The Top 15 Ways to Find New Customers in Retail
Acquiring new customers isn’t an easy task for anyone. With online shopping the options for where you can purchase products and services are endless. But look around, if Nike or McDonald’s can acquire a large customer base so can you.
So what will it take? At the end of the day the criteria for success is rather simple. We often think it’s more complicated when our hard work isn’t paying off. But the companies you admire were once in the same spot you’re in now. If you are curious about how to become the next Nike or McDonald’s consider these 15 steps you can start taking today to acquire new customers.
1. Explore unconventional and creative marketing. Sometimes the best action is the one most people aren’t taking. Menswear direct to consumer brand UNTUCKit realized this when it first tried to figure out how to acquire its first set of customers.
In the early days of the brand the company tried the traditional step of hiring a PR agency to gain exposure. But after going down that route UNTUCKit decided to take the unconventional approach of firing its PR agency. If felt that the PR was not giving the brand the exposure it needed. Instead UNTUCKit placed ads on sports radio and in print airline magazines. While these are not the kinds of marketing moves that everyone is talking about these vehicles often have more captive audiences than a fast-moving social media feed.
You can try the conventional but if it’s not working why not take an unconventional approach? Taking the less travelled route may have less competition and better exposure. The exposure can also come at a cheaper price. UNTUCKit found that, at the time, for approximately $350 it could reach 200,000 potential consumers using radio ads. After its first local radio ad placement in 2013 it had 1,500 website visitors in less than 10 seconds versus a normal level of traffic of 150-200 visitors.
Speaking about this approach, UNTUCKit CEO Aaron Sanandres said: "I think that the biggest lesson is to be curious, right, think about the different, maybe nonconventional ways, that you can get your message to the right audience, whoever that audience is for your particular business." "As long as you can measure it."
Often what looks like a challenge (i.e. your Facebook advertising budget is running out) can be a blessing in disguise as it forces you to think of more creative ways to acquire new customers.
2. Offer free samples. How many times have you gone to Costco just to try some free samples? We all have. Free samples encourage shoppers to try products they normally wouldn’t buy. Free samples are really just another form of marketing retailers use to generate more sales. Speaking about this Tara Miller, Trader Joe’s Vice President of Marketing, said: "so what a lot of people might not know is the biggest marketing expense we have at Trader Joe's is actually just letting people try our food.”
Providing free samples whether its food or clothing taps into a universal sales principle called reciprocity. Author Robert Cialdini writes in his best-selling book Influence, the Psychology of Persuasion that: “one of the most potent of the weapons of influence around us [is] the rule for reciprocation. The rule says that we should try to repay, in kind, what another person has provided us.” “By virtue of the reciprocity rule, then, we are obligated to the future repayment of favours, gifts, invitations and the like.” Retailers like lululemon also successfully use this strategy to get customer to spend more.
3. Sell a loss leader. Loss leaders are one of the oldest tricks in the book for retailers looking to drive foot traffic or acquire new customers. Costco, for example, sells commonly purchased items like rotisserie chicken or hotdogs at low prices to get you in the door. Costco’s hotdog combo is actually the same price it was in 1985. Speaking about this Bob Nelson, Senior Vice President of Financial Planning and Investor Relations at Costco said: Costco generates “very little money” on the combo deal, but “we get so much more mileage out of it than we would by raising the price to $1.60 and making a few more million dollars.” Because a customer believes they are getting an uncommon deal they are more likely to spend more during the duration of their shopping trip.
4. Have lucrative brand partnerships. One of the most effective ways to bring traffic into a retail store is to add a popular brand that can pique the interest of your existing customers as well as bring in new customers. Macy’s achieved this by adding Toys “R” Us merchandise to its website in August of 2021. Toys “R” Us was a popular brand but it was saddled with debt leading it to file for bankruptcy in 2017. But consumers still love the brand and see it as one of the preeminent destinations for toys for children. That is one of the reasons why both Amazon and Target have sold Toys “R” Us merchandise in the past.
After adding Toys “R” Us merchandise to its website at one point Macy’s found the partnership attracted many new Millennial parents who after shopping for toys bought higher margin products at Macy’s. Macy’s then went on to add small Toys “R” Us shops in 400 of its stores. “Our partnership with Toys “R” Us has been instrumental in attracting new customers to the Macy's brand,” said Gennette last year. “Of the customers that shop Toys “R” Us, 25% were new customers to the Macy's brand, and 93% of these toy customers cross-shopped other categories.”
Store within a store concepts never get old. Target is adding small Ulta Beauty shops to 800 of its stores and Sephora is adding small Sephora stores inside of more than 850 Kohl’s stores. They are doing this because these partnerships work.
5. Launch a bring a friend & get a discount promotion. Try offering a promotion where to receive a discount a customer must bring a paying friend with them. This is a great way to introduce your store to new customers. Pala Spa had a promotion called “Friends Who Spa Together, Stay Together”. “Bring a friend and you both receive 20% off any spa treatment more than 50 minutes.” A promotion like this is a great way to acquire new customers.
6. Have the right value proposition. While increasing competition from Amazon is often cited as the reason mid-priced retailers like Macy’s or Lord & Taylor have struggled the main reason has to do with economics. In 1985 it took a male breadwinner in the United States 30 weeks to pay for critical expenditures like housing, healthcare, transportation and education. By 2018 it took 53 weeks.
Consumers simply have less money to spend. And when they do make a purchase they are choosing lower priced retailers over mid-tier retailers out of necessity. Some of the most successful retailers over the past decade are Five Below, Dollar General, Walmart and Dollar Tree. These are all lower priced retailers.
Determining what to price your products at is one of the most critical decisions you will make. While higher priced retailers like Apple and lululemon are performing well the pendulum is swinging in the direction of the lower end. Who is one of the largest retailers in the world? Walmart is, for a reason. You many not have Walmart’s pricing power but pricing your products competitively could be the key to acquiring new customers.
7. Invest in your employees. Have you ever wondered why your Starbucks’ Barista is always so happy while he is serving you a tall Frappuccino? Starbucks’ employees are more engaged and happier compared to employees at many retailers. And it is not a confidence. Starbucks is a progressive employer.
In 1991 Starbucks was the first private employer in the United States to offer both full and part time eligible employees stock options. That means the happier the customer the fatter the employee’s pocket book. Stock options are not the only perk. Since 1988, health care has been offered to all full time and part time Starbucks’ employees including coverage for their partners. Starbucks also offers a 100% tuition coverage for a first-time bachelor’s degree through Arizona State University’s online program. A champion of diversity, in 2018 Starbucks achieved gender and race pay equity for all staff in the United States. This is a feat that not many companies can say they have achieved.
When you make a meaningful investment in your employees they invest in you. Starbucks has lower employee turnover than many of its competitors allowing it to develop relationships with its customers that have a deeper degree of intimacy. Happy employees, equals happy customers which translates into more sales.
8. Provide excellent customer service. Sounds like a cliché doesn’t it? When was the last time a sales associate gave you a best in class experience, something you will always remember? I bet it doesn’t happen often. So how can you move your business towards getting known for your customer service? Taking a look at a customer service leader like Trader Joe’s can help.
Trader Joe’s was ranked as having the highest customer satisfaction rating in the grocery industry in 2023 by the American Customer Satisfaction Index. Like most companies known for providing excellent customer service, Trader Joe’s employees are empowered to do what it takes to ensure customers are happy. Mark Gardiner, author of the book Build a Brand Like Trader Joe’s, took a job as an entry level employee at Trader Joe’s for a year to gain insight into why the retailer is so successful. Reflecting on his experience he said: “even as a new crew member (the lowest-level employee) I was empowered to do almost anything for a customer. Spend 15 minutes in the storeroom looking for a $5 item at a customer’s request? No problem. If I encountered a customer who seemed to be having a bad day, I could give her a bouquet of flowers on my own initiative. Anytime a customer asked, “what are these like?” I could open a package and give them a free sample.”
If Trader Joe’s can excel in this area so can you. Often retailers believe they are offering great service while their customers think otherwise. Why not hire someone to conduct an independent audit of your customer service? You may be surprised by the results. People usually don’t keep great things to themselves. If you think about how you selected your real estate agent or general contractor it was likely based on a recommendation from a friend who raved about the service. Your service is one the keys to your success.
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9. Get your hands dirty and make it personal. If you are starting out and trying to acquire new customers for the first time its often best to market your products and services to people you know. When thinking about who to contact first Rand Fishkin the co-founder of SEO company Moz, provides a useful framework for deciding who to reach out to and in what order:
Sometimes we overlook people we know when trying to build our initial customer base. We only focus on the largest targets when there might be fans right under our own nose. Don’t underestimate the power of your close contacts after all those contacts might not only become customers but are in a great position to recommend your product and service directly to others.
10. Sell a great product. Retail 101: have the right products and services. Do you really have what the customer wants? If you are offering a me-too product is it really better than the competition? The better your product is the less you have to rely on marketing and discounting because over time it will generate positive word of mouth. In the book Contagious author Jonah Berger writes that "word of mouth is the primary factor behind 20% to 50% of all purchasing decisions." You are not going to recommend a product to your best friend that she won’t like.
Do you ever wonder why people pay over $100 to buy lululemon leggings when competitors such as Nike sell leggings at a lower price point? lululemon’s success is not by accident. Those tights people wear from day to night are backed by years of innovation. Some of lululemon’s technically innovative and trademarked materials include Luon, Nulu, Boolux, and Luxtreme. The technological advances lululemon has made in clothing makes it harder for competitors to emulate its success. It also enables lululemon to charge higher prices and lululemon’s clothing rarely goes on sale.
If you are starting out and are struggling to acquire more customers take another look at your offering. Is it really up to par? It can take many starts and missteps before landing on a killer product. Look at Chick-fil-A. Chick-fil A generates more sales per store than any other fast food restaurant chain in the United States. Its best-selling original chicken sandwich that customers love took four years to create. If you don’t have a great product everything else (ie. sales and marketing) is much more difficult to execute.
11. Offer a “try before you buy” program. Many direct to consumer retailers offer what is known as “try before you buy” programs where customers are sent merchandise without having to pay for it upfront. Customers shopping with ThirdLove, a mostly online bra and underwear retailer, start the try before you buy shopping process by taking a bra fit finder quiz in the brand’s online fitting room. The quiz provides a bra recommendation in as little as two minutes. Based on the quiz, customers can choose to have the recommended bra sent to them. Returns and exchanges are free.
Speaking about the launch of the program, in 2019 ThirdLove co-founder Heidi Zak said: "we had an amazing product, but how would we get women to actually take that chance and try the first bra? 75% of customers who tried the try before you buy program ended up becoming ThirdLove customers.” Zak has also said: "[the program] allowed a woman to take a risk on a brand she hadn't heard of and that truly changed the course of our business. It made us profitable.”
12. Pound the pavement. To drum up interest in Brooklinen, a bedding company, when the founders were starting out they didn’t sit back and take a passive approach or invest in a lot of expensive PR. Instead they got into a rented van and drove around New York City dropping off samples of their bedsheets to 60 bloggers and other people in the media industry. They included a handwritten note with each package of bedsheets explaining that they are a husband and wife team and how they wanted to change the bedding industry. “It was well-received, and we made a quarter million dollars in the first month,” said Booklinen co-founder Rich Fulop. “Our Kickstarter backers were very happy about that and made lots of referrals for us. Then we started growing our social presence and email marketing.”
13. Sell food. Have you ever gone to IKEA and stopped in the food court to have a quick meal? If you have then you are among the many people who have helped IKEA to be named the world’s sixth largest food chain in 2019. Along the way IKEA has sold millions of pieces of furniture often from the very people that were just stopping in to have a plate of Swedish meatballs.
The beauty of selling food or grocery items is that the category drives frequent visits. You have to eat, you don’t have to buy a discretionary item. You may not have room for a food court in your store but having a juice bar or coffee shop might be beneficial.
14. Put on events or teach classes. Despite operating in the age of Amazon, many independent bookstores which survived did so by putting on events targeted at the local community. Some independent bookstores have as many as 500 events per year. These events include author discussions and book signings, speed dating, trivia nights, happy hours, craft writing discussions, calligraphy writing workshops and story time for kids.
While brands like Nike and Adidas have built their brands through big name endorsements, think Serena Williams or Michael Jordan for Nike, lululemon has largely marketed its brand via word of mouth. It does this through its free events but also through relationships with brand ambassadors. Brand ambassadors are essentially influencers such as local yoga instructors. These ambassadors teach yoga classes for free on lululemon’s behalf and the free classes draw in existing and new customers. In exchange for teaching classes ambassadors get perks like free clothing. These classes are often taught in lululemon stores making it easier to convert the people attending the classes into paying customers.
15. Be patient. Most businesses worth drooling over are not built overnight. This is difficult to see as the media tends to focus on “overnight” successes. But take Shopify, it generated revenue of $8,000 in the October of its first year in business in 2006. Fast forward 16 years after launch and Shopify made $61 billion in gross merchandise volume in 2022 and is one of the largest companies in Canada by market cap. In Nike’s first year in business in 1964 it made $8,000 not bad for a company that generated $46.7 billion in 2022.
Bill Gates once said: "we always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” The journey to success is a marathon not a sprint. Don’t wear yourself out or beat yourself up in round one, success takes time.