Is your business obsessed with new customer and site acquisition? You’re setting yourself up for failure.
Yesterday I popped into a branch of my favourite high street coffee shop. I stood at the counter, adjacent to the person being served (next to, not behind, it’s just got that kind of set up).
After the server had finished serving the person before me, I understandably expected that she would come to me, after all, I had waited now for about 2 mins, but she proceeded to tidy up a little, straighten her pot of tongs and even managed a brief exchange with the person making the coffees.
And while all this was happening, SHE DID NOT LOOK AT ME ONCE.
Eventually, she looked up, and without saying a word, tilted her chin in a way which indicated she was ready to receive my order. No hello, no thanks for waiting, no nothing!
I ordered and the bag was thrust into my hand. I asked for a napkin, which was again thrust into my hand. And aside from telling me the price, she did not utter another word.
TIME TO HIT THE EXPANSION BRAKES
Now if this was an indie I’d be thinking they didn’t have long left to run, because while the products are good, it’s just way too easy to find something just as good, or even better in London.
But it was actually a branch of a fast growing business, opening sites by the month.
So why is this a problem and what’s it got to do with me?
Well firstly, if you’ve reached a point in your recruitment where excellence (or even adequate) is just so hard to find, you should stop – pause the new openings. Because with every transaction you are simply telling someone just how rubbish an experience it can be.
And suddenly, the LFLs drop and more competition opens, leaving you vulnerable to either
a. the ‘we have to cut the tail’ route to brand oblivion or
b. the marketing team have to do more marketing, which is basically then just telling even MORE people just how mediocre things have got.
RETENTION IS THE ANSWER
So what’s the answer Vic? Well, shift from acquisition to retention. Focus on smaller but more valuable, less is more, and building a business through targeted retention initiatives, whether people based or customer based.
The average hospitality brand has a customer lifecycle (the time from first transaction to becoming £0 value lapsed) of just 15 months, and a retention rate of only 20-30% per year. We’re talking MILLIONS of pounds of untapped, high-margin revenue which can be generated by sweating the asset you already have – your customer database.
Acquisition is considerably more expensive than retention, and the opportunity is far and away greater (and less risky brand wise in this hiring and trading climate) in the latter.
If you want to chat to see the size of your possible prize, drop me a line
