Business of Gaming Retail
High Traffic Count
When you select your store's location, traffic count is a factor. Pedestrian traffic is another. The visibility of your signs is another. If all of these work together in your favor, you'll have plenty of opportunity to greet potential new customers as they enter the door. Engage them in some way (like a 5-minute game demo), and you improve their experience while in your store.These things are expensive. Property managers know the value of high traffic count, and they charge you for it. Big signs are pricey. Most places with high pedestrian traffic—like malls—are expensive.
Paid Advertising
One traditional way to gain new customers is to advertise your products or service through traditional media like TV or radio. The main problem with this method for most stores is that the rate of return is too small for the math to work out. There are so few gamers or potential gamers in the overall population that “the revenue each new customers generates” times “the number of responses you get” is rarely greater than “the amount you spent in gaining them.”I offered EDDM Marketing as one option that might throw the odds in your favor by dropping the acquisition cost of each new customer to a potentially manageable level. You could do well by making this method your main channel for bringing in new customers, especially if you offer product lines with a broader-than-normal appeal, like puzzles, family board games, or video games. That will increase your rate of return and make the math work more in your favor.
One of the problems with advertising is that most ads are obvious ads (not the best ads, but that's a different topic). They have little impact because they're blatant requests for your money. They turn people off more than they turn people on. Ads announce themselves. When you're watching TV and the show stops, the screen grows black, and then up comes another image with heightened sound, you know it's a commercial. Somebody is trying to sell you something, and your mind automatically starts to reject it.
Another inherent property of the ad exacerbates this problem. The ad is coming from you. You can hardly be objective about the qualities of your own store, so people expect that ads exaggerate or lie about the properties you're advertising, whether it's cost, selection, or whatever.
An Alternative
What if you had somebody with unlimited time on their hands, great enthusiasm for your store, and a third-party point of view. In other words, if it wasn't you telling potential customers about how great your stores is, but a friend of theirs telling them how great your store is?You have that.
Customers can be your best evangelists. My argument (and the final point of this topic zig-zagging) is that your existing customer base is the best potential marketing tool you have. And I have yet to see a store maximize its potential.
Customer referral isn't new. In fact, it's been the subject of a lot of studies, some of which you can find with a quick Google search. You have some choices to make when implementing this strategy.
Who will you target?
Everyone? That's the obvious answer, but it's not necessarily the best answer. Your biggest champions will share their enthusiasm without your assistance. It's the people who don't currently tell all their friends about you who stand to increase their contribution the most.
How do you advertise the program?
Channels like e-mail and Facebook are cheap or free. Direct mail is more expensive, but it yields a higher rate of return. Enough to justify the cost? Maybe. I'd try the cheaper options first.
How will you encourage participation?
Another obvious answer is a discount for the referring customer. Give him a flat dollar credit, a discount percentage on his next purchase, or a specific item. It's the real-world equivalent of saying “Like our page and we'll give you something for free.”Make a personal connection with the referrer, too. Thank him with an e-mail or a phone call. If he comes into the store soon, you can do it personally, but don't take longer than a week to follow up.
How will you handle customer interaction with the referral?
Walk around the counter and shake his hand. “Hi, I'm glad to meet you.” Meet, not ask you to spend money here. Have the mindset that he's not a new customer; he's a new friend. Further emphasize the relationship with your language.“Any friend of Bob's is a friend of mine. Welcome to my home.” Home, not store.Expect that this person will never come back again, but leave such an impression on him that anytime somebody mentions your store, he gushes about what a great guy you are. Make him feel welcome, and he'll return. Sell him something, and he'll come back to buy something else. He'll also feel like his trip to see you was justified. Don't be afraid that closing a sale will damage your new relationship.
Be prepared to answer questions he might have about what you do or how things work. As always, train your crew on these techniques, too.
How much does all this cost?
That's the best part. If you use free options for promoting the program and offer a limited-value incentive to your customers, the acquisition cost per customer is very low. The best part is that there's no risk. If you put out a poor ad, you could waste your entire direct mail campaign. With the referral program, you don't spend money until new customers make purchases. There's no waste.If your average sale is $25 and you spend $5 in incentives, you still make out fine with just the one purchase. If you convert that new customer into a long-term gamer instead of just a one-time buyer, you stand to do very well.
