If your goal is to show a positive return on your invested marketing dollars, there are three key elements of your strategy that must work in harmony — the math, the merchandising, and the messaging.  

In part one I emphasized how important it is to create a unique selling point or compelling offer (the message), so you can generate immediate response and track your advertising. In part two I’ll focus on how important it is to maximize opportunities created by your advertising – also known as merchandising.

Imagine this scenario: you operate a successful grocery store in a thriving neighborhood. Through a partnership with a local dairy farm, you have an exclusive opportunity to sell a very popular brand of organic milk for half the price of your competitors. A truly compelling and unique offer.

You capitalize on the opportunity and double your usual advertising budget for the month. You also quadruple your order with the dairy farm and create more space near the entrance of the store to display the milk.

The response is tremendous. Sales of organic milk triple, and your average sale per customer reflects this, but the increase in sales is exclusive to the milk. You also attract hundreds of new customers who are not regular shoppers, but you realize all of them purchased just the milk. It appears your regular customers are doing their usual shopping and adding just the milk, and new customers are also cherry-picking your store for this one item. 

This is an example of a failure to merchandise. The failure occurred in a few areas. Although you were smart to increase advertising and the amount of product you ordered, you failed to capitalize on the surge in store traffic. 

By displaying the milk at the front of the store, you didn’t invite customers to experience the rest of your store and other merchandising efforts. If the milk had been placed at the rear of the store (as all dairy products are) you would have urged customers to walk the entirety of your store and be exposed to other selling opportunities. Who knows, half of the customers might have picked up two or three other items on their way to get milk! 

In addition to placing the milk in the wrong part of the store, you didn’t surround it with complementary items such as eggs, cereal, and bacon to encourage a bigger sale.

Let’s switch gears, what if you operated a home service business, and after your coupon runs in the local newspaper you get 10–20 calls? This is great and means you took the time to develop a compelling offer!

However, the person answering your phone is not trained or prepared to handle leads, they think their job is to only be a receptionist. In fact, they are juggling several other duties as well as answering the phone. They have no script, no process to follow, and no customer relationship software to record the caller’s information for future marketing opportunities. Half of the time, the calls go to voicemail. This is a failure to merchandise by not creating a process to manage inbound calls.

In another example, let’s say you operate a furniture store, and from a pure merchandising standpoint the store is physically arranged to maximize sales in every possible way. But compared to some of the newer chains who sell the same type of furniture, your store is dated. The carpet is old, the lights are dim, the ceiling is low, and the parking lot has potholes. This is a failure to merchandise by not keeping your infrastructure up to date.  

So, before you spend a nickel on advertising space or time, first consider whether an investment in training your staff, or improving your physical store would make more sense. 

Then you should start advertising, because those improvements will maximize revenue from the customers who do respond to your ads.

Shane Nichols is the author of the Intelligent Advertiser Blog.

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