Are You Being Served?
With so much choice, how do you guarantee that you earn the repeat business of your customer base? Loyalty is something your business has to strive to earn every day by ensuring that the customer experience is so pleasurable that they can’t wait to return again. Part of the successful formula for maximizing the customer experience will most likely include, in varying degrees, a precise mix of the key elements of price, service, convenience and selection. Getting this mix right requires a comprehensive understanding of your customers and their sensitivity to price.
Be conscious that the demand curve can be quite different for different socioeconomic classes. The difference in price sensitivities between groups of consumers suggests that consumers with more disposable income will most likely
not change their consumption habits if the price of an item increases. For consumers with less disposable income and finite food budgets, price is everything. The change in price of an individual item can have a substitution effect that can manifest itself by having consumers choose a different brand with a lower price or, worse still, if it’s perceived to be a problem for several items, choose to shop at a different store.
Once you have assessed (or, better yet, tested) your customers’ price sensitivity, you can dial in the proper level of service, convenience and selection you choose. These elements do cost money, and will ultimately be reflected in your price. But if your customers value the level of services you provide, and don’t change their consumption habits even if the prices increase slightly, you will end up creating an experience for your customers that can’t be duplicated everywhere. In fact, it’s also likely if your customers are “well off,” they are probably accustomed to excellent service and a high level of convenience in their daily lives. With the bar set high already, you had better meet or exceed their expectations, or you risk losing their loyalty altogether.
If you determine your customers are at the other end of the economic spectrum and are solely focused on price, that doesn’t excuse you from providing great service too. Employing a friendly, courteous and helpful staff doesn’t have to cost more money, and their interaction with your customers will make your patrons feel like their business is appreciated. That is why it’s critical that you choose the right employees and give them proper training, because they are the true human interface to your business.
David Spencer
Publisher, Gourmet Business
President, HousewaresDirect, Inc.
dspencer@gourmetbusiness.com