Aug/100
A customer database turns a good business into a great one
It is often said that many small businesses fail because they run out of cash. Put simply, when your bills exceed your income, any cash you have put aside will be eaten away until there is none left. If you have no cash to pay your employees and suppliers, it’s time to close the doors for good.
There can be a fine line between a business that is generating cash and one that is burning cash rapidly. For a restaurant, one or two percent gross margin on each dish and each drink can easily be enough to make the difference. As can a few more customers each day or one more pound spent, on average, by each customer.
Similarly, the differences between a business that is breaking even and one that is making a healthy profit can be subtle. Once a restaurant is making enough money to pay the overheads, every additional pound taken, minus the cost of ingredients and tax, goes straight into your pocket. Five more customers a day can easily put another £20,000 each year in your pocket.
£20,000 with just five more customers each day! That is probably less than one percent of the people who have visited your restaurant in the last month alone. And there is a simple way to find those extra customers without spending more cash on advertising – build a customer database. Capture the contact details of every customer and reach out to them regularly with a compelling reason to come back in.
Considering the financial benefits, why do so few business owners bother to build a database? Perhaps because it is a long term strategy, which will not start to pay off until a good database has been built. If you are one of those owners, remember that there is only so much you can do to reduce costs in your business. And keep in mind that customer communication is something that your competitors may be doing.
You are paying rent so that you can invite people into your shop or restaurant. Letting them leave without establishing a way to keep in touch is one way to eventually prevent you from being able to afford that rent.
Aug/101
Restaurants lead the way online
Restaurants, above most other types of local business, have the greatest opportunity to acquire new customers through online marketing. It is not only that they are catered for by a number of online companies offering to bring them new diners. It is also that people like to research online before deciding where to eat. Your job, of course, is to make sure that the people searching in your area decide to book your restaurant.
Having recently completed a review of the various services available to bring new diners to restaurants, I’m unable to think of a good reason why a restaurant should be without one of these.
Take Livebookings as an example. They work with over 500 websites, such as Yell.com and TimeOut, where diners go to search for restaurants. That is a total of 500 million potential diners worldwide. As the UK is a stronghold for Livebookings, a significant number of those 500 million will be potential customers of yours. If you use Livebookings, any of those people can book a table at your restaurant with a couple of clicks of their mouse. And you get an online booking facility for your own website too. The price for access to these new diners? A small fee for each new customer they bring to you.
Once you have those new diners in your restaurant, it is down to you to capture their contact details, particularly email and mobile phone number, so that you can entice them back in. Good food and service is not, by itself, enough. Particularly as there are almost always other good restaurants nearby. People are busy and have lots of choice. Collecting their details enables you to remind them, by email or SMS, about your restaurant and perhaps lure them back this week with a tempting offer.
Apr/100
10 questions that every local business owner should answer
1) How did your customers find out about you?
2) How old is your typical customer?
3) Where does your typical customer come from? How far? Here’s a clue: Ask for their postcodes.
4) What do your average customers do with their time? Are they married with kids? What type of jobs do they have? Here’s another clue: If you have their postcodes, you can buy this type of information.
5) How much money, on average, do your customers spend with you?
6) If you are a bar, restaurant or similar service business, how much time do your customers spend with you?
7) How often do they spend money or time with you?
8) How many of your customers refer you to their friends?
9) How many complain about you to their friends?
10) Who else do they spend money with when they could be buying from you?
Notice that these questions are all about the status quo. Now, for each question, ask yourself what, in an ideal world, you would like the answer to be. You may be surprised to find that, for at least one of these questions, you can change your business to achieve close to the ideal answer. And if you can do that, you may be surprised about the difference it makes to your bank balance.
Mar/100
You can be successful without marketing
If you have a good product or a good service, isn’t that enough to ensure customers return? To ensure that people buy from you again and become loyal fans of your business? Can’t you rely on your product or service to generate loyal custom, without having to advertise, build customer relationships, collect data and all of the hard work that goes with it?
A good product or service is necessary to ensure people return, but it is not sufficient. Why? There are two main reasons. First, you have competitors, some of whom also have a good product or service. In other words, your customers have a choice and you need to give them a reason to choose you. Second, life is busy. Most people have a lot going on. They have lots of different things competing for their attention every day. Combine this scarcity of attention with the fact that you have competition, and it becomes critical that your product or service is memorable.
Of course your product needs to be good. Without that, you have no business. But you must also find inventive ways to remind customers about you and entice them back. And you can’t do that unless you have their contact details. Who ever heard of a fan club where all the fans are anonymous?
However, all of this changes if you are exceptional. If you are outstanding, the rules are different. If your service is truly remarkable and stands out from the crowd, your customers won’t need to be enticed back. There are very few such businesses and if you are one of them, you have a terrific marketing strategy and won’t need to work so hard to be memorable. Otherwise, get to work on building that fan club!
Mar/100
Groups can harness the power of local too
If your local business is a shop, pub or restaurant, you undoubtedly compete with similar businesses in your area. A number of your competitors may belong to a group or chain of anything between a few to several thousand outlets.
Group businesses enjoy some substantial advantages over your business. For example, owing to the volumes they purchase, they get better prices from suppliers. Also, they have larger marketing budgets so can afford to entice local people in with press and radio advertising, perhaps even national press or TV. They offer predictable products and services and most people love the fact that they know exactly what to expect.
However, as an independent, you have a very powerful advantage over your group competitors. That advantage is you. You are more interested in your business than the manager of the local Starbucks or Café Rouge. You are far more motivated. You keep thinking about your business in the evening and it sometimes keeps you awake at night. You put far more energy into it. If a group could have one of you running each of their branches, they would be the most successful business in their sector.
For obvious reasons, it simply matters more to you and, crucially, it usually shows in your interactions with customers. For you it is a very personal matter that your customers are satisfied. If not, you will feel their discomfort in your pocket sooner or later. For you it is natural to remember your customers’ faces and names, their likes and dislikes. Most chain store managers don’t think this way.
And this is the best thing you have going for you when it comes to beating large competitors. You have the motivation and energy to take every person that walks into your store and work to convert them into a loyal customer. Today, most groups and chains underestimate the power of building local audiences, choosing instead to build central marketing databases where consumers interact with the HQ of Restaurant Group PLC rather than their local branch or store.
However, new technology is making it easier for groups and chains to build local fan bases quickly and inexpensively. They will never replicate the dedication of an owner at the branch level, but it is becoming easier for them to leverage their local premises and staff to convert footfall into loyalty more quickly. If they wake up to the power of local, your fight will become a little more difficult.
Feb/100
Try not to be perfect
Sometimes it can feel like your local business simply isn’t progressing. Even though you are putting in long hours and trying to do everything right, things just aren’t going your way.
Your manager forgets to put the new menu out even though you reminded him twice. Your supplier shows up late, leaving you short of stock for a whole day. A staff member calls in sick on a busy shift. You constantly interview people just in case someone leaves at short notice, but half the time, interviewees don’t show.
Problems such as these make you feel like your hard work is getting you nowhere. It seems that, no matter how much you do, things will never be exactly as they should.
And, in a way, you are right to feel this way. Things will never be exactly as they should. Things will never be perfect. There will always be at least one small thing that goes wrong. If you are striving for perfection, you will never quite get there.
But the thing about striving for perfection is that your competitors will never quite get there either. They have many of the same problems as you do. Like you, they also have to work hard to make their business almost perfect. And you can bet that they often feel like pulling their hair out too.
So when times are tough and it feels like things aren’t working out how you planned, just remember, you don’t need to be perfect. You just need to be better than your competitors.
Jan/100
Hope is not a strategy
Just as you were reeling from the blow dealt to your local book shop by the internet, the hammering your grocery shop received when Tesco opened nearby or the kicking your pub was dealt at the hands of the smoking ban, along came the credit crunch. In case you haven’t noticed, it’s no longer good enough just to open the doors and wait for customers to hand over their cash. There is just too much competition and not enough custom to go around.
It’s clear that you need to find new customers and it’s tempting to start placing ads in your local newspaper or paying for prominence in a directory such as Yell. The problem with doing those things is that you are taking the easy option. You are giving your money to the local paper and saying “here’s some cash, now go find me some customers”. Then you are sitting back and hoping.
There is nothing wrong with paying these companies to look for new customers amongst their audience, so long as you are convinced that the money is well spent. The question is, do you want to rely on them to make you a success?
The alternative is to realise that you can make yourself a success. Look around you. Do you have a shop? Do you have footfall? Do you have a van? Do you have a list of customers that have bought from you in the past? Then, you have your own audience. If you have not already collected their personal details, now is the time to start.
Why should they give you their details or tell you their preferences? How can you entice them in to your business, again and again? These are questions that you will need to answer. Once you have answered them well, you will not need to hope for success.
Dec/090
The problem with doing nothing
There are many reasons why you should do nothing.
- I can’t use a discount to attract new customers because my existing customers will be upset.
- I can’t change my supplier because it will mean rewriting our menu.
- I can’t send marketing emails or SMSs to my customers because they might find it irritating.
Your job, if you wish to make a difference and grow, is this. Put to one side your comfort with the way thing are today. Then, find reasons why these activities do make sense. Not only why they make sense to you, but also to your staff and customers.
- Create a separate promotion exclusively for your existing customers. Perhaps an incentive to try a new or premium service.
- If you can’t easily change your menu, you are wide open to local competitors who might change their menus daily. Do yourself, your staff and your customers a favour by redesigning your menus to be more flexible.
- Get your customers’ permission to send them messages and make sure you send messages that are relevant and compelling.
The problem with doing nothing is that you are learning nothing. You’re not finding out what works and what doesn’t. The problem with learning nothing is that you are not moving towards the situation where your hard work generates more money.
Nov/090
What to do when you find a gap in your local market
Marketing is not only about reaching prospects and customers and increasing sales. There’s a big chunk of marketing work to be done way before a local business opens. There are a number of questions to be answered. Is there a market? How big is it? Is there a gap?
Many local business people set out to exploit a gap in their local market. We have all come across such businesses. The fine-dining restaurant that aims to provide a unique gastronomic experience to a provincial population; the cocktail bar that intends to bring a uniquely sophisticated and cosmopolitan environment to the inhabitants of a suburban high street; the sandwich bar with a delivery service.
What is not always obvious at first, though, is that the gap needs to be huge – in fact, truly profound. Otherwise the light will not be worth the candle.
A gap is not, in itself, enough to make you money. Yes, when you fill a gap, you create something different and remarkable. But that is worth nothing unless enough people see it as remarkable enough to start spending enough of their money with you.
Are there a sufficient number of people with sufficient disposable income in your provincial town to fill your fine-dining restaurant not only at the weekends, but also during the week? Or will it crumple under the pressure of having to pay staff to serve a room that is almost empty from Monday to Thursday? Will your business really be so different that it will occupy its own category in the local market? Or will you find yourself competing with several other similar businesses in your local area, constantly fighting to attract customers, continually treading water?
Often, when a market gap exists and is exploited with skill such that a new, remarkable product or service is created, new demand is created at the same time. In other words, people that would not have previously bought that type of product or service suddenly appear on the scene. For an example of this, think of the huge increase in UK red wine consumption after the less stuffy, more accessible new world wines entered the UK. People that would not have bought red wine before suddenly started to do so. There had been a gap in the market for a more accessible red wine and that gap was exploited with skill.
So, before you invest your life savings into exploiting a gap in your local market, ask yourself if you can create new demand. If not, whose customers are you going to poach and how sure are you that they will be game?
Nov/090
Asking for Trouble
For the last few years, I’ve been wondering when my local butcher would improve the appearance of his shop. Perhaps make the outside look more welcoming and the inside a little less jaded. Recently I got my answer. Straight after a new, smarter butcher opened a few doors away.
Why did he leave it so long? What kind of impression did it give to locals and passers-by? I would imagine that all but his most committed customers would have migrated to the nearest other butcher (about 2 miles away) ages ago.
Perhaps the butcher saw no need for change. Maybe he was happy with the level of business he did and comfortable with the way things were.
But recently a new butcher opened literally a few doors away. It looked smart, welcoming and fresh. I can’t think why someone would pick the old one over the new one. There’s no doubt that locals were happily lured away from the old, neglected business. And how many of those customers do you think were lost for good?
The old butcher had the market cornered for years. He had no competitor in the town centre. At some point in the past, his business would have looked welcoming and fresh too. Neglecting to improve and change encourages existing customers to drift and deters potential new customers.
Crucially, this also makes your area look very inviting to hungry competitors. They think to themselves “all I need to do is be better than that jaded business a few doors away”.
For a local business, there are few better ways of inviting trouble.
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