Is it Time to Lose the Customers you Have?

I’m behind the times, as usual, but when you don’t have much time, you seem to fall behind the times quite easily. What’s currently trendy and buzzing in the entertainment world usually gets to me a tad delayed, if at all. You won’t find me standing in line with the thousands for the latest Marvel or Star Wars release, I usually take the approach of catching it on HBO a couple of years later. Call it patient or just apathetic, it’s actually a weird mix of both. Sometimes that leaves me out of the water cooler talk, but I’ve never felt too cheated.

The TV drama Mad Men aired over a decade ago, and thanks to Netflix, I’ve just recently discovered why it picked up a few Golden Globes and everyone found it so appealing. Sure, it’s a show about advertising, and that’s kind of my world, but it’s also an interesting and sometimes cringeworthy look at what corporate life was like in the 1960s. Men were pigs, everyone smoked like a freight train and drank like fish and life was extravagant. But what I really like about the show is it’s filled with brilliant one-liners, and the writers must have done a ridiculous amount of study into the world of advertising to produce something so real.

In Season 1 Episode 3, the agency is hired to revitalize a downtown clothing store. This store is decent and has a long, well-established history, but it just blends in with all the other stores around. The owners want to try to become more upscale, realizing they can’t compete toe-to-toe with Macy’s, and would rather be perceived as a step above. The lead character and ad creator, Don Draper, walks through the store with the owner looking around and observing.

The store is flooded with people because they’re currently running a sale, and as he surveys the purchases and clientele a thought hits him. The store is packed with bargain shoppers, and they soon plan to replace all the economy-priced items with designer brands, run fewer sales and form a new identity. This new identity will leave most of their current shoppers behind. He turns to the store owner and says, “You’re going to lose the customers you have in order to get the customers you want.”

In business, we usually go with an “if it ain’t broke, don’t fix it” mentality, and if things are going well or we’re at least surviving, we don’t want to rock the boat too much. But there’s also another marketing truth that is well proven: you’ll catch what you’re fishing for, and sometimes a little shift in focus can cause a major shift in income. If your advertising is promoting nothing but price, discounts and “cheapest in town,” you’ll attract a demographic that is less desirable and price sensitive. That’s the way it works.

At Hudson,Ink we have never advised selling on price and always encouraged contractors NOT to set their own bar too low and devalue their services. Now, I’m not advocating that you blow up the whole system, alienate your entire customer base and price yourself out of your market. But, if all your competition is scraping the bottom of the barrel, rather than diving down there with them why not shoot higher? If your area has a higher demographic of prospects who don’t price shop but are looking for quality first, won’t call you out on bids then can’t get financing and will actually take your recommendations rather than putting a Band-Aid on the problem for another year, why not target them first? The store owner in this episode of Mad Men was making a conscious decision to have fewer people in her store, but people who spend more are more loyal long-term and cause fewer headaches.

So, why was this a conversation that required an ad agency? Because the dream the store was trying to achieve could only be reached through a shift in two magical advertising words: image and branding. This is a little harder to visualize with clothing stores and in-home contractors, but consider your local restaurant options.

There’s a reason you don’t see people dressed in suits and ties meeting their clients for lunch in a local McDonald’s. The image McDonald’s pushes is food that’s fast, cheap and, well, good enough to get you by. So, they have successfully developed a system based on sheer volume. McDonald’s is said to feed 68 million people every day, and since they must keep margins tight to keep competitors at bay, they need every one of those 68 million. While any one of us would take their financial reports as our own, consider the nightmare of operations they must deal with every single day. They’re the world’s second-largest employer with 1.7 million employees at almost 40,000 locations worldwide. Just stop for a second and think of what their complaint department must look like. Even if you keep 99.999% of your customers happy (an impossible number for anyone by the way), that’s still 68,000 upset people you have to deal with daily, all for less than $0.06 per dollar profit. And that $0.06 is just waiting for someone like Wendy’s, Burger King, Hardee’s, etc. to drive them down to $0.05 with the next “value meal” promotion. Ouch.

Now consider the model of an upscale, local restaurant that sells fine dining, experience, exclusivity and the best steak in town. No, they are not pumping people through like cattle, quite the contrary. They have waiting lists and reservations that exclude some people from even making it in the door. Much less volume equals much less management, less required staff, fewer complaints, less competition, etc., and according to Forbes Magazine, your local fine dining restaurant makes an average of 60% profit per dollar… Sixty percent. These places present themselves to the market with a message of, “If you want premium service, you won’t find anywhere better. But don’t expect to pay McDonald’s prices for that service.”

This is not a solution for everyone, and your market will tell you what it can bear, but remember this: People will view you the way that your advertising presents you. If your image presents you as a step above the rest, one who takes care of all the finest details and will do anything to make their experience memorable, there’s usually a much larger market for that than you realize. While everyone chases the masses, economics shows us there will always be people willing to pay a premium for quality, and they’ve already been disappointed by the quick, fast and cheap people.

If you’d like some simple ideas to improve your brand and rise above the price wars, give us a call at (800) 489-9099 or shoot us an email to [email protected] to schedule a time to talk specifically about your needs. Hudson,Ink has never been the cheapest option out there, nor do we want to be, but we’ve had a waiting line of contractors for almost two decades for a reason.