How Smart Is Your Store… and Why Does It Need To Be?

Could the secrets to more effective marketing strategies
be lying right in your stores?

How well do you know your customers? I mean really know them. How often do they come in? What do they do while they are in your stores? What services do they buy? Who are the most profitable? Who are the least loyal or infrequent users?

I think you would agree that if you had the answers to these questions and many more like them, you would have a huge advantage in developing marketing strategies that would be likely to yield more productive results. The answers may not be as out of reach as you think. In fact, many of them may already be in your transaction data.

Many retailers have come to understand that the value of their transaction data lies in the ability to connect it to the customer. Not just to total daily transaction activity, or to fulfill accounting and compliance requirements, but to also be able to connect all of those transactions to the actual people who performed them – both customers and staff. Being able to connect customers to their cash register receipts is what gave birth to the dozens of loyalty card programs that offer “member-only” discounts or special offers only to registered cardholders who present their cards at checkout.  Previously anonymous grocery or general merchandise purchases at big box stores or pharmacies were now able to be connected to the actual person making the purchase.

Financial services transactions by their very nature are data-rich with details about the customer. Their name, address, phone numbers, email, physical description, signature sample, banking information and more is routinely collected as part of the onboarding process of a new customer, and then if done correctly, every transaction could, or should be associated with that person.

While all this information may have been captured by your POS or Loan Management system, have you really studied it with regard to the marketing insights that can be mined from that data? If you do, you will realize that you have a variety of customer types or segments, each with identifiable patterns of behavior. If your marketing efforts are targeted to those behavior patterns, they will be more effective in the results they achieve due to their relevance to each segments’ unique needs and behaviors. For example, how many of your customers came in to cash a check at your store and never came back again after the initial sign-up process? If you are like the typical FSC, it’s likely to be nearly half! That’s right, between 40%-50% of the consumers in a variety of FSC databases I have personally studied usually reveals there are this many one-and-done customers lurking in the database. If a marketing campaign targeting this easily identifiable segment of your customers could get just one in ten to cash one more check, you would experience a 4% to 5% gain in check- cashing fees from that effort.

What about your front-line employees? They are your salesforce. Is their proficiency ever really measured? Each signs onto the POS system at the start of their shift, and every transaction they process is associated to them. But how do they compare to each other with regard to metrics such as transactions processed per hour worked, or fee revenue generated per hour, ancillary products sold, etc. These are all easily measured Key Performance Indicators (KPIs) that can be rolled up into marketing or sales dashboards that can be reviewed at regular intervals to better manage your business. Like the old adage goes, you can’t manage what you can’t measure. All of this and more is lying in your transaction data, waiting to be put to work.

But what lies beyond the transactions? Do you know how many customers walk through your doors every day? Does everyone make a transaction? Where do they go in the store and what do they do at each of these places?
Are there self-service zones for ATMs, coin counters, copiers or other such devices? Do they use writing counters to complete applications, sign checks or perform other activities? Are there other ways to interact with
them to share product information, take surveys or solicit feedback?

Progressive retailers today are using infrared sensors to capture traffic data, product interaction, dwell times and other such activity to better understand how the customer interacts with the retail space, so that we
might better communicate with them in each of these zones and improve the overall experience of their visit … you know, that WOW moment we’ve all had at one time or another and never forget.

Armed with the intelligence of how your customers interact with your retail environment, and how that interaction ties back to their transaction behavior, you can plan very intelligent path-to-purchase strategies that
will enhance their experience with you, and more likely their loyalty as well – all while you improve your chances to sell them more per visit and increase their overall value as a customer.

I like to refer to this type of strategy as creating a “Smart Store,” that is one that can capture and, with the right tools, report critical business data back to you to help make better staffing, retail environment, advertising and
promotional decisions, resulting in increased sales. Because you see, not all marketing is about creative strategies and cool graphics. There is a science side to it as well, and when you put that to work for you, it results in marketing decisions that are fact-based, not just unproven hunches or theories.

Loyalty Programs… It’s About Customers, Not Transactions

Increasing Sales and Building Stronger Bonds with Your Customers

Are you the only game in town that offers the financial services that are available at your stores? Probably not. There are probably plenty of competitors in your stores’ neighborhoods.

Do you sell your services for less than everyone else? Also probably not.  Most services available in the alternative financial sector are either fixed by regulation or market forces.

Do you offer services that your competitors do not? Again, the answer is probably “no” for the vast majority.

How Do You Stand Out from The Competition?

It’s called “Customer Experience.” And Customer Loyalty programs are a proven way to improve the Customer Experience. According to an article in Entrepreneur magazine, Starbucks’ customer-retention program played a key role in its 26 percent rise in profit and 11 percent increase in revenue during a fiscal quarter in 2013. To keep up with major online retailers like and eBay, Best Buy increased reward points from four percent to five percent last year to motivate customers to keep coming back. This strategy, along with additional changes, has helped that company’s stock more than double since early 2013.

Can Loyalty programs be effectively used by small businesses? A joint study by BIA/Kelsey and Manta of nearly 1,000 small business owners found they now spend more than half of their time and budget focused on existing customers. The report, titled “Achieving Big Customer Loyalty in a Small Business World,” reveals that for early adopters who already have a customer Loyalty program in place, 64 percent of them report it’s been effective, meaning that it makes more money than it costs to maintain. It’s important for business owners to keep in mind that customer Loyalty isn’t just for big businesses – a well-designed program can help any size business.

Loyalty or Reward programs have been around for nearly as long as people have exchanged goods to encourage continued patronage by their customers. Consider the farmer who would throw in an extra ear of corn for his good customers. S&H Green Stamps, originating in the early 19th century, created the concept of using stamps earned as a reward and then exchanged for items of value. Today, points are often used as digital currency. This concept has its roots in the first Frequent Flyer program that earned “miles” for distance traveled on American Airlines flights, dating back to 1981.

Modern Loyalty or Rewards programs have their roots in the early 1990s and were developed as a way to create differentiation. As many retail models began to move into self-service modes, they lost personal contact with their customers. Additionally, the brands available were not usually unique to a retailer and consumers began to view products as commodities, often just seeking the store with the best price. Furthermore, advances in technology allowed savvy retailers to study purchasing trends and identify different patterns in various consumer behaviors. This allowed for segmenting customers by their purchase habits, thus resulting in the ability to design rewards for certain behaviors rather than just transactions.

Engaging Your Customers

The most important component of any Loyalty program is customer engagement. Successful programs engage customers at three levels.

First, is at the introduction. Getting the customer to join your Loyalty program is the natural first step. Why not reward them for that and give them a taste of the rewards with their first transaction? Get 500 points – just for signing up – is a strong initial engagement.

Second, use your data on customers to segment them into different groups based on their behavior. Frequent customers can be rewarded not just for their purchases but also for their dedication to your brand. Offer them rewards for new customer referrals. Infrequent customers, on the other hand, can be offered rewards for incremental visits or purchases, while monthly customers like those who have enrolled in your benefits direct deposit program can be notified when checks are available for pickup. These incentives also facilitate harvesting of email addresses or text message opt-ins for future communications.

The third way to engage may not be with communications about transactions or visits at all. It could center around “insider” information only available or released early to Reward Program Members. It could be regarding a new store opening, a new product release, a change in pricing policies or any other activity that would be of interest and make them feel special.

With today’s technologies, successful retailers can have old fashioned two-way conversations with their customers, extending the special bond created beyond just store visits. Loyalty programs are a proven method of increasing sales and building stronger bonds with your customers.

Grow Your Business with a New Marketing Plan for Existing Financial Services

Full service FSCs continue to see check cashing fee revenue in a steady decline as the consumer segment slowly migrates to electronic payments. Small dollar lenders have become extremely hampered by negative regulatory and public perception issues, as well as bank services discontinuance as a result of “Operation Choke Point.”

One bright spot in the landscape lies with small businesses.

  • There are almost 28 million small businesses in the US
  • More than 22 million are self-employed with no additional payroll / employees
  • 52% of small businesses are home based

Why not capitalize on the strengths of your organization’s check cashing skills and available capital by repositioning your services to a different market whose reason for using your solutions are slightly different … and much more lucrative.

The opportunity lies in focusing a specific marketing plan to attract small business owners and their key employees to use your retail network as an alternative to traditional business bank accounts. Using the current infrastructure with the addition of some proven strategies, systems and processes, a high volume, profitable customer segment can be tapped for a whole series of product offerings from check cashing to improve liquidity, a reloadable prepaid card for funds management, and possibly even installment credit products.

A truly successful program will incorporate these five areas. We call them the “5 Pillars of Commercial Check Cashing”:

  1. Marketing – drives leads to your business
  2. Decisioning – manages the special risks associated with this category
  3. Customer Relationship Management (CRM) – system for tracking customers and documentation
  4. Commercial Prepaid GPR Card – with special features for businesses
  5. Remote Check Cashing – to allow checks to be cashed when not in store
Marketing to Small Businesses Is A Different Game

Unlike consumers, small business operators are not as likely to just walk into your store for your services. They will need to be educated and have their pain points addressed in order to see the value of this service to them. Knowing who this customer is and how they operate differently than a conventional check cashing consumer is critical. From what industries do they come? What is the best way to reach them? Are they seeking a different customer experience than the consumer? And how do you solicit trial, enrollment and loyalty from this unique customer segment? All of these issues must factor into your strategy and should result in effective tactics to address each.

Grafico Marketing Group uses its years of experience in Business-to-Business marketing to provide a lead-generating program that is geared to reach small businesses and stimulate leads back to your retail locations. From access to targeted lists of small businesses to professionally designed sales tools to a disciplined sales process for your front line business development initiatives, the program utilizes the expertise of the industry’s only marketing firm to specialize in the alternative financial services space for over twenty years.

Big Risks, Big Rewards – Decisioning is Unique for Small Businesses

While the reasons for cashing checks payable to a small business may be similar to those of a consumer in the desire for more liquidity and flexibility that is available from a bank, these checks are really very different. Making the decision to cash a particular check is similar in key respects to any other check cashing decision – except that the verification of the ‘non-natural’ payee requires a few extra layers of diligence and documentation.

First, they are made payable to a legal entity rather than to a natural person, so the identity validation necessary to verify the legitimacy of the organization is a new step in the process. Then there is the issue of the person presenting the check. Are they authorized to cash this check, and by whose authority? Are there multiple people from the same organization that are authorized to present checks for cashing? These are all realistic considerations that have to be faced when making a decision about the risk of cashing these types of checks; not to mention that their average size is considerably higher than those typically presented by a consumer as a paycheck or benefits payment. Collecting, managing, and reviewing the requisite documentation is one key to a successful commercial program.

Joe Coleman of RiteCheck, one of the industry’s premier check cashing minds, has built a very successful Commercial Check Cashing business and has developed proven solutions to assist in the risk assessment and underwriting process to help protect your interests in taking on this new business segment. He is now sharing this opportunity as a consultant and has formed The Coleman Group to bring his success to the industry at large through his experience in building this 5 Pillars program.

Customer Relationship Management – More Than Just Transaction Tracking

Most POS systems today used to track financial services transactions are just that; devices to track transactions. Considering that they also hold a great deal of customer information makes them a valuable and necessary tool to effectively manage your business.

But try to pull some valuable information about the customers that are performing certain transaction types in marketing oriented reports, and that is a different matter altogether. The ability to segment heavy users from casual users, reward behavior with a loyalty program, or associate multiple users with a single company becomes substantially more difficult than just tracking transactions and balancing drawers at the end of a shift.

To really perform some meaningful marketing analytics, the data needs to be removed from your active transaction database – you don’t want to be running heavy analytics on your full customer data that will slow down your systems while your stores are trying to access it for live transactions. The ability to track transactions, associate multiple “pre-approved agents” of the entity authorized to cash the checks, manage returned items, manage the requisite documentation, and even consider any type of loyalty or retention programs, is all based on the ability to enhance your POS data with a more comprehensive reporting system than is currently available from most of the consumer-oriented POS solutions on the market. Further, your CRM must be able to manage the additional CTR requirements of checks cashed by an agent on behalf of an entity.

A Prepaid Card Exclusively for Businesses – Part of the Secret Sauce

A common feature of a GPR Prepaid Debit Card is that it can act like a virtual bank account for its user. But the general consumer-oriented cards cannot serve a small business effectively. A prepaid card designed for small businesses needs to be able to …

  • Be issued to a legal, non-human entity with an EIN number, not a Social Security number
  • Be able to load larger amounts of money than the typical $5,000 – $10,000 maximums
  • Be able to have multiple sub-accounts tied to the master account for use by employees
  • Have a different fee structure more in tune with the purchase patterns of businesses

While more card issuers are studying this opportunity, some more progressive ones have already introduced such a product. Supporting this program is FirstView with a GPR Prepaid card specially designed for this small business customer segment. The card can be used as is or privately branded to your specific identity or marketing program. This card provides a powerful connection to your relationship with your commercial customers and provides them with a money management tool that makes incremental revenue for you.

Then you can cash checks for your best customers … even when they’re not in your store with Remote Check Cashing!

Remote Check Cashing – it’s the buzz amongst the industry. If using a check cashing center is mostly driven by convenience as much of the research suggests, then this is the ultimate. Small business customers are often highly mobile. While some of your stores may be convenient for them from time to time, imagine their ability to cash a check with you from anywhere and deposit the funds onto your small business prepaid card. Why would they ever want to use another check cashing service if you can offer that convenience?

But it’s awful risky, right? With the casual consumer that occasionally uses your service, it sure is. But then again, this is not your casual consumer customer. You have a “thick file” or a great deal of information on file with this customer and eventually, a great track record and relationship. The small business customer is probably the least risky customer to whom this service should be offered, especially if they have to earn the ability to use it through past performance. It is the ultimate competitive differentiator creating tremendous stickiness to your best commercial customers.

The FirstView Prepaid Card that is part of this program, comes equipped with the ability to accept funds through a mobile check cashing app powered by Cachet Financial Solutions, one of the financial services industry’s leading providers of Remote Check Cashing technology.

By bringing it all together through the implementation and effective management of these 5 Pillars: Marketing, Decisioning, CRM, A Commercial GPR Prepaid Card and Remote Check Cashing we believe this approach provides the critical components for a successful Commercial Check Cashing program.

When was the last time you saw a new product or service that could make such a positive impact on your business … all while using your current skills?

Building Trust with Your Brand

Do you have a brand? I don’t mean a name or a logo, but a brand. Your brand is about the customer experience with your business, the way you differentiate your store or chain of stores from other financial service centers, the personality of your business. Everybody has a brand. It’s how they use it that makes it a successful brand or just another also ran.
One way to strategically use your brand is to create trust with your customers with it. Why is this important? Because you perform mission critical transactions with your customers. They trust that you provide them with the cash they need to manage their lives, they entrust you with considerable amounts of personal information and they trust that when they hand over their money to pay a bill or wire funds that they will get where they need to be in a timely fashion.

Also in today’s economy consumers are becoming more and more skeptical with their financial institutions. According to the 2011 Edelman Trust in U.S. Financial Services Survey, of the top factors listed by 75% or more of consumers surveyed, financial institutions came up short of expectations. For example, 91% of those surveyed indicated that Honest Communication was an important factor in the reputation of their FI, but only 67% of those consumers perceived that their bank lived up to that aspect of their relationship. Similarly, 84% said Open and Transparent Practices were important, but nearly 1 in 3 said their bank or credit Union fell short. 75% said fair and competitive prices were important, but only a little over half felt that they were provided. In these areas where financial institutions are suffering from an enormous trust deficit, financial service centers seem to excel. This may provide a rare opportunity for FSCs to not only secure their relationships with existing customers, but to reach up demographically into a whole new pool of dissatisfied bank customers.

So how do you build trust with your brand?

Create a Brand Personality – stand for something.

Whether it’s the best customer service, the cleanest stores, the most product offerings – whatever you do best – be sure to associate it with your business. Having a unique identity helps customers not only find you, but to distinguish you from all of the other FSCs in the market and to associate the things that make you different with your brand.
Use the Voice of the Customer – solicit feedback from your customers. Meet them in the lobbies, train tellers to interact with them and ask questions, address them by name and ask for their suggestions. Incorporate their comments into testimonial statements in your in-store advertising and graphics. Show happy customers in the ethnic varieties that comprise your base. Develop referral programs that reward customers for bringing in friends and family as new customers.

Recognize and Reward Loyalty – All too often consumers’ patronage today is taken for granted.

Acknowledge that you value the business your customers bring to you. Create frequency programs with incentives for cashing checks or paying bills. Offer scratch off tickets, sweepstakes entry or a free gift with purchase.  Everybody likes to get something for free, especially when it is in the form of a thank you for  your business message.

Show Respect – Focus on good customer services.

After all most banks are not, so this is an easy way to beat them at that game. Address customers by name. It’s right there in front of you, on their check, bill or other paperwork used to process a transaction. Make cross sell suggestions based on past purchases. Again, your POS system likely has their recent transaction history right there on the screen in front of the teller. And be sure to tell them what’s new. Most consumers appreciate that.

It’s really very simple to build trust. Do the things listed here and customers will believe that you really do have their best interest at heart. Trust is the bedrock of every brand. You simply have to mean what you say, say what you mean, do what you say you will do and live up to your promises. After all, wouldn’t you trust someone who did those things for you?

Technology in Marketing: More Than Social Media

Are you connected? I don’t mean as in who you know, but how you keep in touch with friends, family and most importantly how your business stays in touch with its customers.
Social Media, SMS / Text Messages, Websites, e-mail and so on are in the forefront of many discussions on the topic. It’s interesting to note that many of these are marketing tools were not even around as recently as ten year ago. So how do you keep up and how do you know what’s applicable to your business?

Before you get started, there are some basic tenets that must be followed to help you to achieve success.

Know your audience.

Understand your customer’s preferred form of communications. Today, more people are using the Internet via mobile devices than by desktop computers. Conduct some research with customers. A few brief questions to hundreds of people per can yield rich, accurate results.

Align business objectives with appropriate tools.

Different tools are better at accomplishing specific goals. For example, a text message would be effective to an existing customer reminding them that they can pay a recurring bill with you; while an interactive store directory on your website would attract new customers by providing hours, directions / map or even rate information as appropriate. Doing it in a mobile format would be even better, since it is estimated that over half of all local searches are done with a mobile device. Define who you want to reach, how you want to accomplish it and what metrics will result in success.

Think beyond advertising and promotion.

All too often, it’s easy to think of marketing only in terms of advertising or promotion and not as the strategic business tool it really is. Decisions regarding product offerings, go-to-market strategies and customer relationship management are just a few of the areas that will play crucial roles in your business’ future. The traditional retail model for financial services is still a viable distribution channel, but is in the process of being redefined to meet market changes. To evolve, in fact to survive it is crucial to look at marketing through a new set of eyes and be aware of the various tools available to you.

Some practical thoughts about a few strategies that are being effectively utilized by industry thought leaders include:

Websites – both informational and transactional.

Informational websites are essentially electronic brochures with the ability to communicate everything about your business. They have essentially replaced yellow pages directory advertising for many retailers since so much more information can be shared for so much less cost.  Many providers of retail short-term credit are also finding that by adding a website to their delivery channel, they are not cannibalizing their store traffic, but complimenting it by attracting new customers from beyond their traditional trade areas or from people not comfortable using financial services centers. As capital requirements are declining due to declining check counts, consider re-allocating that capital to small short-term loans like payday advances, lines of credit, title loans or even installment products.

Text Messaging

In the past five years, the CTIA, the International Trade Association of the Wireless Industry – reported that the number of SMS or text messages grew from about 159 billion per year in 2006 to more than 2.3 trillion per year by the end of 2011 – a 1,450% Increase! This is truly becoming a consumer’s preferred choice of communications.  But they are not seeking overt advertising messages, but an optional way to communicate and do business with you.  Payment reminders, transaction tracking on their prepaid debit cards, EBT payment alerts … these are the types of activities consumers are seeking that may drive them to your stores better than any advertising message.


Yet another opportunity to connect with your customers beyond their visits to your stores. Again, avoid being overtly promotional as people do not want to subscribe to advertisements. But information about new product offerings, coupons for services, featured events or activities, offers to subscribe to other services like signing up for text messages or liking your Facebook page, these are all excellent ways to use email communications and nurture an ongoing relationship with your customers.

If you are not sure where to start, don’t be afraid to consult with a professional.  A small investment in an education on your options could save you considerably compared to a trial and error process.  Attending conferences, national and local, provide opportunities to attend workshops or meet with vendors that are experts in their fields. And of course the Internet itself is an incredible research resource for learning about various technologies and strategies. However you choose to get started is less important than getting started. Because in today’s world, if you’re not connected with your customers, someone else will.

The Silver Bullet & The Next Big Product

The world is changing rapidly. How many times have you heard that adage?

For anyone over the age of 40 that seems like an obvious statement. We’ve seen men land on the moon. Computers become powerful miniature devices that we cannot live without. Cell phones were originally envisioned as Dick Tracy’s wristwatch or Maxwell Smart’s shoe.

In the financial services world there are also changes occurring that no one ever thought would happen. Futurists and science fiction writers predicted the day when we would be a cashless society – and we all laughed.  And while we may not see a cashless society in our lifetime, there is no doubt that electronic payments have rapidly changed the face of our industry. In the last ten years alone we have seen the introduction of small dollar, short-term loans change the face of the industry. We have seen the introduction of prepaid debit cards go from something that consumers did not understand to a device that is now estimated to be in the hands of 6 billion users who loaded more than $140 billion according to a recent Federal Reserve study. The study also indicated that this was the smallest, but fastest growing payment category, up 22% from 2006 – 2009. What’s more, the amount of money loaded onto the cards is expected to reach $552 billion in 2012 from $330 million three years ago, according to the Mercator Advisory Group, a research firm. Seems like a real opportunity.

While these two items held the hope of being the next silver bullet in terms of bringing revenue and profits to an industry that has lived too long on a single product model, there are probably very few readers that could make a case for a successful business model over the next ten years based solely on either one of these products.

The alternative financial services industry is currently at a redefining crossroads. Most businesses have one or two products that comprise 85% or more of revenue. If one or heaven forbid, both of those products were to go away in the next few years, these operators would be out of business. This is an issue that I am sure keeps many of you up at night.
The real challenge is that while the under-banked population is growing in numbers, the traditional services being offered are not able to effectively capitalize on the opportunity. Additionally, new forms of competition are looking to enter the financial service space serving customers that don’t like or want to use banks. Large chain retailers like Wal-Mart and Sears Holdings have already entered the check cashing and money services arena as have several large grocery chains like Kroger and Safeway. They are all vying for the shrinking pie of check cashing. On the loan front, banks and credit unions are lurking around the fringes of this space.  They see the opportunity in the demand for short term, small dollar loans but will likely never be back in the payday advance space. Once the code is cracked on how to make a profitable product, they are highly motivated to find new revenue sources in this highly regulated and uncertain environment.

So how do you plan for the future?

How do you make sure you business is relevant to your customers five, ten or even twenty years from now?

Well one thing we do know for sure is that your customers like the services that you provide! Multiple surveys of consumers visiting and using alternative financial services centers are very happy. According to FiSCA consumer studies conducted in 2000 and 2006, customers are very happy with the quality and perceived value of doing business in financial service centers consistently scoring high satisfaction levels of 2/3 to 3/4 of consumers surveyed responding to these areas positively. Banks could only wish to have the kind of customer satisfaction ratings our industry receives, especially in the current environment.

Then how do you continue to experience the type of success that you have traditionally enjoyed with the single product models of the past? In a word: diversification.
Today’s consumer is, if nothing else, time starved. They already trust you to provide good service at a good value. The more that they can do in your stores to handle their personal business needs, the easier you will make their lives … and this will not come from a single product offering as it once did in the past.  Today you need to be the supermarket of financial services to your customers.  The more that they can accomplish in a one-stop shopping experience, the more they will continue to do business with you.
Carefully consider the mix of services you offer, balancing traffic generation with good margins. The consumers using your services have needs for a variety of services regarding their personal business. Tax preparation, auto insurance, title/tag services, cash for gold, legal document preparation, discount prescription plans, internet cafes, small business centers, cash & coin services … these are all potential opportunities that could be fit into the current retail distribution platform and reach thousands of qualified prospects daily. Even modest close ratios like 10% – 15% could result in a viable business model given the margins available with these types of services.
This consumer is also far more prepaid savvy. If you don’t have a solid prepaid debit card program in place, you will lose this consumer to direct deposit once their government benefits check, and eventually their paycheck goes away. Can you move them to a check-based direct deposit program that keeps them coming to your stores? What other services will they come to you to access?

Want to learn more about these opportunities? Be sure to attend the FiSCA Annual Conference and Exhibition where more than 100 vendors providing product and service offerings to your customers are on hand to show you their wares and how it can fit into your business model.

With the pace of change moving as rapidly as it does today, you need to look outside of the box that may have been your business model in the past. If you stand still, the market will pass you by quickly.

Figures Don’t Lie … But Liars Figure.

A prominent statistician, Carroll D. Wright once said when addressing the Convention of Commissioners of the Bureau of Statistics of Labor back in 1889: “The old saying is that ‘figures will not lie,’ but a new saying is ‘liars will figure.’ It is our duty, as practical statisticians, to prevent the liar from figuring; in other words, to prevent him from perverting the truth, in the interest of some theory he wishes to establish.”

All too often people attempt to prove a point using statistics or research figuring that numbers are factual evidence of the truth. The problem often is that many people use numerical information incorrectly, either innocently or with a motive to mislead. Numbers are manipulated all the time when trying to prove a point or win a debate, whether by deliberate misuse, negligence, or plain incompetence.

So how can factual data so often be wrong? Well, it occurs in one or both of the following areas.

First, numbers must be gathered. If they are collected incorrectly, or by someone with an agenda or bias, then the data is flawed and the conclusion can be suspect.

Second, numbers must be analyzed or interpreted. Again, this process can be done incorrectly, or misused by an individual or group. Once you learn what to look for in these two areas, you can evaluate the numerical data you encounter and rely on it only when it is objective and correct.

Here are some examples of how data collection or assumptions can impact the accuracy or objectivity of research:

Survey Structure

Marketers, politicians and the media all use statistics regularly to support points of view or to attempt to validate or disprove activities or public opinion. Problem is, if numbers are not gathered accurately or objectively, they can result in misleading conclusions.

A few things that should be considered when determining if surveys were conducted accurately are:

  1. Sample Design
    • Sample Size – if the sample number is too low, it won’t be representative of a larger population; asking just two people if they like a new product and finding that one person does doesn’t mean that 50% of all potential product users, a number that could be in the millions, arrive at the same opinion.
    • Target Population Profile – if the target population includes all adults using financial services, then selecting participants from consumers that just use financial service centers to cash a check or take a payday loan will not be representative of how the general population manages their finances
  2. Question Structure. Questions must be structured in an objective, non-threatening, non-influencing manner. Compare, “Do you think people should be allowed to borrow money at 429% annual interest rates?” to “Do you think people with limited access to short term credit should be able to decide whether or not they want to borrow money if they understand all of the fees, terms and conditions?” The second question is obviously much less biased in its approach.

Margin of Error

Remember, surveys can’t prove anything with 100% certainty unless they ask the questions to 100% of the population. Most survey results end with a statement such as “there is a margin of error of three percentage points.” What does this mean? It tells how confident the surveyors are that their results are correct; the lower the percentage or margin of error, the greater their confidence in projecting the results to the whole population being studied.

Correlation Studies

Once numbers are gathered, they must be interpreted or evaluated, and this step affords many opportunities to distort the truth. For example, researchers often do correlation studies to find out if a link exists between two sets of data. One such example is a study published by The Center For Responsible Lending (“CRL”) back in 2005 entitled “Race Matters: The Concentration of Payday Lenders in African-American Neighborhoods in North Carolina” that intended to impugn the motives of the industry to target the African-American community by correlating the number of stores located in census tracts that were heavily populated by this ethnic group. A subsequent paper critiquing this study by Thomas Lehman, Ph.D. an Associate Professor of Economics from Indiana Wesleyan University clearly demonstrated that the CRL study “… fails to consider a host of potential determinants of storefront location that go well beyond the demographic composition of the census tract in which the store is located. Thus, there are likely a number of omitted variables that may explain storefront location decisions but which were excluded from the model developed by the authors of the study.” The refutation goes on to explain many other variables that could determine store location strategies beyond racial profiles that disprove this correlation.


Statistics is simply a mathematical science that gathers information about a population so that group may be described usefully. Statistics are often used to draw conclusions and make decisions based on that information. So, what’s the problem?

In general problems with statistics are similar to those of other types of numerical data; namely, they can be gathered, analyzed, and/or interpreted incorrectly, or mishandled by someone with a bias.

For example, how many times have you read an article that implies that only poor people that are closed out of the banking system use check cashing stores? The fact is that most people use check cashing stores by choice; and as many as half of the consumers that use check cashing stores have bank accounts. While the statistics may indicate that the median incomes of those using check cashing services are below those using banks, it is not an absolute conclusion.

In summary, it is just as easy to deceive with numbers as it is with words. Surveys, studies, and statistics are conducted and interpreted by researchers who might have a bias, or simply lack the skills necessary to do their jobs properly. Therefore, it is important to evaluate numbers before accepting them as truth. Ask questions about how the information was gathered, what its margin of error is, and how meaningful it is. Does the conclusion make sense, or does it seem to distort the findings? Thinking critically about the many numbers you encounter will help you to rely only on information that is objective and accurate.

Store Design: Image Is Everything

If you were investing your hard earned dollars into purchasing advertising space, you would not place a tattered, out of date image that made you look bad into that medium, would you?  Not likely. You would want that ad to make the best statement about your business that it possibly could in order to attract new customers, create a positive image for your company and maximize your return on the investment.

Then why would you not approach the appearance of your store the same way?

Various research by a variety of organizations all seems to result in the same findings … the storefront is the number one generator of new business. In each and every survey studied, more than 50% of new customers asked how they first learned about a store where they cash their checks, acquire small loans, pay their bills or wire money indicated that it was the storefront or signage that first attracted them.

And if that is not an important enough motivator, what about the improvement to your image in the community that results from a focus on positive store appearance? In October of 2009, FiSCA launched its Store Appearance Committee that provided a set of Best Practices with the goal of improving your company’s performance and image in the communities you serve.
Customers prefer and choose retailers that provide attractive, safe, bright and welcoming environments. A customer’s first impression is developed by the exterior appearance of your property. It is reinforced by the look of the lobby and is cemented by the way your employees present themselves. These are all a reflection of your business, to your customers, your employees and the community at large.

The most convincing case for focusing on the appearance of your store is that most Financial Services Centers that have invested in aesthetic and marketing improvements to their store appearance have reported that they have experienced increases in their business. Implementing these Store Appearance Best Practices encourage better recognition of the store, appeal to new customers that may not have been comfortable doing business under previous conditions, and improve the communication of marketing messages about the various products and services you offer. Simple, low-cost improvements can yield exceptional results.