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This month we answer a bunch of your questions about marketing, delivery fees, discounts, and ranking on Google!
Read more about:
- Substitution notices on website
- Higher priced arrangements
- Raising delivery fees
- Competition sends coupons
- Advertising a shop we're selling
- Poor SEO report from marketing company
- Email frequency
- Is texting illegal
- Newspaper ads are cheap
- Measure if ad spend is profitable
With products being so hard to get these days, it may seem like good customer service to have a substitution notice on our website. My partner disagrees. Who is right?
Your partner. This is the classic operations versus marketing tug-a-war. Operations wants to make fulfilment streamlined and minimize the possibilities for questions and disappointment. The explanation goes something like this: “Why not tell everyone to expect substitutions and we will exceed their expectations”. On the flip side, the marketing argument is that such a notice will send potential buyers to another shop.
The facts show that you will lose business if you have any type of landing page. When you warn customers that they may not get what they want, you can lose a significant percentage of sales. You should remove products from your website that you know you will not be able to fulfil for long periods of time but otherwise leave a nice assortment up and call the customers that order arrangements that you cannot fill. It may sound like extra work, but it is a small price to pay to have an inviting site that entices your customers to order. Some shops call every web customer to confirm the order and usually get rewarded with an add-on purchase or an upgrade to the initial arrangement size. It can be a positive event for your customers and your shop.
Do you recommend putting arrangements that cost more than $200 on our website even if we never sell arrangements in that price range?
Yes. Use the high-priced arrangements as “price anchors” which is a common merchandising method. Most shoppers will naturally pick the middle priced option. When you add a higher priced item, that “anchors” the price point in the consumer's mind and they pick something between that and the lower price point. You see this method used at automobile dealerships, consumer electronic stores, and many other retailers once you start looking.
You want to have an arrangement over $100 on every other line of each website category and it is important to have at least one arrangement over $200 in each section. Try it and you will see for yourself that your average order value will increase.
We are considering raising our delivery fee. Will that hurt sales?
It is very unlikely. We've seen hundreds of shops raise delivery fees and have never experienced the shop owner reverse the increase. One florist did experience some issues when he announced the price increase to each caller and justified it with an explanation of the costs that had risen. Once he stopped mentioning it, there were no further issues.
Most of your customers do not know what your delivery fee is and do not use that as a factor in ordering. It is like sales tax, just part of the process.
Another florist in my town is constantly emailing discount coupons. Do I need to offer discounts so I do not lose business?
Generally you don’t want to offer discounts. A notable exception is if an individual customer comes to your shop and asks you to match another shop’s offer, you always want to give them the discount to preserve the relationship.
Fortunately, discounts are typically not necessary for florists. Many of the purchases your customers make are for occasions and they “need” to buy something for that purpose. This includes the major holidays, birthdays, anniversaries, get well and more. In these instances, discounting is usually not going to increase your sales and customers do not expect it.
There are situations where discounts are helpful. However, you want to discount strategically. You always want to get something of value in return for the discount. For example, if you want a customer to take delivery early for a holiday, you can offer a discount or free gift with purchase for early delivery. In this case, you are getting something in return – the capacity to take another order for that holiday.
You could offer a discount to someone that has not bought from you in more than a year. In this case, the discount might entice the customer back to your shop when you would not have otherwise seen them again.
Discounts are helpful when bundling products. For example, as a Valentine’s Day special, you can include a “free box of chocolates” with the purchase of a dozen roses and a plush animal or other premium item.
Use discounts strategically when you can get something in return that makes it worthwhile. Never follow another shop’s pricing or discounts without carefully considering how it will work for you.
We are planning to sell our shop. Should we stop spending on advertising?
You are on the right track in cutting expenses before you sell your shop. Following the industry formula, your shop is worth 3x the annual profit so any expense that you can cut adds to the value. However, if the marketing is bringing in enough new business to cover the cost, it is adding to the value of your shop. A shop that is growing – has increasing sales - is worth more.
If the advertising is not paying for itself, then you should stop it, regardless of whether you are planning to sell your shop. To break even, the marketing should bring in sales that are double the cost. So a $100 per month ad needs to bring in $200 worth of sales. The goal is to do better than break even but any marketing that pays for itself is worth continuing.
I received an email report from a marketing company showing that our shop gets an “F” in SEO. Should I be concerned?
Many marketing firms use reports to scare small business owners into a phone consultation. Sometimes the reports are valid but most of the time they are inaccurate or do not even show real data for your shop. It is important to know how Google ranks your shop because almost 60 percent of the shoppers looking online pick one of the three florists listed in the Google “box” next to the map. You want to be one of the shops listed.
You can get a comprehensive score for a small fee from a ranking tool such as localfalcon.com. It will show how Google ranks your shop in relation to the other shops in town. A free ranking tool that is less comprehensive is also available at https://teamfloral.com/local-search
My husband sends emails out to our customers once a week. I think that is too often. Is it?
Probably. The average flower shop customer buys less than once a year which means that for most of your customers, that is too frequent. So why not send the emails anyway? Because it hurts deliverability for all your emails.
The email services, such as Gmail and Yahoo, heavily filter all incoming messages. Consider that 8 out of 10 emails are marketing messages. If they were not filtered, all of our inboxes would be overwhelmed with promotional emails.
The filters monitor the users reading behavior and automatically route most of their emails directly to spam, junk or promotional folders. The filter only shows a user what it “thinks” they want to see.
If even a few emails go unopened, the system assumes that person is not interested in emails from that sender and begins routing all future messages away from the inbox. If your customers do not open even a few emails from you, the filter will probably stop delivering them to the inbox. This happens automatically behind the scenes. Neither you nor your customer will know that your emails are never delivered. Services such as Constant Contact may show a high delivery rate but that is delivery to the mail server, not to the customer's inbox. The top professional email marketers can only only get about 60 percent delivery.
We are planning to start texting anniversary reminders to our customers. I heard it is illegal. Is that correct?
Texting is a great way to help your customers remember special events. It is one of the most effective marketing tools available and also one of the cheapest. But, you must have written permission to text marketing messages to a person.
A friendly text reminder seems innocent enough but in a landmark court case, a medical clinic was found guilty of texting flu shot reminders to customers that had not given permission to receive texts from the clinic. The decision was later overturned on appeal but it stands as a stern warning to not text without written permission.
The written requirement is difficult. In order to not be in violation, you’ll need to have some way to ask and record permission. Many large retailers have a box on their website with an incentive if the shopper agrees to receive text messages. Others email offers. As of now, floral POS systems and websites do not have that feature built in. The best course of action is to be safe rather than sorry.
Is newspaper advertising a good idea? The rates are so cheap.
There is a reason that the cost of newspaper advertising has gone down – it has lost most of its effectiveness. There might be opportunities for targeted ads. Some shops still find that small ads in the obituary section bring in enough sales to cover the costs. Typically, the newspaper gives the advertiser an online ad in addition to the print version. For the most part, print media such as newspapers and magazines are not an effective way for florists to advertise.
How do I know if my advertising is profitable?
Good question! You may have heard the story from a marketing executive that goes, “I know that half of my advertising is not paying for itself … I just don't know which half!” Tracking advertising is always a challenge. Sometimes it can be tracked electronically (such as pay-per-click and some forms of SEO) and other times you have to estimate the results.
Once you have some idea of the sales created by the ad, the math is easy. Any advertising that brings in sales that are 2 times the cost, is at least breaking even. If an ad shows enough sales to breakeven, it is worth doing.
The break even analysis is straightforward. Your “out of pocket” cost to create an arrangement is about 50 percent. That is 30 percent for COGS and 20 for labor to take the order and make the design. To illustrate, let’s say you spend $100 on advertising. The ad generates $200 in sales. It’s worthwhile because you breakeven. Out of the $200, your cost for the product is $100 leaving $100 in margin to cover the cost of the ad.
The goal, of course, is to do better than breakeven but any advertising that pays for itself is worth continuing because there are benefits from the ad that are not always trackable.
