Burying your head in the sand and not caring what your customers think are not the basis for business success.
We can learn a lot about running a business by observing others. The restaurant industry is one we all experience and provides useful case studies which highlight what makes a good business.
One small restaurant I know has a proprietor (let’s call him Henry) who is so particular about what he serves and to whom that I’m always afraid I will unwittingly say something to upset him. In fact, Henry bears a frightening similarity to the soup Nazi in that famous episode of Seinfeld. Only the foolhardy dare order something that isn’t on the menu or engage the waiter in a lengthy conversation on any matter. Don’t laugh loudly or you could be out on the street, literally (and not at a table). Making the faintest complaint is suicidal. So why go there? Because quite simply Henry’s food is delicious – unlike anything else in the area – and people are prepared to conform to his rules in order to get it. (The trick is knowing what the rules are).
On the other hand, there is another restaurant whose food is quite average but it has a lovely warm atmosphere and the people who run it remember their customers’ names and usual orders. Its direct competitor is newer and has, arguably, better food but the fit-out is so stark and cold it’s like eating in a correctional institution. Guess which one has the most customers?
COMPETITIVE ADVANTAGE
This small sample emphasises the need
to objectively identify your sustainable
competitive advantage and level of
customer satisfaction. Yet so many
businesses measure customer satisfaction
simply by their sales levels. While this may
seem logical it does not give an indication
of the strength of the competitive advantage
or areas of vulnerability. Sales may have
increased simply because the competitor
across the road has closed for renovation
and, once the renovated business reopens
in attractive new premises, sales
may plummet. If you are not aware of
areas of deficiency you won’t be able to
correctly focus your business improvement
strategies. If you are not aware of why
you are attracting customers you won’t
necessarily know how to secure those key
success factors and protect yourself from
competitors. In Henry’s case, he has one
strong point and some serious weak points.
If someone opened up another restaurant in
the same area, which produced the same
quality food and didn’t mind being slightly
pleasant to the customers, Henry would be
out on the street himself.
But Henry is not interested in other peoples’ opinions. He is, in fact, a good example of how hubris can engender a false sense of superiority and security.
This applies to big business and café owners alike. Organisations can have hubris just like individuals and this means they are unlikely to genuinely seek feedback from their customers, although they may go through the motions that textbook management practice dictates. I was recently reminded of this after staying in one of our top hotels. After having a few less-than-satisfactory experiences I thought I would complete the customer satisfaction survey they had handed out on checkout. They had gone to a lot of trouble to prepare and print the survey and indicate where to put the postage stamp but had not printed the return address anywhere on the document – a fairly clear indication that they did not really want the feedback.
Henry doesn’t want feedback either. He does just what he wants and is not swayed by customer opinion. If they don’t agree with him this merely evidences their stupidity and their undesirability as customers.
CUSTOMER SATISFACTION
All businesses could rationalise in this way and
operate blind to customers’ dissatisfaction
and their own developing uncompetitiveness.
The clever ones have a range of formal and
informal measures of customer satisfaction – from informal contact, either regularly or
at the end of a project, to formal customer
surveys conducted by external consultants
by mail or face-to-face. Then they act on the
results on the basis that, however incorrect
they think it is, the customer’s perception is a
reality that has to be dealt with. If customers
feel they are in a correctional institution,
even though the designer has assured that
the fit-out is state-of-the art design, a good
restaurant owner will have a second look at
the design. If customers want items that are
not on the menu, a good restaurant owner will
change the menu.
Business owners like these are the ones that can best withstand competitive pressure. Business owners like Henry are not here for the long term.
Sue Prestney FCA is spokesperson on SMEs for the Institute of Chartered Accountants in Australia.