A Bird in Hand...

May 12, 2014  by in Business Strategy, Industry   

For the past decade or longer furniture retailing has been focused on promotions and, more specifically, finance promotions. Often referred to as “No, No, No” financing, the tone has decreased, but the message remains the same—Furniture is a deal! I won’t despair about the fact that the Consumer Price Index for furniture has been flat for the past five years while all other consumer products have increased nine points. Nor will I dwell on the fact that only about 30 percent to 35 percent of consumers take advantage of these promotions. However, I will discuss customer loyalty.

As an industry, many of us are stuck in a paradigm that believes on average, consumers purchase furniture every seven years and the purchases are influenced by different life stages—new household formations, first homes, downsizing seniors, birth of children and the list goes on. The fact is that people are continuously decorating their homes whether in major or minor ways. This destroys the myth that by the time they purchase furniture again, they will have forgotten their last shopping experience. The challenge for retailers is to become the consumers “retailer of choice” as they continue to furnish their homes. To meet this challenge the retailer must satisfy the returning customer through the buying process from the selection to the needs analysis by the sales associate to the successful closing and, finally, a great delivery experience.

 There are many opportunities to disappoint the customer or to wow her with excellent service. The fact is even with the best retailers, only about 35 percent of the consumers make it to the closing. However, the chances for closing to a prior customer are more than twice that of a new customer. You do the math. The returning customer represents a substantial part of a retailer’s sales. In our quest to discover the factors that identify the characteristics of high performance retailers we find one of the top five factors that identify these retailers is the percent of customers purchasing each quarter that purchased in the preceding eight quarters. This graphic illustrates. The challenge to maintaining the customer’s loyalty requires an ongoing commitment to making every customer a customer for life. This is not as easy as planning that one-time “blow-out” event. Just a thought.