Sunday, August 31, 2008

Simplicity can be bliss

Product innovation and continual product improvement are two of the main mantras of US business. In many industries it is "improve or die".

However, product improvements and innovation for their own sake can be a strategy misstep and should be aligned with consumer desires.

Take In-N-Out Burger, for example. This western (California, Nevada, Arizona & Utah) burger chain has maintained a simple and stable menu (see picture) for many, many years and their customers love it. They offer just a few items but they do them all exceedingly well. No chicken sandwiches, roll-ups, salads or breakfast here. Just how many hamburger patties and do you want cheese? Only one size in servings of french fries, shakes and coffee.
Obviously In-N-Out does not try to be the fast food outlet for every fast food buyer. They know their customer base and focus on them.
Living in an area of the country without any In-N-Out Burger outlets, I continually get comments like "wish we had them here" from complete strangers when I wear one of my In-N-Out t-shirts.
In-N-Out keeps its customers in mind and those consumers want few (if any) changes. Such simplicity and limited product assortment is not for all firms but businesses need to take care not to innovate their products away from their customers' desires.

Friday, August 29, 2008

Don't forget current customers

New customers not the only route to increased profits

While not taking anything away from the importance of new customers, current customers are often overlooked as a source of increasing sales.

How can this be? I think a major reason is that many businesses find it easier to track new customers than tracking increased sales from current customers. Businesses reward employees where data is available (i.e. attracting new customers) and, therefore, employees focus on new customers.

However, not looking at current customers as sources to increase profits is a mistake. By their very nature, current customers have an established relationship with the business... thus costs of their acquisition is lower than attracting someone that is not a customer.

An example
Dropping by a Starbucks one morning last week the sign above was prominently displayed (along with similar wording on the receipt). This "come back again later today" promotion has multiple potential benefits to the coffee chain:
  1. Starbucks increases sales by bringing traditional AM customers back in the PM.

  2. Starbucks gets the profits of the drinks ordered in the PM ($2 promotion price - actual cost associated with the drink = profit).

  3. Builds the habit of stopping by Starbucks after 2 PM even after this promotion ends.

To do
The question is how can your business attract more purchases from current customers?

Sunday, August 17, 2008

"Shoot straight" with customers

Be accurate,
.....don't overpromise.

On a recent trip I had the opportunity to eat at Pret A Manger -- a sandwich shop with locations in London and New York City. These busy eateries specialize in preparing "natural, tasty food".

One item I noticed was Pret A Manger's promise (see photo) that states:
"Just Made" organic when we can, always
preservative-free and "Just Made", of course

This product statement is straightforward and clear. It promises without overpromising -- note the "when we can" clause. From the crowds at the several locations we passed and/or ate at, it is a hit with customers.