Pay What You Want

There is a new kind of restaurant that’s opened here and it’s our topic this Foodie Friday. It’s called A Place at the Table and here is the concept as reported in the local newspaper:

A Place at the Table puts its mission at the counter, inviting patrons to pay what they can afford: the suggested donation, a little extra, pay for someone else’s meal or pay one’s way through volunteering. Volunteer jobs could include sweeping, wiping tables and bringing food to guests.

It’s not fancy and it’s only open for breakfast and lunch, which of course will have the effect of keeping the total bill down anyway. In my mind, that makes it less painful for those of us who can afford it to in essence overpay. It’s an interesting business model, don’t you think? Apparently, they’re doing pretty well as well as doing a lot of good. They’re not the only ones doing this, of course.

As far back as 2014, there were many of these restaurants in business around the world. Now you might think that most people would try to eat for free but the opposite is really true. Most people tend to pay at least the prices listed on the menu and many pay more. In addition, these businesses are often supplemented by grants, donations, and free labor to offset their costs.

The restaurant business isn’t the only one where the pay what you can model is in place. Music has become another one, with several artists releasing albums and asking the public to pay them what they think it’s worth although some folks distinguish between pay what you can and pay what you want. In my mind, anyone who is willing to offer their product up for judgment and to allow the user to asses the value is operating under the same model.

We see it in software and video games. It’s even expanding to fashion and amusement parks. So here is my question for you today. How much would your typical user pay you if they were setting the price? Is it enough to cover the cost of the product? Enough for you to make a profit? Or do they find less value in what it is your offering than you’re currently charging them? If you think the last response is closer to the truth, you had better look around because it won’t be long before a competitor figures that out as well and undercuts you. If you’re already competing on price and you’re still answering with the last response, you had better spend some time on figuring out how to add value so customers will gladly pay what you’re asking.

Make sense?

Advertisements

Leave a comment

Filed under Consulting, food, Helpful Hints

Finding The Black Swan

Many centuries ago, people were convinced that there were no such things as black swans. That thinking is so old, in fact, that there are references to it in Roman literature. That thinking was disproven around 1700 when a group of explorers sighted some black swans in Australia.

Since then, the term “black swan” is used to refer to something that, as Wikipedia states:

comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight.

If you’re in business, I’m sure you’re familiar with black swans even if you’ve never called them by that name. My team often used the Monty Python quote that “NO-body expects the Spanish Inquisition!” when something surprising would happen.

I don’t think of Black Swans as negatives, necessarily. In fact, it’s exactly the sort of rare bird we should be seeking in business on many levels. For example, you’ve read many times in this space about the need to understand your customer. If you’re approaching them with an open mind, what you might find can be surprising. You might find, say, that your ad that’s aspirational in nature might have the exact opposite effect on your audience – it reminds them of what they don’t have and makes them mad.

Where I find Black Swans particularly useful is in negotiating. It’s critical to understand the needs and wants of the person with whom you’re negotiating and to get on the same side of the desk as they are, meaning you’re not in an adversarial position. In the process of doing that discovery, you often find a Black Swan – something you didn’t know about them or about something that’s part of their bottom line for the negotiation. Every party in a negotiation has a bottom line – things they can’t or won’t give up – while other things are far more fungible. Unless and until you can understand what those things are, you’re wasting time. If you find a Black Swan in the process, it’s important that you incorporate it unless it crosses your bottom line.

Part of finding the Black Swan is keeping an open mind, whether it’s in negotiating or in reading data or even in a brainstorming session. Be open to possibilities even if they don’t match your current understanding of the world. The Black Seans are out there – find them!

Leave a comment

Filed under Thinking Aloud

Conducting

Did you play in your school’s band or orchestra? Maybe you sang in the chorus? I did all of those as well as in the school’s jazz band. If you did, you came face to face with a conductor. For those of you unfamiliar with how a conductor operates, I’ll spend a few words on the topic. For those of you already familiar, please keep reading because those hours spent under their baton can tell you a lot about business.

Whether you played in an ensemble or just listened, you’ve seen a conductor at work. Their right hand, usually the one holding the baton, keeps time. Their left hand, the far more expressive one, serves many purposes; among them cueing various instruments, helping the musicians understand the dynamic you want to project or the phrasing you’re after.

One of my childhood memories is of seeing Leonard Bernstein conducting the NY Philharmonic. He conducted the orchestra in a way that was a cross between dancing as a listener and working hard as a musician. There is no doubt, if you watch old videos of him, what he is trying the get from his musicians. That’s not true of all conductors.

What you probably never thought of is how anticipatory conducting really is. It begins in rehearsal, where the conductor will often stop and explain what he or she is after. The musicians are learning what each gesture means and they get a sense of the speed and phrasing the conductor wants. It’s assumed the musicians already know the notes and heaven help the musician who causes the conductor to stop and demand the musician play a phrase the conductor heard as wrong. It also means the conductor is a few beats ahead of his musicians so he can cue them, hopefully in a way that also tells them how he wants the upcoming music played.

What does this have to do with business? A lot. I always looked at my role as being similar to an orchestra leader. My job was to bring coherence to a large, diverse group of executives who played very different roles. I kept time with one hand, meaning that I set goals for the entire group and established how we’d get there. With the other hand, I let individual elements within the group know when to speak up. Most importantly, we rehearsed. No, I didn’t have my group do things just for the sake of doing them. I did, however, ask them a lot of questions to make sure they knew the music and that when it came time for them to be front and center they would shine. I was careful to be clear about what I wanted and about what I meant when I asked for something. I was also a few beats ahead at all times.

Watch some of the great conductors. Bernstein, Loren Maazel, Seiji Ozawa, and others. There are some great business lessons there, don’t you think?

Leave a comment

Filed under Music, Thinking Aloud

Mageirocophobia

It’s Foodie Friday and today we’re going to address what for some people is a debilitating problem: mageirocophobia. I know – how can I think about something I can’t even pronounce? Well, hopefully, it’s not something you think about at all, but it might just get you thinking about something that goes on in your business life, so read on.

Mageirocophobia is the fear of cooking. Yes, such a thing exists. It can take many forms and even experienced cooks might have a little of it. For some folks, they’re fine cooking for themselves but the thought of cooking for a large group – a party, a large family gathering – can become a problem. Maybe that’s when they opt for a caterer, telling themselves that they’ll be busy preparing the house when in fact they’re afraid of failing. For some people, they’re afraid to cook for others or their children, worried that they’ll poison them by serving undercooked food. In other cases, it’s a simple fear that what they’ll serve will be inedible, or at least bad enough to cause ridicule. Some people are just afraid of the entire process – sharp knives and hot pans can cause cuts and burns (I know that from personal experience!).

As with most fears, a fear of cooking is really a reflection of other things going on such as a strong need for approval or a fear of failure. It can cause people to do odd things such as never serving chicken to guests or insisting on overcooking pork. Some people I know are terrified by sharp knives and the blades in their kitchens are always dull which, as any good cook knows, causes more accidents than sharp knives do.

Some of us do the same thing in business. A decade ago I wrote a post that asked each of us to consider if our fears in business are rational? Fear of failing is not irrational but it can be debilitating. We listen to the negative voice in our head that tells us we can’t do something and we’ll be a laughingstock when we fail. We play it safe. We take the safe route and don’t push to scale quickly, avoiding new markets or products. Ultimately, as with the fearful cook, we miss out on pleasure as we avoid pain.

I’ve made my share of mistakes in both the kitchen and the office. I try to learn from each one and move on. We all have a bit of fear in new and difficult situations – we’d not be human if we didn’t. We need, however, to push through our fears if we’re ever going to achieve our goals, don’t you agree?

Leave a comment

Filed under food, Helpful Hints, Thinking Aloud

Messing Up Moviepass

Do you have MoviePass? I do and I think it’s fabulous. For roughly $10 a month (about the cost of a ticket here) you can go see one movie a day as long as they’re not IMAX or 3D. Too good to be true? It really seems that way but I’ve never had an issue using it.

You might be asking yourself how do they stay in business? Lots of other folks are asking the same question since I gather they have to pay the theater the full price of admission when you use the pass. I go to an average of one movie a week (4/month) which I gather from this article on Recode is more than average. They’re recently starting charging a premium if you want to see a very popular movie right as it’s released, but that’s a minority of what’s out there. Still, they must be losing money on most users so how do they stay in business?

In a word, data. I go to see some movies in the theater that I might ordinarily wait to see on pay cable or via streaming. I often hit the concession stand, which is where the theaters make most of their profit. Good deal for them, right? Where Moviepass is thinking they’ll make their profit is from understanding the moviegoer and selling that data. That’s why they’re so inexpensive – to scale quickly – and they’re hoping to become so ubiquitous that they end up getting a cut of the increased attendance they are generating (the 3 extra trips to the theater I make in a month!). With me so far?

A friend of mine also has a Moviepass that she was given as a gift. Her 6-month gift ran out the other day and she went to renew. Here is where the fun begins and where we all can learn a little something. There is no way to renew a gift subscription. Seriously. She wanted to convert the gift to a regular subscription on her own credit card and Moviepass won’t let her. Instead, they require that you start all over and create a new account using a different email. Let’s think about how many things are wrong here.

First, you’re a data company. By demanding an existing customer start all over, you’re blowing off all the data you’ve collected on them to date. Second, since Moviepass requires a physical card to work, you now must issue a new card. Besides being an expense for you (create the card, ship the card, etc.) it’s extremely inconvenient for the customer. Third, I’m anticipating that since an account is married to a device, there will be an issue when she gets her new account and tries to tie it to her existing phone. You can’t use your pass without using the app and the app is tied to a device and your card. There isn’t a single reason I can think of that makes this a smart policy.

This silliness has forced many customers to reach out for customer service (a cost!) and from the heated postings on Facebook, Reddit, Twitter and elsewhere, it’s resulted in a lot of lost business for Moviepass. One of the main advantages of the digital world is how there is far less friction in many transactions. Online commerce brings your shopping to you and you never leave the house to lug stuff home unless you care to. Moviepass seems to have found a way to increase friction among its existing customer base – those who received gifts and want to remain as customers. Not very smart in my book. Yours?

Leave a comment

Filed under Consulting, Huh?

Building A Disaster

Have you heard about the Build-A-Bear fiasco? Build-A-Bear Workshop declared last Thursday “Pay Your Age Day.” Customers could come in and build a bear at its workshops across the U.S., Canada and the U.K. for the price of their age rather than the $50+ it normally costs. Not a bad deal if you’re an 8-year-old or even a 35-year-old parent. The response was overwhelming, with mile-long lines in some places. According to The Washington Post, some waits were seven hours long.

It’s great that there is a large, enthusiastic audience wanting to build these bears, but that’s about the only ray of sunshine here. Some stores gave customers who were turned away a $15 voucher. As a parent, I can tell you that the voucher does little to placate a disappointed child. They were counting on a new furry friend. Many of the ones turned away were members of their Bonus Club, a frequent buyer program, already and others had to join to get the discount. In other words, their best customers. Yikes!

The CEO went on TV and said: “There was no way for us to have estimated the kind of impact, those kind of crowds.” He added, “We did put a notice out for people that we thought the lines could be long, and we worked with the malls, but it was beyond anything we could’ve ever imagined.”

That’s the point for any of us who run promotions. You need to imagine what an overwhelming response will do to your operation. In this case, maybe they should have had people sign up to take advantage of the promotion in advance (and get their emails as a bonus) to get places in the line, much as one does at a concert to get in “the pit”. Maybe extend the promotion for a few days to let those people into the store at predetermined times. Heck, maybe take space in unrented stores in the mall and add capacity. Be creative, consider lifetime customer value, and spend what you need to in order to prevent a disaster.

No good deed may go unpunished and companies that disappoint their best customers rarely go unpunished as well. You with me?

Leave a comment

Filed under Consulting, Huh?

Bad Boys And Brands

Happy Foodie Friday! There’s been a food-related story making the headlines this week and I think it reflects something that can be useful to any of us in business. The founder and chairman of Papa Johns Pizza had to step down this week after he admitted to using the N-word in a company conference call. It has sparked a public relations crisis and it’s not the first one his actions have caused. You might remember that he also weighed in on the controversy surrounding NFL players and their kneeling during the national anthem. While he certainly wasn’t the first sponsor to criticize a league, doing so over an issue that went way beyond the league itself resulted in a public relations issue for the brand.

While I’ve never been a fan of Papa John’s pizza, his bad behavior made me all the more certain I’d never eat it again. One person whose food I am a fan of is Mario Batali. Even so, I’ll not be going to any restaurant associated with him. His bad behavior caused him to “step back” from his restaurant empire following the first public allegations of sexual misconduct. That was followed up by a 60 Minutes story. Even so, he hadn’t completely divested himself of a financial interest, and that certainly affected the brand, so much so that three of his restaurants on the Las Vegas Strip are set to close even though they were doing well.  The local partner in these restaurants, Las Vegas Sands Corp., decided to end the relationship with Batali’s organization.

Why do I bring this up? Because every one of us in business is a celebrity on some level. We might be nationally known or maybe it’s just our customers, partners or employees who consider us famous. Our actions can enhance or damage our personal and corporate brands every day and we need to remember that no incident remains quiet or hidden for very long. Nearly every person is holding a camera and a video recorder in their hands and bad behavior rarely goes unnoticed or unpublicized.

There was a restaurant I patronized on a regular basis. The food was OK if unextraordinary, the prices were reasonable but the owner was a great guy. I loved spending a little while with him every time I went and I kept going back because he took great care of me as well as did good things in our community. We are our brands, and how we act can damage that brand as badly as a misplaced ad or a faulty product. Enjoy your weekend!

 

Leave a comment

Filed under food, Helpful Hints, Reality checks