Do consumers lie to mislead you? I was told they do not. Then help me understand what was wrong with the following picture when I was working for a bagel restaurant chain. 65% of customers stated that they wanted to try specialty bagel and flavored cream cheese. 55% of customers stated that they do not come to a bagel store to get plain bagel and plain cream cheese But actual sales from 500+ restaurants showed that more than 80% of customers were ordering a plain bagel with plain cream cheese. This made no sense, as I could not explain to the senior management team the consumer insights were not in sync with actual sales. As I thought more about it, this made sense only if the consumer’s buying situation changed from the time they answered the survey questions; and the only way to find out was to actually be at the store and watch customers buy a bagel. THE OBSERVATION PHASE: On a Saturday morning, I was the first person in the store and seated myself at a table close to the ordering area. By 8:00 am, the line started becoming long and soon, I saw something that completely baffled me. Here was the sequence of events: A customer stood in line. When his turn came and he was at the ordering counter, the store employee greeted him. The customer then started looking at the menu board behind the employee. The menu was nearly 30 feet long. The customer started browsing the menu, trying to identify what he really wanted to order. By the time the customer browsed the entire menu and wanted to ask the order taker a question, he realized that the order taker had “TAKEN EYE CONTACT OFF HIM & PLACED IT ON THE CUSTOMER BEHIND”. This was a very uncomfortable situation for the customer. In a way, the order taker announced in broad daylight, in front of all other customers in the store, that the customer cannot perform a simple task of placing an order at a bagel store. This is very humiliating. To get out of the situation, the customer goes for a plain bagel and plain cream cheese, something that is a default answer. This occurred over and over, and soon I realized that the customer had approximately 8 seconds to place their order before the order taker declared them a failure. And it was not easy to read the entire 30 feet of the menu in 8 seconds. TESTING A SOLUTION: The next morning, I was back at the same store, but this time I prepared a table mat that had the pictures of all bagels (with names) and all cream cheese lids (with names too). I moved to my observation seat and saw that the table mats changed the entire customer/order-taker interaction. Now the customer took the eye contact away from the order taker and focused on the table mat. The table mat allowed the customer total control to choose what they wanted to order. For groups, there were discussions centered on the table mat, which allowed each person in the group to get what they wanted. By the end of the evening, nearly 70% of customers in the store had ordered specialty bagels and flavored cream cheese. RESULT: Soon this idea was tested in more stores and then taken nationwide. The result was dramatic: Nearly 75% of customers were ordering specialty bagels and cream cheese. The profitability and customer satisfaction scores increased significantly. RETROSPECTION: As I think back I realize the following: The marketing team built a 30 feet long menu but did not know that the customer had only 8 seconds to read the menu. This was bound to create problems for the customer who had to either ignore a big part of the menu or be “reprimanded” for taking the time to read the entire menu. Nearly ½ the customers were leaving the store ordering things that they did not crave; in fact when this group ordered a plain bagel and plain cream cheese, they settled for something that was just an “OK Solution”. I do not think it is a sustainable business model for a brand to force ½ of their customers to settle into ordering what they did not come in to get. BEYOND BAGELS: This is a situation faced by customers nearly every day in different restaurants and industries beyond. Here are a few situations where I would request you to think of how the customer was made to feel: Drive thru restaurant, when a customer wants to pause to make sure the food order is correct. The order taker does not have time to go into the details of the order. When a customer is picking up a prescription at a pharmacy and wants to have a discussion about the side effects of the medication. The pharmacist makes the customer aware that all the information is on the 8 pages of instructions and is simply interested in getting a signature from the customer that shows that he explained to the customer everything about the medication. Specs for electronic goods, especially digital cameras. Instead of training the employees to help the customer make the right decision, employees are referred to the description of each camera. Hence when a customer wants to understand the difference, and asks a question, the employee starts reading to the customer the descriptions. Come on, the customer can read, and the customer wants to know what the descriptions mean. In short, businesses surviving on making customers feel like goofballs, and hence there is an opportunity for competition to step in by solving for this; and be rewarded big. Subscribe to be notified of new blog postings ...
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How can an idea so good not work in increasing loyalty? During my days with one of the top three pizza companies, my team came up with a brilliant loyalty building idea. “You buy 10 pizzas and after that, you can buy pizzas for the rest of the year, at a special price of $7.” Now, to put things into perspective, those days, a large pizza was valued at $10 and this was a 30% off offer, without any coupons. Also, I had followed the cardinal rule of loyalty programs, as this offer was the best deal the customer can get from the pizza company. Before rolling it out, I was in a focus group where the idea was presented to loyal customers. During the focus group, I was my usual self. I was romancing the customers, making them feel excited by being there and getting their feedback. It was evident that this idea was working, as nearly every customer was buying more pizzas from my company and was not even thinking of going anywhere else. Isn’t that the ideal goal of a loyalty program? But there was something missing. Is there something more a brand should seek other than customers buying more? I got the answer when, towards the end of one of the focus groups, I asked the respondents, “What else can we do to make sure that you never ever buy pizzas from anyone else? Do not hesitate. Do not hold back!” An older woman in the group said “Son, looks like you are not that smart. In fact, you may be a little slow to get things.” I had no clue where she was going. She went on, “Look son, not once, not twice, not just five times, but ten times (she showed her ten fingers as she said this), I have shown you that I can afford to buy your large pizzas for $10. I had no problems with the price. But do not get me wrong; I like the fact you reduced the price to $7. But you know what it made me realize? It made me realize that earlier, you were really really ‘hosing me’ at $10. Even now, you are making a lot of money at $7. So the deal made me question everything about your restaurant.” Wow, that was some insight. By reducing the price and offering a ‘sweet deal’ only to people like her made her doubt my brand and in fact, weakened the connection between her and my restaurant. That means, I gave up profits for my brand to fail in her eyes. After the price drop, she was visiting more often as she was handcuffed by the $7 price point. But the connection was not strong enough to survive if I could not offer that $7 price point in the future. I paused and then looked at her and asked, “What one thing can I do for you that will make you come to me every time you order a pizza?” She was ready with her response. “Treat me special. Find out about me. Give me things that I want. Give me things that you do not give everyone else.” “And what might that be?” I asked. She gave me a look and the only way to describe that was, “wait and be patient, I am telling you.” She went to say, “If I am truly so special, why not put my pizza at the front of the line every time I order. Put me and the rest of the people in the group first.” Another wow. How could I miss it? I have experienced every time I have flown. Even on a flight which is delayed, the super fliers get to board first, effectively saying ‘na na boo boo, you cannot have this’ to the rest of the customers. Yes, special means getting things that the person feels are special and that are not what everyone gets. MY REFLECTIONS ON THIS LEARNING, LOOKING BACK: I am sure that the results (measured by increase in sales) achieved by my marketing team using the ‘after 10 pizzas, get a large at $7’ idea is one of the best loyalty ideas to ever hit the pizza industry. But did the team put this idea to sell more pizzas or reward the customer? Marketing had identified an idea that was easy to track and implement. And in some ways, since it was topped with a deal that was so “incredible” that result, measured by sales increase, was bound to happen. But in the process, the brand’s connection with the customer was not getting any stronger. It was just transactional where the barrier to leave was high. But we were also eroding the brand equity as the loyal customer was now looking at us as a $7 pizza company. Is that what was the intended positioning of the brand? Looking back, I would like to ask myself the following questions, if I had to do it all over again: Was it a true gift or a bribe? Did we give the customer what was easy or convenient for us to give? Did the customer feel special getting the gift? Were we excited all the way from our heart to give the gift? What kind of future expectation did we set? May be after 20 pizzas, get a large at $6? Was the whole idea driven by driving short term transactions without understanding the consequences of us becoming a $7 pizza company to our loyal guests? Based on all these reflections, I see this “loyalty idea” similar to me telling my date, “Now that we have gone out on 10 dates, I want to buy you free dessert on all future dates.” I am sure the response to the free dessert offer will not be favorable, nor will it increase her loyalty (connection) with me. The dating example truly puts in perspective the grandma in the group saying “Son, looks like you are not that smart. In fact, you may be a little slow to get things.” Subscribe to be notified of new blog postings Email Address // ...
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