Get your ducks lined up for those refunds
By Gordon Hecht, YSN Contributor
There was a time, not so long ago, that we only had to remember four seasons (Frankie Valli notwithstanding).
Besides the ongoing argument between Bugs Bunny and Daffy Duck over whether it was duck season or wabbit season, we now have vacation season, holiday season, busy season, slow season, indoor season, and outdoor season. All of those can affect your business in a positive or negative way.
Now that Christmas season is behind us, the next major season is tax season. Starting Jan. 31 (last day to receive W-2 forms) and ending April 15 (last day to file 1040s), this used to be a time that We the People feared, but now look forward to. Tax season used to end with us writing a big check; now it’s the time that many shoppers get their biggest cash influx of the year.
Prior to 1943 there was no payroll tax withholding program. Workers got their full pay every week and were responsible for putting some aside to pay their federal income tax. April 15 was a dreaded day, especially if you didn’t have the bucks to pay up. Uncle Sam and the IRS tend to be very impatient people when you owe them money. Today, most people have more money withheld than taxes they owe, causing a large refund windfall.
With the wide use of E-File many of your shoppers will soon know the amount of their refund, and are willing to spend it even before they get it. It’s important to train your sales team to be ready to capitalize on this early-year opportunity. Create terms and programs that make it easy for these pre-shoppers to make their buying decisions now.
One effective program is an in-store promotion of “$99 starts any order.” While not a true layaway program, the $99 deposit allows your shopper to secure today’s pricing even though they haven’t gotten the refund to pay in full. Once they receive their refund, they can pay off their order and you can order the merchandise or deliver it if it’s in stock.
While waiting for their ship to land, there is always a chance that your shopper will want to cancel. Be gracious, take your lumps, pay ’em back, and move on.
Many stores offer a tax refund bonus program. Let your shopper know that their refund is worth 10 percent more in your shop. If they’re getting $1,000 back from Uncle Sam, give them $1,100 in merchandise from your store. In case you can’t find your calculator, that’s a 9-percent discount. How can you verify the amount of their refund? It’s simple, you can’t! Take them at their word; the more your shopper exaggerates, the bigger the sales ticket amount.
Sometimes the refund is just not enough. You’ll see shoppers getting $1,000 to $1,500 back who want to buy $2,000 in merchandise. They will hold up on the purchase or trade down because they only wanted to spend the amount of their refund. This is a golden opportunity to introduce zero-percent financing and put more money back in their pockets. For instance, take the scenario of a shopper with a $1,500 refund who selects $2,000 in products and is ready to depart your retail palace. Suggest they use $1,000 of their refund as a down payment and then pay $83 a month for 12 months with no interest. They can take the remaining $500 of their refund and waste it on frivolous things like gasoline, bread, eggs, and milk.
Big refunds lead to big purchases. Understand the opportunities and the roadblocks, create the solutions, and rehearse them with your sales team. Make it a part of the retail presentation and tax season could be your biggest season.
Gordon Hecht is a business growth and development consultant to the retail home furnishings industry and a regular contributor to YSN. You can reach him at Gordon.Hecht@aol.com.