Every Customer Helps Your Bottom Line, Be Mindful of Customer Sentiment

This is an older article wrote years ago that I published here since I believe the concept is still relevant.
At the end of the month after your numbers have been run, whether or not you are in the black should be clear.  What is most important is to never forget that your success comes from the dollars of each and every customer that chose you over your competition.  First, let me say, there is nothing wrong with having an ideal client; here we do a lot of work for many businesses identifying a specific type of clientele.  The reason we do this is because no business can be all things to all customers all the time.
Supermarkets for example, serve the masses but there are many different chains available to the consumer.  They all do a good job of selling the basic staple foods we buy often here in the USA.  Looking a bit more closely, we see that each supermarket has a niche that they try to use to lure in a specific customer.  Whether it is a robust international foods section (like a local Stop&Shop) or if they have incorporated a pharmacy and or a bank (like a local PathMark), they all believe it is that extra bit that will bring them the most customers.
Supermarkets are usually large chain corporations that sell on volume, small and medium sized businesses often sell on margin.  If someone selling on margin over catered to a specific type of customer it would be visible in the books within a month or two.  Just as the government can crowd out the private sector, as it is doing by using Obamacare as the vessel to crowd out the private insurance industry and shift all healthcare to the government over time; a business over-catering to a niche can crowd out their regular customers.  There will always be more general customers than those that fill the niche.  A successful business could cover this and make changes, for a new business or a business on the cusp of closing down, this can be fatal.  We are well equipped to handle problems such as these and can usually fix this with a few days of analysis and observation.
Businesses that are local to our NYC and surrounding area must also be careful to not alienate their consumer base from the top such as Formula 1 appears to be doing as I describe in the previous post.  We have often observed that management at the lower level is handcuffed by poor policies and procedures implemented by management at the upper levels.  It is often the case that the people at the top have not actually tested and attempted to use these practices themselves, which leads to a poor implementation at the bottom.  The customer at the end of the day will notice any difference in the quality or delivery of the goods or services that they are purchasing.  The customer, being a creature of habit, will also be less likely to be willing to respond to the changes in service.
Major Sporting Events may help small business, but business owners beware!
It is well known that small businesses near sports arenas are prime opportunities for revenue generation.  These events are big draws to local businesses, from the bars behind Yankee Stadium, to the local residents and business owners of Orchard Park NY, who charge Buffalo Bills ticket holders a very small fee to park on their lawns or other spaces for Buffalo Bills home games.  While these are great for local businesspeople, always beware of the sporting event that is indirectly helping your bottom line.
In the case of my NFL example, what would be there to help the losses in revenue to local residents and business owners in Buffalo should the team make a long and often discussed move to Toronto?  The answer is obvious, nothing!  The best you could do if you were in a situation such as this, would be to plan for as many possibilities as you could.  We always help our clients produce action plans that focus on diversification of every resource, even customers.
More locally to NYC, business owners near CitiField and Yankee Stadium get a huge bump during baseball season.  It is because of this that the value for commercial space is very high right near a stadium.  Something to be wary of however is if someone is trying to sell you on commercial space for an event that has never been held before.  A classic example of this was 2011, in Weehawken and West NY, NJ.  There was a large press conference announcing that the pinnacle of motorsport, and the most watched sporting series in the world, the Formula 1 world championship was bringing its series to Port Imperial NJ in 2013.  Immediately after the press conference commercial space near the race route began to sell, people were keen to secure space which would bring in big dollars every year for the next 10 years.  A month after the announcement, another came, that the event had been postponed due to poor planning.  In July 2013 the event was said to be back on for 2014, only for it to be indefinitely postponed.  Any business owner, who bought in hoping for great revenue, has surely been caught out.
Should the racing event or any other event like it take shape in the future, be wary.  The most important thing to do is proper research into the sporting series or the events that will be held there.  I have provided an example below using the supposed race in Port Imperial as an example.
Since 2009, the F1 regulations, which are dictated to the participating teams from the top, have been based mostly around aerodynamics.  With the exception of Brawn GP winning the championship in 2009, year after year it has been Sebastian Vettel with the most laps led, most points, most wins, and every championship title.  Since 2010 his team, Red Bull Racing, have won every team constructors championship.  In 2013, RBR is once again in position to easily be victorious in the individual and team championships.  F1 has not made any significant changes to pivot the series away from aerodynamics, thus not spurring competition, and will not until 2014.  The same person and team being heavily favored to win each event is starting to cause attendance to fall at major events such as Silverstone in the UK.  (http://www.abs-cbnnews.com/sports/05/02/13/british-gp-organizers-wary-vettel-effect)
With fewer fans in the stands at the largest races, local revenues are beginning to drop and the F1 race event calendar is changing because of it.  New events in cities where the racing is a novelty are replacing time tested races in cities where local businesses and municipalities are no longer making money from putting the fans in the stands.  It would be likely that there would be a big pop to local revenue in the first year, but as the years wear on, that would be likely to decrease.  I would argue this is the fault of management being drawn to the largest possible payouts by cities willing to pay; however their management should be weary as well.  This may support the series now, but if year after year the same driver and team continue to win, they may see their TV ratings starting to slip as well.  After all, why bother watching if you know who will most likely be winning, week after week, with the exception of a rare mechanical failure.
All readers looking to piggy back on to a sporting event in the future for chances of increased revenue should be sure to investigate the sporting series or league thoroughly to be certain that there are no current problems plaguing the sport.  Our clients always make sure they put action plans into place to diversify their client bases as much as possible in the event that the sporting event never happens, or that a team moves away.
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s