a truly remarkable and memorable
human experience.
He paused a long moment
and then said “The cost would
be incalculable. It would be
astronomical!” he said. And he was
right. The cost of such a campaign
would be beyond the grasp of even
the largest companies.
But here’s the thing: their brand
was already engaging an audience
of that size with just such a media
experience. They’re just not
accounting for the value anywhere
in their measurement of store
contribution.
In the watch world, if a brand is
coming into contact with 80 million
customers per year in their stores
then those stores should be credited
with at least an approximation of the
market value of those impressions.
The point being that physical retail
is no longer simply a product
distribution strategy – it’s a customer
acquisition strategy for which there
is an inherent and attributable return
of value. We must account for that
value.
The question is “what’s the
appropriate value to attribute”? It’s a
great question and one that requires
two components; an agreed upon
value per consumer impression and
most importantly, a gauge of the
quality of the average impression.
5IFlSTUPGUIFTFSFRVJSFTTPNF
educated assumptions to arrive at
an internally agreed upon value per
impression. This is not a number
that will appear in any quarterly
shareholder report, so what’s
important is only that it’s internally
accepted as an appropriate and
SFBMJTUJDlHVSF'PSUIFTBLFPG
argument, let’s assume that you
agree internally that the value of one
positive in-store customer experience
JTXPSUI9UIFWBMVFPGBmFFUJOH
advertising impression on Facebook.
If your Facebook cost per impression
is eighty cents then the cost per
impression in a store would be eight
dollars per customer per year.
The next step is to qualify the
degree to which the impressions
are positive or negative. In my
experience, the best possible gauge
UPBDIJFWFBMFWFMQMBZJOHlFMEJTOFU
promoter score (NPS). The essence
of which is the answer to a customer
survey asking: “How likely is it that
you would recommend [brand] to a
friend or colleague?”
Respondents are grouped as
Promoters (score 9-10) — loyal
enthusiasts who will keep buying
and refer others, fueling growth;
1BTTJWFT TDPSF
TBUJTlFECVU
unenthusiastic customers who are
vulnerable to competitive offerings;
and Detractors (score 0-6) — who are
unhappy customers that can damage
your brand and impede growth
through negative word-of-mouth.
Subtracting the percentage of
Detractors from the percentage of
Promoters yields the Net Promoter
Score, which can range from a low of
-100 (if every customer is a Detractor)
to a high of 100 (if every customer is
a Promoter).
If a store’s NPS is positive, we can
reasonably assume each impression
the store generates adds to its
contribution to the chain. If the NPS
is negative, we can assume that each
new impression subtracts from its
value to the chain. This value, positive
or negative, should then be added
or subtracted (at least on paper)
from the sales contribution the store
makes on paper to the company.
The result? A far truer picture of a
store’s true contribution and value.
Consider this example: Store A sells
$5 million worth of merchandise in
a year but also generates $2 million
worth of positive impressions for
the brand, meaning that the true
contribution of the store – at least
from an internal perspective – is $7
million in value. Conversely, Store
B generates $8 million in sales but
generates $3 million in negative
brand impressions, giving it a true net
value of $5 million.
Which store would you close if
you had to choose? If the decision
was based solely on sales the answer
would be simple but completely
erroneous. However, by including an
internally agreed upon media value
per customer, we get to a result that
NPSFBDDVSBUFMZSFmFDUTUIFUSVF
contribution of each store.Put a different way, I’ve been into
small stores that generate awesome
customer experiences and contribute
greatly to a positive brand impression.
I’ve also been into elaborate,
FYQFOTJWFmBHTIJQTUPSFTUIBUBSF
absolutely shitty and do nothing but
devalue the brand. If you evaluate
stores on the basis of sales alone,
you’ll never know the difference and
even worse, you’ll probably end up
closing exactly the wrong locations.
As my friend and STORY NYC
founder Rachel Shechtman once said,
we have to stop looking at rent as a
cost of distribution and begin looking
at it as the cost of new customer
acquisition. Stores are media, and
until we begin measuring them as
such, we’ll never understand their
true and total value.This article was contributed by Doug
Stephens, author and founder of
consultancy Retail Prophet originally
appeared on the Retail Prophet website.
Link: https://www.retailprophet.com/
measuring-the-store-of-the-future/REENGINEERING RETAIL / INSIGHT
watchpro.com / AUGUST 2019 / WATCHPRO 29