Monthly Archives: September 2018

September 12, 2018 · 8:33 am

There’s No “I” In Storm

One more bit of thinking today as Hurricane Florence approaches the Carolinas. While it’s easy to see the eye of the storm in the satellite photos, the message here on the ground is that there is no “I”. Let me explain and tell you why it’s relevant to your business as well.

Riding this thing out seems to be a communal effort here. My neighborhood has a closed Facebook group and it’s been overwhelmed with offers from neighbors offering to help one another with everything from cleaning up yard waste to clearing storm drains to fixing generators. There are constant reports of where there is bottled water or gas available to buy (both are hard to find) as stores’ stocks are replenished. In short, while everyone is looking after their own storm prep, they’re doing so with an eye to the community as a whole.

That’s something that gets lost in business sometimes. Each of us is very focused on our own success and we sometimes lose track of the whole. I don’t just mean the entire enterprise (how well is the business doing) but also of our co-workers (how well are the people doing). Too many of us are selfish. We spend time self-promoting. We try to climb over others on our way up the ladder, not recognizing that doing so creates the envy and resentment that can poison an organization.

The truth is that while of course business is competitive, at its best it’s also collaborative. You can’t succeed, either as an individual or as a business, without the trust and support of others.

We’ll get through this storm just as we did the last one. That, in part, will be due to good preparation and help from one another. As with the storms that happen in business, it’s much better than trying to ride it out alone, don’t you think?

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September 10, 2018 · 1:23 pm

Hurricane’s Comin’

I went to bed last night after watching my favorite weather forecaster give a rather dire outlook for this week. When I moved to North Carolina I opted for hurricanes over blizzards, I guess, and now it appears that one is headed right for us.

I ran out earlier to pick up a case of water bottles just in case the forecasts are accurate. The local Walmart had nary a bottle anywhere, and the long aisle of empty shelving reminded me that I wasn’t the only person who had this idea four days ahead of when this thing is supposed to pay us a visit. I’ve got lots of ice to hold the food and lots of wine to hold me so I think I’ll be fine.

On the drive home I thought to myself that it was pretty cool how everyone is going about their business and preparing. There weren’t any D batteries at Walmart either and there were lines at the gas stations I passed. People are trying, as we were constantly told in the Boy Scouts, to “be prepared.” Which leads me to today’s screed.

There is a hurricane headed for your business. It might not be on your radar yet or you may have red flags raised over your beaches, but you can rest assured that at some point a massive, devastating storm will hit you. The thing is that you need to have a disaster place in place and preparations made long before that time arrives. Was Chipotle ready for the massive e. coli outbreak? It almost destroyed them and they still haven’t recovered. What if the power grid fails for whatever reason and all of your refrigerated inventory must be thrown out? What’s the plan to deal with that and are there financial plans in place to recover?

You need a crisis response team and a disaster plan. Your key players from all your relevant business functions – operations, public relations, marketing, quality assurance, legal, etc. – have to have been briefed on the plan long before it’s executed. I’ve written before about how my organization’s web servers failed after 9/11 due to a lack of dust filters that forced the shutdown of the emergency power we were careful to have at our disposal. When the crisis had passed, we rewrote the disaster plan to account for yet another “just in case.”

Hurricanes happen. The question isn’t how to prevent hurricanes but how best to prepare and recover from any damage they cause when they do. I’m ready for this one. Are you?

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September 7, 2018 · 12:55 pm

The Great Customer Gulf

Foodie Friday is here at last and with it comes some great information from Earnest Research. My data tells me that screeds about research don’t score particularly well with many of you but I think what the study I’m highlighting today is an excellent reminder of a basic business fact that pertains to the balance between keeping customers happy and attracting new customers. Read on!

What the study examined was the top 10% of various restaurants’ customers by the frequency of visit and how that compares with the average frequency. As reported by The Franchise Times, the gap can be enormous:

At McDonald’s, that top 10 percent customer went 86.5 times each year on average. That’s 309 percent more than the average customer, who went 21.1 times through the year.  Even the most frequent Starbucks customers don’t reach that. The top 10 percent of customers by frequency went 80.7 times—though they visited 374.5 percent more than the average customer who stopped in 17 times.

Earnest researchers checked in on a handful of brands for this data (see chart, right). In green are national QSR chains, orange is national fast-casual restaurants and blue represents chains that are regional but have a traditionally strong customer base. While the numbers jump around a lot, the highest frequency customers come between three and five times more than an average customer.

Your reaction to that may be a large “duh” since the Pareto Principle is probably burned into your head by now. What impressed me, however, was the size of the gap. If you factor in “average order value”, the amount of money spent by the top 10% is huge even though as it turns out they tend to spend a bit less per trip. In real terms, for example, the difference between a top customer at McDonald’s and an average one means a $708 annual value compared to the average customer’s $187.

Money spent to keep a customer happy is money well-spent. Money spent to get a customer to become a more frequent customer is even better. While there’s no question that we all have to keep adding new customers to our base, once they’re there, we need to shower them with love, great service, and incentives to grow their engagement with you. The data shows it’s true in the franchised restaurant business and I’m pretty sure it’s true of yours too.

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