Lower Oil Prices and Optimism Fueling Consumer Spending

The 4th Quarter saw a slow down of growth from 5 to 2.6% but consumer spending popped up 4.3%. This is good news as 70% of the economy functions from consumers spending. Growth might have slowed in the 4Q but people are more optimistic about their future and this can create positive signs for economic growth in the first half of this year.

According to Sam Bullard a senior economist at Wells Fargo, "Sharply lower oil prices do present downside risk to business investment, but accruing benefits to the consumer in the form of lower gasoline prices should increasingly offset the near-term drag(1)."

As consumers save money at the pump and heat on their homes they are naturally going to spend that extra money somewhere. Americans are not great savers. Nearly 75% of people live pay check to pay check while only 25% have enough to cover 6 months of expenses (2). 

If we aren't going to save that money most likely it is going to be spent somewhere. We love to eat, buy clothes, go to the moves, and take trips. All that extra money will make its way into the market to fuel sales and great economic activity. Watch the restaurant, retail, and beauty markets next quarter.

It isn't all about the money saved from oil as this doesn't consume the largest percentage of American budgets. As optimism rises Americans simply like to spend more money. It is the psychological effect of feeling good about one's life and prospects for the future.

Oil isn't the only thing working in American's favor as hiring is increasing and wages are starting to rise. A few percentage points in income could lead to even more spending. As the economy moves forward we will find that the combination of events coming into play at different times will hopefully keep us happy, optimistic and motivated.

Sea Shells-Tips on Using Sensory Perception to Improve Sales

The smell of salty sea permeates the nose while the hum and hiss of the waves is subtly blanketing the distractions from the outside world. Foam bubbles among the rocks leaving little foot prints as they sway in and out with each ocean movement. Sea shells creating a colony of travelers  As your toes feel the powder of the sand and the cool water rushes around your ankles you peer out over the horizon to see cranes diving in the water in search of today's meal. The breeze parts your hair and reminds you that life is always present. 

San Diego is a popular destination full of sensory perception. In fact, so popular that it draws 34 million visitors a year (As cited in UT Sand Diego).  They come from all of the world to play in the ocean, eat at the restaurants, attend games, soak up the weather, enjoy the night life and bask on the beaches. San Diego's attraction as a tourist destination is based upon how the environment activates the sense and creates memories that foster positive changes in mood.

The seaside paragraph writing is an example of how written language encourages feelings, thoughts, and impressions through activating our senses much like as the tourist experience of San Diego. The input of hearing, sight, touch, smell, and taste help us understand the world around us and lead to positive impressions and moods. The same mechanics that help us "remember" and "feel" positive experiences can also be used to generate additional sales.

You may consider another more focused example. The sights, smells, and general impressions of homes in the real estate market impacts the likelihood of a positive sale (Blake, 2002).  The first impression, clean walls, the smell of apple pie in the oven, and decorated furniture raise the value of the whole home. The opposite is also true. Dirty walls, musty smell, and lack of furniture can make a home look like a poor habitat that leads to lower market value. 

Business that desire to create inviting atmosphere where patrons are more eager to return, or make purchases, should consider incorporating sensory perceptions within the customer experience. Hotels develop an inviting lobby while cars try and put in place the "new leather" smell. Each sensory perception has some advantage in creating long lasting impressions that can lead to higher or lower future sales. 

This doesn't mean that you should just overload people's sense. Businesses should understand which senses contribute to the experience and which are overloading the customers and making a poor impression. Light background music in a doctor's office is very different than hard rock (or electronic) unless your demographic is between 20-30. At some point, it becomes taxing for people to continue to stay in a sensory overloaded environment and they will seek to escape. 

There are companies that do this right. Some coffee shops will match the visual impressions of baked goods with the smell of coffee or cinnamon. A pub may decorate with items of interest to male sports enthusiasts while providing the smell of charbroiled meat. Fine dining restaurants may focus more on a sleek design and international music based upon current trends. 

The key to using sensory perceptions well is to understand your customer base and match it to your customers needs. If your customer base is in search of housing in a family neighborhood then providing items like apple pie, clean yards, and pointing out local parks would be of benefit. If the customer base is more trendy then modern music, community interaction, popular aromas, and a perception of exclusivity should abound. 

Sensory perception is part of what makes us who we are. Our brains, and their focus, determine which pieces of information sensory perception will understand and which it will ignore. Offering sensory perception to your customers should be based in what they are currently thinking and seeing out of the situation and enhancing the impression to its highest end. Such impressions eventually create memories and feelings that can help people "connect" with the company and buy more items in the future. 

A few tips on using sensory perception to improve sales:

1. Think of first impressions and how the senses get enacted.
2. Subtle impressions may have more power than overbearing stimulus.
3. Define your target market and design your sensory perception around their needs. 
4. Sensory stimuli should heighten the experience and raise the value of the product.
5. Use combinations to create a stronger impression. 
6. Stimuli should created positive feelings and memories.

Blake, T. (2002). Sale of the Sensory. Journal of Property Management, 67 (6).

 

 

 

 

 

Does Combining Customer Service with Sales Improve Company Performance?

Customer service and sales are both important functions for an organization. What happens when we put them together? A study by Jasmand, et. al. (2012) delves into the nature of creating ambidextrous sales-service functions. Their findings determine a net positive result of helping customers with their problems and offering those products/services that better suit their needs. It creates some confusion among employees but seems to improve customer satisfaction and overall sales volume.

There is a natural mental barrier between customer service representatives and sales. Customer service representatives do not view their job as including sales and therefore are less focused on this activity. A lack of perspective limits the abilities of firms to create higher sales through a level of mental merging of the two functions. Training, time and commitment will be needed to bridge the gap and improve upon the integration of both constructs.

Ambidextrous goals and behavior in service and sales can be difficult for representatives. It creates confusion on what actions should be taken and toward which goal. It is a complex skill that low cost providers will have a hard time teaching as the representative will need to know when a better product or service will provide higher levels of customer satisfaction. Most organizations have trained employees to focus on a single activity based on the definition of their job function.

Let us see how this works in a real life scenario. A customer calls in to complain about a product. The customer service representative can log their complaint and check the warrantee to make a return. However, if the customer service representative listens closely and asks important questions they may be able to suggest an alternative product that fits the customer’s needs better (customer satisfaction). The sales portion may come into play if the returned product can be used as credit for a higher level product that actually satisfies the customer (improved sales).

The study found that ambidextrous sales-service activity increases customer satisfaction and sales but reduces efficiency. The total net effect is positive on organizations whereby sales and customer satisfaction improves the company beyond the loss in efficiency. The authors acknowledge that if proper training occurred, organizational resources were adjusted, and the measurements of activities improved, efficiency may rise. For example, if fewer resources are needed from the sales department because the organization is fulfilling some of that function in customer service and developing higher customer retention rates then the sales-service activity improves net efficiency between the varying functions.

Jasmand, C. et. al. (2012). Generating sales while providing service: a study of customer service representatives’ ambidextrous behavior. Journal of Marketing, 76 (1).

Cultural and Motivational Intelligence Contributes to Exports

Proper staffing with relevant skills is important to any business. In large firms the export manager should understand the cultures in which he or she is working within. The researchers looked at 153 U.S. companies to determine if an exporting manager’s cultural intelligence impacts the success of the company in engaging in international sales. Such skills allow for greater adaptation through understanding. 

Companies naturally move through marketing-mix adaptations whereby they change the way in which they handle internal and external pressures.  When done well it increases the strategic, financial, and competitive objective achievements into specific markets (Cavusgil & Zou, 1994). Much of this adjustment is based on the manager’s ability to understand the markets and make connections to the people within that market. 

According to Resource-Advantage Theory when firms can deploy the proper mix of financial, physical, legal, human, organizational, informational and relational resources they can become more productive (Hunt, 2000). The human aspects of R-A Theory relate closely to the marketing manager. This requires the skills of the international marketing manager to match with their motivations and metacognitive cultural intelligence to encourage additional product sales. 

Motivational Cultural Intelligence is the ability to continually put forward energy to learn about new cultures and situations where culture is important. It rests on the four dimensions of motivation, behavioral, cognitive, and metacognitive (Ang et al, 2007). It is a process of understanding norms, cultural rules, underlying values, and mental models of other people that can help in negotiations and business. 

When metacognitive CQ is high it contextualizes thinking with sensitivity to the embedded nature of culture and stronger cognitive flexibility that adjusts to changes in the environment (Klafehn, et. al, 2009). This helps managers understand their customers better from the perspective of their culture and create higher levels of business opportunities. It provides a context to the other’s culture and how to relate information to raise the value of products. 

The research found mixed results in terms of performance but does provide support that motivational CQ and metacognitive CQ can understand culture better, are willing to make adaptations, and can enhance strategic thinking within the organization. The study did have a limitation in terms of measuring how much control these managers have over the processes and whether or not any of their suggestions have been implemented. Simply having personnel with strong skills doesn’t mean there is going to be a benefit without some way of ensuring their ideas are heard and strong ideas are implemented.

Ang., et. al. (2006). Personality correlates of the four factor model of cultural intelligence. Group and organizational management, 31 (1). 

Cavusgil,S. & Zou, S. (1994). Marketing strategy performance relationships: an investigation of the empirical link in export market ventures. Journal of Marking, 58. 

Klafehn, et. al. (2009). Navigating cultures: the role of metacognitive cultural intelligences, “in Handbook of Cultural Intelligence: Theory, Measurement, and Applications.” Soon Angand and Linn Van Dyne, eds. Armonk, NY: M.E. Sharpe.

Magnusson, P. et. al. (2013). The role of cultural intelligence in marketing adaptation and export performance. Journal of International Marketing, 21 (4).

Can Better Marketing Data Lead to Stronger Performance?

Data can lead to confusion or clarity. As the market becomes more versatile companies will need betters ways of measuring.  Research by Homburg et. al. (2012) delves into what makes successful marketing data management and what doesn’t. They use a more complex contingency-based model that studies the association between market performance and data through the concepts of breadth, strategy fit, and cause & affect. 

There are many examples of data systems that include dashboards and balanced score cards. The right kind of data can lead to conclusions about cause and effect and this can have great benefits for organizations seeking a path to navigate. Data management is a method of drawing key measurements from the environment and aligning organizational activities for greater market performance. 

The greatest benefits of data appear to be from those who seek to create a differentiation strategy. This means that the firm is selling products that compete within certain demographics. They are showing themselves to be different than others because of X or Y. Market differentiation is a common strategy among companies that desire to set themselves apart in competitive markets.

Data management works well when market complexity and dynamism are higher. It helps to create more clarity that encourages alignment with new market trends. When markets are constantly changing data provides a target that may not be available to other firms. Proper systems help to clarify, develop strategies, and focus energy toward specific targets. 

They found through 201 marketing responses empirical support for performance outcomes depending on the strategy, complexity and dynamisms of the market. Faster changing environments need better information that can guide decision-makers into making stronger strategic choices. The biggest pay offs are for those firms that differentiate themselves from others. When markets are larger and across different continents breadth helps to ensure you are capturing the right data. Secondly, the data must fit within the strategy of the organization and help them focus on what is important. Third, cause and effect information helps firms adjust their processes to create greater impact in the market. 

Comment:  Data for data sake is not beneficial. The type of data collected should be based upon the strategic needs of the organization. This data is then organized in a way that encourages useful conclusions. Since data organized improperly can mislead decisions it is important to regularly revisit the type of data being collected and how it is being organized. 

Homburg, et. al. (2012). Marketing performance measurement systems: Does comprehensiveness really improve performance? Journal of Marketing, 76.