Price inflation has been one of the most commonly discussed topics in 2022. We routinely get questions about trying to manage pricing in commodity markets in this environment. Too often we see business owners who feel they must hold pricing even as costs rise because someone else has the same service or product. This fallacy can cause serious harm to your business and takes your focus away from more important issues at hand. It often leads to finding ways to cut material costs or eliminate important interactions with your customers.
If not pricing, then what?
The restaurant industry is one that many small businesses can relate to and has also dealt with this challenge, some far better than others. Similar to many small to mid-size businesses, the restaurant market is segmented from narrow products (beverages, breakfast) to narrow service experience (quick serve or take out only) to restaurants with a broad range of products and services. Over the last three years, we have seen some restaurants excel while others languish, often in the same product or service category. What creates that difference, and how can you learn from it?
The customer experience is the quickest and easiest way to help set yourself apart in any market, but especially one with commodity tendencies. We all know that you can get coffee at a donut shop, gas station, or QSR for far less than your $4-6 Starbucks cup. While some will claim the coffee itself is far better, what really sets Starbucks apart is its customer experience. Everything about the brand, the location, and your beginning-to-end experience make you feel a part of a community. This creates loyal advocates who will find other ways to save $25 a week when budgets get tight.
The Chick-fil-A difference
Throughout the pandemic, CFA widened the gap with its competitors. While many fast food and QSRs struggled with service and keeping employees, CFA’s model kept stores well-staffed and went to great lengths to upgrade their technology quickly to provide more and faster ordering options to handle the increased demand. Over the past six months, they’ve had a few price increases as poultry prices have risen and surely wages have gone up. It has not seemed to slow down the demand or the positive attitude their employees exude – “My Pleasure!”
You might be wondering how this will relate to your customers and business. Surely customers may have options with businesses that don’t raise prices or cut some corners. You may also think your market is different from coffee and chicken sandwiches. That’s where I’ll disagree and could point to hundreds of brands that have created loyalty and brand advocates across many markets. When you develop a subscription plan with clients and provide a service, their biggest concerns are the quality and how you treat them. When they agreed to your product or service, they accepted your price and value. We business owners often forget that there is another cost out there besides our competitors – switching costs.
How to create a better customer experience
In service industries, so much of this revolves around the interaction of our employees with our customers. Do they look presentable and interact when appropriate? We’ve found many clients want to know a little bit about the people who take care of their properties. I have one client that throughout the course of the year uses social media and newsletters to highlight some of their employees and help make them part of the customer experience. Others will encourage leaving a personalized note on a service summary or invoice to show that little extra touch.
Similarly, we often think about marketing only as it relates to new clients. Your marketing team can also be used to create some great ideas that improve your customer experience and create more loyalty. For instance, on July 4th, we’ve encouraged lawn maintenance companies to invest in those small wooden US flags and leave them with one of your stickers or the invoice in your client’s yard the week before the holiday. In addition, if you offer plant services throughout the year, consider leaving a small plant or flower for the homeowner at Easter or Mother’s Day.
These types of tokens of appreciation show how much you value your client. They also make it far less likely for them to object when you need to raise prices. We all understand inflation, we tend to fight back when we don’t have loyalty to that product or service and figure we can find someone else who might do it better. At Rand Inc, we can survey a segment of your customer base and then help you find ways to improve your customer experience while maintaining your sales volume and margins. To learn more, reach out to me at tjobe@randinc.cc
