Achieving Business Excellence with John Spence

Some Thoughts on Opening a New Business

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A very close friend of mine, David Huffman, is considering opening up a restaurant, so I wanted to give him a few quick ideas to help him get his new venture off to a super start, but really I think these ideas apply to just about any business…

 

David: I have been giving your restaurant idea some thought – wanted to pass along a few things bumping around in my head.

1. The example of the brand report I sent you is a document we use to help our clients create a clear and consistent brand identity. The main idea is to achieve congruence across all aspects of the business – so that every single element of the organization reflects and supports a strong and compelling brand message to the customer. Most of our clients are a going concern, so our job is to take the brand that already exists and try to shape it to be as relevant and respected as possible for the current market served. For a new enterprise, such as yours, it is a bit different. You can either create a brand that you (the owner) feels really strongly about and then hope to attract customers who feel that the brand resonates with their values, desires and aspirations (Starbuck would be a superb example) – or – you can go out into the market and see what your target audience is looking for, then build a new brand to meet their unique needs. Unless you have developed a truly compelling concept, something you feel is a hidden gem just waiting to be shown to the public, I lean towards doing some market research and trying to figure out what people want to buy – then simply give that to them.  Especially in your case, where you have an extremely well-defined target audience, it makes sense to me to try to learn as much as possible about their needs and wants – and use that information to at least inform your decisions about how to build and brand your business.

2. I just read a great book called “FLIP” that basically said in the old days the equation was:

Fast – Good – Cheap … pick two!

Now the equation is:

Fast + good + cheap (value) + something else!!!

Today’s consumer has more choice, information, power and discernment that ever before. They are used to getting top quality… immediately… at the lowest possible price – in every single purchase they make (thank you Internet!). This is now table stakes. You must deliver very good quality, with consistently superior service, that is extremely convenient and fast – at an incredibly competitive price – or you simply will not be able to attract and keep enough good customers to sustain a highly profitable business. Sounds a little daunting, doesn’t it?

3. We had a discussion about this not too long ago in the office…  in the restaurant business there are really only FOUR factors that impact success (the truth is there are only a handful of factor that truly drive success in any business – and for some only a single factor… Banks = Service… this is their only real differentiator). For a restaurant the factors are:

  1. Food Quality (you can add “selection” in as a sub-topic)
  2. Price
  3. Service
  4. Ambiance

In this equation “Food Quality” is the driver. As long as food quality is good to excellent, the other factors can be manipulated.

Superb Quality + decent service + nice ambiance = mid range prices

Poor to decent quality + decent service + decent ambiance = very low prices (think Denny’s)

Poor quality + superb service + stunning ambiance = high prices (as service and ambiance are expensive to maintain)…which leads to bankruptcy.

Superb quality + superb service + great ambiance = very high prices — i.e. the $5 coffee at Starbucks.

I’ll stop here as I am sure you get the idea. As I look at it, unless you have unlimited resources and can afford to hire absolutely the best chef, top service personnel and build an absolutely stunning space – the best course of action is to make food quality the top priority (with a limited selection), service excellence second, ambiance third, and then price it in the upper middle range – just slightly below expensive. Of course there are many, many issues that impact this, but in general, that would seem like the best overall plan for success.

(**Note:  if food quality is truly “world-class” – selection can be down to just a single item or two!)

4. If you agree with my hypothesis above, then it stands to reason that it will be critical to really understand your target market in order to pick the exact right selection, build the appropriate ambiance and determine what price level will be acceptable to them. The goal is to own the Voice of the Customer (VOC). To talk to, question, survey, listen and observe the people who will actually come in and patronize your establishment. What do they want? What will they pay for? What will bring them back time and time again? What do you need to do – for them – to create a large and loyal group of customers that love your place and are happy to spend their money on you? Remember: it is NOT about what you like – it is about what the customer likes (unless you are honestly a perfect representative of your exact target market – and for this venture you are not). If you own the VOC – you own the keys to the kingdom.

5. If you want to understand the key elements of delivering consistently superior service, I strongly recommend you read:  “The Starbucks Experience” and “The New Gold Standard” (about service systems at the Ritz Carlton hotels) – both by Joseph Michelli. I understand you are not building a Ritz Carlton – but the ideas are universal to delivering service excellence and can be applied (and should be) to any business. One you get through those books I will be happy to help you, as I have done a lot of customer service training programs for my clients.

David, I hope this has helped a little, I will keep thinking and sending you notes, please let me know if you have any questions at all. 

Take good care my friend, John

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Comments

  1. John-
    Thank you so much for taking the time to comment on my books. By sharing your favorable thoughts about each book through your blog you are making a significant contribution to the positive impact they have. I am extremely grateful!
    Joseph

  2. What a pleasant surprise to get a note for you Joseph! We have never met, so I am not plugging your books because we are friends — but because they are extremely well written with superb information.

    Most of the folks that read this blog know I read 120+ business books every year — and rarely give recommendations — but “The Starbucks Experience” and “The New Gold Standard” are my top two picks for really getting a handle on what it takes to deliver truly world-class customer service. I like these books so much I bought more than a dozen copies of each and sent them to some of my key clients that were struggling with how to dramatically increase the level of customer service their organizations delivered. You have done a superb job of giving real, solid tools and ideas — married to highly impactful stories about ordinary people delivering near super-human levels of service.

    I would also add that I feel very strongly about this subject because I am convinced that there are only two sustainable competitive advantages left in business: 1) creating a culture of innovation throughout the organization 2) Delivering “Consistently Superior Customer Service” that delights and surprise your best customers. Therefore — your two books should be mandatory reading from nearly every business owner or manager — delivering great service is just that important!

    Thanks for the note Joseph — keep up the fantastic work — I have gained so much value from your writing. John Spence

    From Some Thoughts

  3. John,

    Thanks for this post – lots of good food for thought here (pun intended).

    I like the VOC concept a lot – I tell my people that customer service is really another sort of sales position. Customer service reps are, in my opinion, in charge of “re-selling” current customers – and being the voice of our customers is a great way to keep people returning AND help us make sure our products and services are continuously relevant to our markets.

    Good stuff as always.

  4. Derek Lewis says:

    Thanks for the new book tip, John. “The Starbucks Experience” was absolutely fantastic, so I’m sure “The New Gold Standard” will be great, too.

    Thanks for wading through so much information and synthesizing it for so many of us. I always enjoy reading your blogs.

    Looking forwad to your next book!

  5. John, thank you again for taking the time to review my new book. I appreciated your comments so much that I have have posted a link to your blog on my blog. Thanks again, I am in your debt.
    Joseph Michelli, PhD

  6. Definitely, services marketing and the marketing of goods are different stories. And when it comes to opening a restaurant, things could get tough, as we’re looking at an increasingly competitive market. So it’s worth taking a look at some reference books that could give you good advice on the topic. Have a look, for example, at Hospitality Marketing by David Bowie and Francis Buttle. It’s a really simple and pragmatic book, just as Services Marketing . Enjoy!

  7. Let me start by saying I have longtime reader, first time commenter. I thought I should probably say thanks for posting this piece (and all your others), and I’ll be back!

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  1. […] To read the rest of this review, click here. You can also read more of John’s thoughts on The New Gold Standard on his blog. […]