Monday 22 October 2018

Alan O'Neill: Great customer experience is key to success in limited market

customer service is key (stock photo)
customer service is key (stock photo)

Alan O'Neill

Across the globe, more people are migrating from rural areas to cities. That phenomenon has not escaped us in Ireland. How many times have we heard from the GAA of the difficulties in forming a team in some communities? That puts added pressure on those businesses that depend on local customers to survive and prosper.

In Co Sligo there are more than 65,000 people. Break that down further into age and social demographics and you'll appreciate the challenge of running a localised business. A successful business in a community that depends mainly on local footfall throughout the year, already has an admirable set of skills.

Hooked and Eala Bhán

On the banks of the River Garavogue in Sligo, there are a number of great restaurants. Two in particular are owned and managed by Anthony Gray.

As a very proud Sligo man, he has invested money and a considerable amount of his energy in the town and local community.

Award-winning Eala Bhán is renowned for its fine dining experience, with a menu of locally-sourced artisan produce. My mouth is still watering from the Trio of Fish when I visited recently.

Anthony's dad ran a local butcher's shop in days gone by. Anthony wanted to introduce a little bit of his family heritage into Hooked, his newest venture.

Opened in 2017, Hooked is a more casual experience with wholesome Irish food. All produce is passionately sourced locally. The free-range eggs Benedict from Ballisadare on the breakfast menu were my favourite.

Employing 46 people, Anthony has a very strong customer service ethos. He instils this in all of his team and tells them all to "treat the customers just like your mum and dad". He knows how dependent they are on repeat custom in a small catchment area. "Great food of course plays a big part in that, but I want all our customers to have a great experience every single time," he says.

Recent Challenges

Almost every industry has peaks and valleys in their business cycle. I remember from the retail jewellery business, we lived for peak gifting time in December. Then when i did consulting work for C&C's Bulmers, I saw first-hand the impact that summer weather has on its results. Some industries even have peaks and valleys every week. Pubs and restaurants for example, live for the weekend.

Managing cash flow across the year with peaks and valleys like that is hard. For Anthony Gray, his business peaks during the summer months in particular. But because of the lack of footfall in the quieter months, it puts a lot of pressure on cash flow throughout the rest of the year. It's no surprise that businesses often lose money during the valleys and depend on the peaks to compensate.

Managing Cash Flow

While it may be possible to reduce your variable costs (such as raw materials and payroll), other fixed costs such as housing and insurance are not as flexible. Banks are well used to cyclical trends and will usually work with you to ease the pressure. "Using a short-term overdraft facility is one of many options", says Killian O'Flynn, head of business banking in Permanent TSB. It would be really helpful if landlords and insurance companies would flex their fees, just like the banks. So why not meet and explain your situation to them, build their confidence in you and negotiate a payment plan? With frankness, transparency and the right attitude, you might receive!

Driving Footfall

Footfall comes from two sources … repeat customers and new customers. If all your energy goes into acquiring new customers, you're missing a trick. If the experience that new customers have is bad, how likely are they to come back? Because there is a limit to the number of people in Sligo. Anthony and his team focus heavily on their existing customers, giving them a great experience each and every time. That drives repeat custom and those satisfied customers will, in turn, refer their friends.

That doesn't entirely fix the seasonality issue. Themed events are also a great footfall driver. Anthony has already developed novel packages, such as steak nights and other concepts in collaboration with a local hotel and cinema.

On a separate point, we're already familiar with the way airlines and hotels balance supply and demand. They have different pricing strategies for different times of travel. Why not the restaurant industry? Bob-Bob Ricard's in London is currently trialling a different price list for the same menu early in the week. If that takes off, it will revolutionise the industry.

I'm not a fan of using discounts to drive business, due to the impact on margin. It also feels unimaginative and obvious. Customers too are now immune, unless the discount is 50pc off. I do believe in promotions that have some element of added value. If you give a free dessert for example, the customer will feel they're getting a bargain - but the cost to you is less than giving a discount off the whole meal.

Creating a great experience

Doing clever and creative promotions to drive business in quiet times does work. But I always come back to the same point. If customers have a great experience with you, they will return. If they have a bad experience, they simply will not.

So as a priority, take a look at your overall customer experience before you spend money on promotional activity. It may work to get new customers, but you don't want them to be one-time customers only.

 

Alan O'Neill is a change consultant and non-executive director. For 25-plus years he has been supporting global and iconic brands through change.

Alan-oneill.com. Business advice questions for Alan can be sent to sundaybusiness@independent.ie

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