Business Killer 1: Big Box Retailers and Chain Restaurants (sort of)
Posted by Ryan Volberg at August 8, 2007 2:30 PM
How to Reach your 20%
Provided that you've been building a good relationship with your customers over the years, and have not engaged in price gouging since you were the only option within an hour's drive, you should be able to keep your most profitable customers.
Your personal relationship and even your own personality (and those of key staff) are your most powerful weapons in your fight for survival and profitability. But you’ll need to use them correctly in order to have the most impact. Applying any tool in a haphazard way won’t give the best results. So what’s the plan?
Here are four steps to making your business more competitive. These are four steps that a big box retailer will have nearly ZERO ability to execute. It simply doesn't fit with who they are. Their entire culture is based on being a no-surprises carbon copy of the same store in two states over. And that's okay; there are plenty of customers for every great business.
1. Investigate your business like there’s money hidden in it (because there is)
Look over the last month's receipts and note 4 things:
- Which customers spend the most money in a single transaction?
- Which customers spend the most money over a month?
- Which customers are buying unique or hard to find items?
- Which customers are the most knowledgeable about your offering?
This task assumes that you've kept at least half decent records about your customer base. A cash register tape might not be enough. While a full CRM (Customer Relationship Management) system is probably overkill for most restaurants and retailers, you can use a simple log book to track events in your business. Train your staff to identify these four groups of people and take notes on their comments and purchases.
2. Tailor your offering like your customer doesn't care about anything else (because they don't)
Once you've identified some special customers, move more of your offerings to those items or complementary items. For example, if you own a toy and hobby store, and note that you have a strong customer base in the area of radio controlled cars; broaden your selection of those items. At the same time, you'll want to add more accessories that customers can purchase to modify existing items. In addition, you might want to consider adding more radio controlled airplanes, helicopters and boats to your line. Big box retailer and large restaurant chains can't compete with this. With few exceptions, they get shipped the same products that every other location in the country gets.
3. Service them like your business depends on it (because it does)
Large chain restaurants and retailers spend countless hours training their management and staff to act in a way that many business owners find completely natural. Walk into a big box and ask for information about an item that is not one of their main lines. For example, a large hardware store might have some people with decent knowledge about power tools, but if you ask them about pest control, they'll probably just point you to the aisle and leave you to fend for yourself. The business owner that really cares about each customer gets into a conversation about the pest control issue. During the conversation they discover that the homeowner is planning on building an addition. The business owner recommends not only a pest control solution, but also a local architect, a local renovation company and a new flooring solution. Based on that experience, where would you shop?
4. Follow up like you're on a life or death mission (because you are)
Once the sale is made, large companies have no ability to customize future offerings. Do you remember the customer's last purchase? Is there a possibility for additional sales because of that? If a customer booked their Christmas party with you, what about their next corporate event? Can you help them plan a mid-summer golf tournament? Or a fall customer appreciation night? Put yourself in their place and add value to their business by making it easy for them to look good and be successful. Your large chain competitors will be left wondering why your restaurant is busy on a Monday night while theirs is half empty.
When the big box retailer or restaurant park moves into your area, view it as an opportunity to become even better at the things you're already pretty good at. In many cases, you'll find that those are the most interesting and profitable parts of your business anyway. All of us deal with the same reality. Find a niche. Or die.
Ryan Volberg is the CEO of Vivonet, a company dedicated to ensuring retail and restaurant success.
 Category: Survival Tips
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