Added Value = Added Sales
Competing for bargain business; banking on fraud protection.
By Carol L. Schroeder -- Gifts and Dec, 6/1/2008 12:00:00 AM
Q: I recently overheard one of my friends bragging about how much money she saves by shopping online and at discount stores. How can an independent retailer compete?
A: With friends like that, as the old joke goes, who needs enemies? But seriously, we all know that shoppers, especially women, pride themselves on getting good deals. It's an ongoing challenge for specialty retailers to prove that it doesn't always cost more to patronize independents. There are steps you can take to make sure customers feel they are receiving good value for their money — and hopefully brag to their friends.
While it's almost impossible to compete on price exclusively, there are three ways to build a reputation for good value:
• Offer items unique to your store, including unusual, exclusive and private label merchandise • Pass along savings from show specials or closeouts • Enhance your merchandise with “value added” services and goods
The term “value added” is defined in different ways by economists, but I'm using it to mean gaining a competitive advantage by adding something to a product before it is offered to the customer.
You can increase the perceived value of the products in your store without spending a lot of money. The first way is to provide consistently excellent customer service, with extensive knowledge about the merchandise you sell. A well-trained, enthusiastic staff makes shopping a pleasurable experience that customers want to repeat.
Consumers frequently mention that high-quality gift wrapping is a value-added service they feel sets the specialty shop apart from a discounter. Don't forget to include your store name in your boxing or wrapping of gifts.
Another way to add value is to give a gift with purchase, known in the trade as a GWP. See if there are two or more items you can bundle together, such as a tote with a set of bath items, or batteries with a clock. If the secondary item is inexpensive, or something that didn't sell well on its own, a GWP can be a low-cost way to increase perceived value. Or you might want to make your GWP a service, such as free delivery or assembly.
Customers often appreciate it when a store offers to make a donation with purchase, or DWP. This allows consumers to support worthwhile causes as they shop. Be sure to mention your “cause marketing” on signage in the store, and on an insert to go into the package with the item when purchased.
Store signage and package inserts are also ideal ways to convey information about products you carry that are locally made, environmentally conscious or created under fair trade conditions. These “feel good” attributes all add value to shopping at your store, and can help you combat the trend towards online and big box shopping.
Checking for Check Fraud
Q: Our bank suggested we use its online service to balance our checking account and sign up for ACH protection. Are these just ways for our bank to make more money from our business?
A: In this case your banker has your best interest at heart. Financial frauds preying on businesses today are frightening, and can be more costly than breakage and bad buying decisions combined.
Automated Clearing House transactions are an easy way to pay regular bills without writing checks. But unauthorized direct debits can be taken if someone steals your account and bank routing numbers. You can prevent this by placing an ACH block on your accounts, specifying who is authorized to request an ACH transaction on behalf of your business.
Patrol your checking and payroll accounts regularly for suspicious activity. Online banking makes it easy, even if you do your own bookkeeping. Look at your account every 24 to 48 hours, because a business account usually requires earlier notification of fraud than a personal account to limit liability.
What should you look for? One type of internal check fraud involves setting up a fake vendor, or even a fake employee, and writing checks that are cashed locally by the swindler or their associate. Look for checks written for even amounts. Legitimate merchandise and payroll payments are rarely in round numbers. Amounts that repeat regularly might also be suspect, or accounts with a local mailing address.
Also look out for a business-to-business check scam involving intercepting a check, changing the name it is made out to and altering the amount. The check is given to an unsuspecting person hired through a work-at-home scam to deposit into an American account, and funds are transferred overseas. Make sure outgoing checks go directly to the post office rather than being left out for the letter carrier.
Another fraud uses checks stolen from the back of a checkbook or a stack of computer check forms. Keep these supplies in a secure place, and watch for any that come into your account out of sequence.
For those with online sales, watch for checks for more than the amount required. Scammers then ask for a refund of the difference, and only when their check fails to clear do you discover it was not written on a valid account. This type of fraud is becoming a huge problem, according to Kimberly Lankford of Kiplinger.com, because of a federal law requiring banks to make funds available for withdrawal days before verifying that the money exists.
Keeping a steady eye on your bank accounts is time well spent if it saves you from falling victim to one of these costly scams.
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