Wednesday, July 27, 2016

Maintaining Owner Sanity (Tradecraft)

In an ideal world, a small business would have clearly defined roles without overlap. We're going to assume such an ideal world for a moment, as I discuss roles in the business. We're getting towards the end of our big construction project, with electrical work going on right now, so I'm going to talk about insulation.

A game store staff is a bit like an electrical circuit. We'll use the example of a dimmer switch. The job of the line employees is to delight customers through the flow of policies and procedures from higher up. They are the bare wires delivering delight to customers within the confines of the circuit. The role of the manager is insulation. The manager insulates the line employees from the concerns of the owner that don't involve delighting customers, but just as important, the manager insulates the owner from the day to day needs of the line employees. As the owner, I'm the switch and because we're working in the dark most of the time when it comes to management, I'm usually dimmer.  A dimmer switch, if you will. My idealized job is to define the ebb and flow of this system and nothing more.

Defining the ebb and flow means crafting policy and procedures. The role of the manager is to implement those policies and procedures. The role of the staff is to carry out policies and procedures. So the question of "What should we do about X" is a manager query. The question of "How should we handle X going forward" is an owner question. This is in a perfect world, but that's not how most small businesses operate.

Most small businesses have an owner-manager, either by design or by accident. If you're an owner on site without a manager, you've become the owner-manager. This overlap removes the insulating layer from the bare wires, which results in a short circuit of your (dimmer) switch. You will be constantly interrupted by line employees who wish nothing more than to deploy delight to customers. Employees, likewise, often craft policies and procedures out of desperation. Sometimes those policies and procedures are adopted and sometimes not. This chaos can drive everyone a bit bonkers.

The solution is to add back that insulation so the owner, the switch, can focus on power distribution. The manager can implement policy without worrying about existential threats, and the line employees can get back to delighting customers and getting praised for their great work. 

How do you do that? Isolating the circuit is a good start. As an owner, not being on site gets staff thinking about process and who they need to talk with to find an answer. An office works too, but isn't quite as good. A hybrid of this is coming into the store only at times when you can be interrupted. I reconcile my check registry at home, if possible, because I will cut you if you interrupt me. I work from home on Mondays so I can devote time to order placement without interruption. Whatever you can do to make your switch a little less dimmer is a good thing.

If you've got other strategies for isolating that circuit while still maintaining contact, lets hear them.

Wednesday, July 20, 2016

The Problem With Review Culture (Tradecraft)

It's not an exaggeration to say small business owners devote their lives to their businesses. This is no 9-5 job, it's a dedicated, 24 hours a day endeavor that is all consuming. A small business has been compared to a mistress. You're enticed to sneak off to it because it appreciates you in ways your partner can't. It gobbles up your family's money, constantly placing you in the position of financial infidelity. Nobody has broken down stats for divorce among small business owners, but I'll bet it's much higher.

The small business owner works tirelessly on processes and procedures to grow and improve. We use the same assets day after day, but doing it slightly better, enough to outpace inflation and wage demands and taxes and fees that do nothing but get larger each year.  This is called working on the business. If you can't grow at least 3% a year, you're probably failing. If you can't boost it to 8-10% a year, you're probably better off working for someone else. That means every day this year, come in and do the same thing you did last year, with the same resources, but 10% better. Next year we'll be expecting the same.

So you would think that with so many reviews of businesses, small business would be on a road to perfection. Well no. What review culture has taught consumers is if you have a problem, you write a poor review of that business. You don't attempt to resolve a problem with the manager or owner, you just give them a scathing review because you've been wronged and people need to know. Nobody has contacted me to fix or resolve an in store problem in years.

Before review culture, there was an opportunity to collaborate and right the business, to improve the process, to address the needs of the customer. The business was part of the community and the community works together. Now we get our businesses summed up in stars. One star. Your business, your life work, is a failure. The customer is no longer interested in having a better local business. Instead, they're in a mercenary battle of customer versus faceless business, a dynamic that has likely shifted with the rise of e-commerce. 

When I get a low review, I take it seriously. After all, it's a massive failure on my part, since it's so much a part of my life. I work in a business where I order a product based on the projected needs of as few as 2-3 customers. Half of what I buy for the store is a single copy of a game that never gets re-ordered. HALF. I'm dedicated to the concept of delighting that one person, whoever they may be. One unhappy customer is a complete failure of many systems that have come together, so of course I'll take it seriously.

I'll usually respond to the reviewer, attempt to improve the process, perhaps offer them some incentive to return. This is how it used to work. You had a problem at the market. You talked to the manager. The manager promised to fix the issue and gave you a coupon for a free frozen pizza. Everyone benefited, plus pizza. 

Businesses are far from perfect. There have been periods in the life of my business where there have been problems. We're better than we were a year ago and unrecognizable from five or ten years ago in quality.  I have five employees right now who average around three years on staff.  The newest employee is number 23 in my payroll files. That means 18 people have come and gone for various reasons to get to where we are now, and this isn't even my first payroll company. 

I recently had someone rant on our Facebook page about bad service they received eight years ago and how they would never set foot in my store again. I don't even know how to fix an eight year old problem with employees who probably don't work for me anymore, who may have even been fired for the reasons they described. I'm guessing it was someone in the low teens of my payroll files? Who knows. There is no opportunity to make that situation right, although I can suggest letting it go. Eight years is a long time to still be ranting about a business you won't ever visit again because some young dude, whose now probably married with children and a mortgage, and existential problem of their own, was paying more attention to a different customer. I can't even recognize the store they're describing.

When it comes to customer satisfaction, I would rather give away product, hand deliver it to the door of someone I've wronged, than see them go away upset. However, review culture offers no resolution to customer dissatisfaction. There may be a resolution to our processes and procedures, but here's the thing: that poor star review is never changed by the reviewer. There is no negotiation, no actual upside of addressing a low reviewer, if all you're looking for is better reviews. There is no free frozen pizza coupon to assuage hurt feelings. There is no relationship management going on here.

A bad review is always a "better luck with the next customer" situation. A business owner who doesn't want to lose their mind will instead look at reviews as an aggregate. 4.4 is pretty good out of 5. That's just infuriating though if you're trying to come in and do things better every day. We're not the government. Good enough is not good enough. We work in single digit profit margins. We can't accept good enough as success.  

So bottom line: There's no customer review feedback loop that works to improve small business. It's not a process of remediation, it's an adversarial process of social ranting.  This is assuming there are real problems, as opposed to the many reviews that are either people unhappy because we don't carry what they want (so many of our Yugioh reviews) or in the articulate stylings of Kylie Jose, "Eh."

Sunday, July 10, 2016

Be Tom Petty (Tradecraft)

I recently spent my vacation off roading around California, my brain stuck on Tom Petty Radio. That's when I realized, I should be more like Tom Petty. In the game trade, we should all be more like Tom Petty. Let me explain what I mean by that.

Tom Petty is not a superstar. He loves to play music. He'll play music for charity. He'll play music for the sake of collaborating with people he wants to play music with (Dylan, Orbison, Lynne, Clapton, etc.). In a radio interview, he talked about how one of his albums rose to number two on the charts. He commented number two is pretty good, I spent most of my career at number two. He's a guy who doesn't need to be the best, he wins by doing what he loves and collaborating with like minded people.

He also looks out for his industry, a proponent of artist rights whose been able to bend the recording industry at times, while also being firm yet reasonable about artistic appropriation. In the game trade, that's a rare thing, someone who can successfully run their business while successfully advocating for their industry. You can yell and bluster all you want, but do you bend the industry in the right direction?

Tom Petty is the perpetual number two guy, but along the way he's sold 80 million records, won several lifetime achievement awards, and managed to have a normal family life with wife and kids. Maybe it's just me, but I've always been a self appointed victim of the tyranny of the best. As I get older, I've learned it's more about doing what you love, finding fellowship with like minded individuals, and attempting to have your personal version of life balance. Tom Petty's not a bad model for that.

Thursday, July 7, 2016

Nothing But Net (Pricing)

Amazon wants to get rid of MSRP or "list" price. Ostensibly this is because customers are suing online retailers for overstating their savings. If I sell you a board game for $30 that has an MSRP of $50, that's a 40% savings, right? But if the publisher is selling it for $40 on their website, that "MSRP" suddenly gets quotation marks around it and my 40% savings claim is now a lie that involves lawyers. Trying to monitor who is selling what at what price is a nightmare, even though it's shown customers get excited when they see their savings percentage.

I think the real reason Amazon wants to eliminate MSRP is pretty simple: profit, or lack thereof. What? You think they can make money selling goods at 30-40% off? They lost a billion dollars of Wall Street money their first ten years in business trying this. Now they make it up in seller fees, so retailers like me can sell at 30-40% off. We couldn't sell at loss and make it up in volume, but do you know who can? You!

So expect prices online to rise. Their goal of obtaining dominant market share in online sales has succeeded. It's estimated they now capture over 50% of online growth.  For every new dollar spent online, 51 cents is spent through Amazon. It's only rational that they begin to squeeze out a better margin from online sales.

As an aside, if you're a culture warrior fighting for a $15 minimum wage, and there's an Amazon box in your house, you are in need of the change you believe in. The progress and disruption we have been trained to think is good for society has costs, whether it's main street jobs or the immigrant taxi driver. Progress and disruption has consequences that can't be legislated away without behavioral changes.

Tuesday, July 5, 2016

Popularity Immaculate Conception (Tradecraft)

A friend sent me this article called How Do Board Games Go Viral?

How indeed.

The article isn't bad, it's just one sided. It basically gives board game popularity credit to online sources like Boardgamegeek, Kickstarter and discussion forums like Reddit, powered by online reviews. Meanwhile, the author quotes (our questionable, highly subjective) industry sales data showing hobby game sales have grown rapidly, I suppose because of the above mentioned sources? This jump from nobody knowing what board games are are to viral levels of adoption is what I refer to as Popularity Immaculate Conception. There are steps missing in how this board game boom was conceived.

The missing link is the game trade itself, of course. As a retailer, a big part of my job is finding out what's popular. This is when I put on my "buyer" hat, one of a dozen or so hats I wear each day. Being a buyer involves going to trade shows, listening to designers, taking calls and daily emails from sales reps attempting to pitch me The Next Big Thing, and talking to retailer experts more plugged into their various game niches than myself.  It also involves listening to customers, who are often the best sources of information on the things they love, something true in every trade. 

As for trade shows, spending thousands of dollars to attend them is still an important part of the learning process. The GAMA Trade Show in Las Vegas has always paid for itself just based on discovery of hits. Origins is crucial for many retailers. For certain stores with a more mainstream clientele, New York Toy Fair is invaluable. We also have at least four private industry Facebook groups where we discuss this stuff endlessly, if you're taking a year off from shows. 

I will admit I ride on the coat tails of many retailers who do a lot of the leg work. They go to more trade shows, play the games, compare notes with like minded individuals and buy deep on what they think are hits. Despite the Internet, it's actually possible to be a taste maker in the game trade, with demo games and hand selling that can increase sales and interest in a game, orders of magnitude greater than the shelve it and forget it method. In fact, creating demand and not just supplying it is quickly becoming the key to modern retail. Sitting back and stocking The Hotness list from Boardgamegeek will not do. Plus the secret to board game sales growth is new people, not veterans. 

When we teach a game, our goal is not to just get the sale, but to create hobbyists. We take people who know nothing about board games and introduce them to the hobby. They go back home and teach their friends and families, and suddenly there's a community of like minded board game hobbyists, playing games we introduced them to. Creating hobbyists is how game stores sell board games, including supporting them with board game nights, Tabletop Game Day and various events to keep customers engaged, and hopefully buying new games. We spend over $1,000 a month on Facebook, mostly marketing new products to hobbyists. If I sold you a board game like a car salesman, as a one time purchase, I would quickly go out of business. 

If you don't happen to have a pro-active store in your area, doing the hard work, you may be forgiven in believing in Popularity Immaculate Conception, that the retailer simply reads the same reviews you do, from reviewers that somehow get clued in magically about what's good. By the way, those reviewers are often plugged into the same sources as us, rather than us plugged into them. To sum this up, the missing middle step in Popularity Immaculate Conception is a vibrant game trade sharing information across its tiers.