In business, both B2B and B2C, a standard of excellence can be established to the delight of the end user. For the business that makes the commitment to provide a product, service or experience that is truly first rate, there is an opportunity to charge appropriately. For the end user who enjoys a consistent standard of excellence, the higher cost is recognized and accepted because the experience is well worth the money.
Disappointment when performance lags
For nearly two decades, my family has celebrated Thanksgiving at a Marriott in California. Every year, our party of 15 walked away satisfied, even after paying hundreds of dollars per person, saying “Wow, that was spectacular.”
However, this year, we had a very different experience. For example, last year, there was an option to take a boat ride to the dining area through a large man-made lake on the property. For the kids especially, it was a delight. This year, according to employees, due to staffing issues, the boats were unavailable.
In past years, there was also a 25-foot Christmas tree inside the majestic lobby of the hotel, where countless holiday card pictures were taken by families every year. This year, according to the employees, due to budget cuts, the tree is not going up.
The buffet has always been legendary. Beyond turkey and traditional Thanksgiving fare, there was whole suckling pig, prime rib, a sushi bar, a donut wall and endless desserts, constantly being restocked to serve hundreds of guests. This year, everything was cut back noticeably, and many items were simply gone and not replenished. The pig was transformed into a pork roast.
Last year, the ambiance was quite pleasant with large, well-decorated tables, attractive lighting and impressive centerpieces. This year, there was no tablecloth, the room was as bright as a hospital ER and the centerpiece was barely visible on a table for 15.
I know these are classic “First World” problems, but when expectations are set by past performance and you paying luxury prices, it is easy to be disappointed when performance lags. Clearly, management made choices that showed a disconnect on their part, a lack of empathy and a failure to understand what was important to their longtime customers, many of whom were openly grumbling. By no means was the experience horrible. It dropped from 5 stars to 3.5 or maybe 4, but that is the trap that every business can fall into.
A lesson for operators
As an operator, it is easy to say, “What we are doing is still very good. Sure, we have cut back on quality and service, but we are still way ahead of our competition.” Customer loyalty does not work that way. When an operator sets client expectations, clients expect them to consistently deliver. When that does not happen, an operator becomes vulnerable to competition, because the partnership becomes fractured.
Meeting expectations can lead to long-term partnerships
Many of the leading operators in our industry clearly understand that meeting expectations is the key to establishing long-term partnerships. Jon Holden is vice president of sales and marketing at All Star Services. He believes that consistent, high-level service is critical. “I'm looking for long-term partnerships,” Holden said in an interview earlier this year. “When there are egregious fees and very high pricing, I don't see that as a sustainable partnership for our company and the client. I want to make deals that are fair and equitable. We need to deliver excellent service consistently, and at the same time, make sure that our margins are where they need to be as an operator.”
A consistent approach is key
In a recent episode of Automatic Merchandiser’s Vending & OCS Nation Podcast, I asked Cheryl Bravo, vice president of business development at InReach, how a company the size of InReach can maintain a consistent level of service. “It just has to be cultural. It has to be a repeatable, standardized process that we do across the organization. We can’t have one standard of service in one market and a completely different standard of service in another,” said Bravo, who said this type of consistent approach means a decreased margin for error, all of which leads to greater account retention.
Retention is important
A Forbes article from December 2022 by Saravana Kumar, founder and CEO of Kovai, addressed the importance of account retention. “Most growing firms have found themselves in a conundrum on how to balance customer acquisition and customer retention efforts. Though they know customer retention is important, many new companies tend to focus more on customer acquisition. I'd like to remind you that retaining a customer is much cheaper than acquiring a new customer,” wrote Kumar. “In fact, studies suggest that depending on the industry you are in, acquiring a new customer can cost five to seven times more than retaining an old one.”
A look forward to 2024
As you contemplate budgets for 2024 and if you consider cutting back on the level of service or quality to control costs, remember that your customers will notice, and the cost of replacing a customer is quite a bit more than keeping a loyal customer happy. Don’t let your customers walk away from the table as we did this year at the Marriott saying, “For the first time ever, this just wasn’t worth it.”
ABOUT THE AUTHOR
Bob Tullio is a content specialist, speaker, sales trainer, consultant and contributing editor of Automatic Merchandiser/VendingMarketWatch.com. He advises entrepreneurs on how to build a successful business from the ground up and specializes in helping suppliers connect with operators in the convenience services industry – coffee service, vending, micro markets and pantry service specifically.
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