Tag Archives: business thinking

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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Filed under Reality checks, Thinking Aloud

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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Filed under Consulting, food

Red Delicious

This Foodie Friday, let’s consider the Red Delicious apple. Until very recently, it has been the dominant apple in orchards all around this great nation of ours. According to the US Apple Association (as quoted in the NY Times), it has recently lost its dominant position to the Gala, and Granny Smiths are closing fast. You can probably hear Honeycrisps off in the distance too.

I know what you’re wondering: is this some sort of tangent brought on the by the start of football season (Go Blue!) and, therefore, the fall apple season? Not really, because there is a business lesson in the fall of the Red Delicious that can be used by any of us.

Have you ever eaten a Red Delicious apple? If you’re not sure, buy one the next time you’re at the market. They will be easy to spot. They’re very pretty – your prototypical apple. It’s a lovely deep red and their skins are generally unmarked. If you were trying to find an apple to use in an art class, the Red Delicious would top your list. So what’s the problem?

Bite into one. What do you get? Not much. They are bland and almost flavorless. That skin is so beautiful because it’s too thick to bruise. Oh sure – you get a blast of sweetness but there really isn’t much of a flavor there, especially when you compare it to pretty much any other apple. While people do eat with their eyes, at some point what they’re eating gets to their mouth and the food needs to deliver on the promise made by how it looks. That’s true of any product or service. Nice packaging, wonderful design, or a fancy sales brochure may attract a large consumer base but if what’s delivered doesn’t fulfill the promise made, it will be one and done. Either you’re solving the customer’s problem and providing superior value or you’re not, and it doesn’t matter how pretty you are.

Don’t be the Red Delicious of your business sector. It may be nice to be number one (and it’s probably pretty profitable for a while), but over time, it’s unsustainable if all you are is pretty. Substance matters, don’t you think?

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Filed under food, Reality checks, Thinking Aloud