Great topic--a subject close to my heart!!!
I would hire people that knew how to at least crochet and knit, and part of the condition for employment would be that they [color=red][u]MUST[/u][/color] like working with people. That means greeting people with a smile and a "hello" when they come in. To me, that's a big part of the overall first impression of a "friendly" LYS--whether you're ignored or your presence is acknowledged. If a new customer feels a store is "clique-ish", they may not want to return (I know I don't want to come back). It's great to acknowledge return customers and have a friendly repoire, but I think sometimes stores can ignore the new customer...it's like they're "too much work" or something. That can make a LYS feel cold and snobby.
Customer service is why people keep coming back, even if your prices may even be a bit higher than somewhere else. That means (besides a friendly work staff), providing things at no charge, which may include helping someone to fix a mistake, rolling a hank into a ball, and maybe offering a free class here or there. When you give excellent customer service, people will ALWAYS come back, and best of all, they'll recommend a friend (or two!). Offering classes like a "mother/daughter" knitting class is fun--my LYS offers this and although I haven't been able to take advantage of it, I'd LOVE to do it and I think it's a GREAT idea.
Offering some classes on things other than knitting might be a good way to promote knitting--say you offer classes on spinning and crocheting (and personally, IMHO, I think that LYS should offer classes with at least crocheting in addition to knitting). You might have someone that is taking those classes show an interest in learning how to knit if they don't already know how.
Keeping an "ear to the ground" and offering a variety of projects for all age groups is important. There are child and teen knitters that may appreciate something really fun and funky, adult knitters that may want to try something that's really in style or something classic; maybe you have those that just like to make things like charity gifts/prayer shawls, etc. And don't forget projects that might appeal to the male knitter, too.
I also think that offering at least one evening here or there for a "sit and knit" where knitters can come together to work on their own projects to "fellowship" as well as get help on patterns would be really nice. One LYS near me has these once a month I think and they serve lasagna during it!!! :happydance: Not very safe for messy people like me because I can see sauce stains on my knitting, but how fun does that sound??? They also have one night a month where there is knitting after store hours until midnight, which would be fun--almost like a sleepover!
How about sales and discount coupons? I base many of my projects off of what is on sale at Michael's, Hobby Lobby, or Joann's (both yarn and needles) during the week and if there's a coupon available. At my LYS, there never seems to be a sale on anything, so I just don't go. But because I get a 40% off coupon at Hobby Lobby and Joann's, you can bet I will go almost every time to either of them (or both!) to buy something! Like everybody else, I'm on a budget, and I just can't afford to constantly pay full price on everything.
Keeping current with mailings would be nice. I'm on both of the LYS' mailing lists, and I never seem to get anything. :pout: Hopefully, the LYS can have a current website which includes classes, current sales, upcoming events, etc. posted on it, so if paper mailings are too costly, then at least making sure that you include a business card with every purchase (or one of those business card magnets) that has the website for the store listed on it would be a great way for at least some customers to keep in the loop with things, but again, not everybody has access to the internet, so some paper mailings would probably be necessary. I tend to prefer paper mailings too because I don't always remember to check websites regularly for things (or the websites are so outdated or lack good information that it isn't really helpful anyway), but the paper I'll stick on my fridge or in my planner where I won't forget about it.
One last thing--offering a great selection of supplies (besides yarn) is really necessary. There's only 2 LYS in my area (neither one of them are close by, either), and you wouldn't believe the tiny selection of knitting needles sizes and brands they have! It's very frustrating! You can't knit without needles! :wall: So offering a variety of needles--straights, DPN's, circulars, wood or bamboo, metal, etc.--is really important, along with other things that knitters need that they can't find in the small knitting sections of the Michael's, Hobby Lobby's, Joann's, etc.
I guess the sky is the limit for how much someone is willing to promote knitting and make it accessible to the public, but for me, superb customer service is non-negotiable...it's priority and key. No matter what else they offer, if their customer service is bad, I'll never come back. Every customer walking in the door is a potential repeat/long-term customer, and should be treated as such.