One Technique for Turning Around a Failing Business

Don’t forget to enter the SmartyPig $25 giveaway contest which ends on Thursday, January 28.

Years ago I read the book “Raving Fans” by Ken Blanchard and Sheldon Bowles. The idea behind it is techniques to go from satisfying customers to creating a consumer-cult of the style enjoyed by Apple, Tim Hortons or In-N-Out Burger.  It’s certainly a tall order for a book to give you a  blueprint of how to create this reaction to your business (and as a whole, I think the book failed by shooting too high).  It does have some interesting ideas, one in particular that I think is useful for possibly turning around a failing business or improving many businesses.

In the student plaza next to the University of Waterloo there’s one location that people joke is cursed after the last 4 restaurants that have opened there have each gone out of business after a couple of months.  The most recent restaurant to go out of business was a Tex-Mex place called “Casa Salsa“.  When it first opened, it was crazy busy, but right from the start I figured they were in trouble.

For starters, they advertised themselves as a Mexican restaurant.  One of the faculty members in the CS department said “They’re actually a Tex-Mex restaurant, which is good, because I like Tex-Mex better than Mexican”.  It’s not the end of the world, but incorrectly identifying your style of restaurant is going to be off-putting to customers who are knowledgeable about the style of food you’re offering.  I don’t think this is a huge deal in and off itself, but it became part of a pattern.

They had an incredibly complex ordering system where you had to take a form, and select various items off of it for your order.  I intended to get a burrito, but was served tostadas instead.  They were tasty, and when I looked at the ordering form again I saw where I’d went wrong, but it’s strange when they make it that difficult to order food (maybe once I’ve gotten my third degree I’ll be educated enough to navigate their menu – clearly a B.Sc. and M.Math aren’t enough).

Their prices were higher than the competitors, which in a student eatery is an important consideration.  After their business had declined, they eventually implemented a “student special” (with a student card) which made it more competitive.  By the point they’d done this, their early customers had already fixed the idea of “that place is more expensive” in their minds and they weren’t able to win students back.  Additionally, the sign they put out advertising the student special was small and quite hard to read.

Lastly, the staff were fairly rude.  Early on I guess this can be faulted (they felt they had so many customers when they first opened they could be brusque and get away with it).  I ate there 1 week before it closed (I finally had broken down and decided to give the student special a chance).  I was the only one eating there and two young women came in who were OBVIOUSLY students, only one of them had a student card, and the person working the register forced the second one to pay full price.  Nice.

Gary Vaynerchuck has an interesting video on Profit.ca where he talks about customer expectations.   He talks specifically about engaging customers with social media, but the broader message is clear that as competitors offer something, it becomes increasingly vital to match them or you’ll start losing customers.

The technique mentioned in the title is to ask customers what’s wrong with your business.  In “Raving Fans” they give the example of diners who have had a bad experience at a restaurant, when asked “how was everything?” by a staff member on their way out mumbled “fine”.  Things WEREN’T fine, but the diners have had the experience where they mention a problem and the staff member got argumentative with them.  Instead of complaining, they just don’t go back and the company loses future dealings with them.  When the first Swiss Chalet came to my home town, my family went to it and it was VERY greasy.  None of us ate there again for over a decade (it turns out we just had a bad meal there, usually it’s better than it was that night).  It’s in everyone’s best interest to catch the problem and make it right with diners who have had a bad experience.

One way to get around people saying “fine” is to keep digging and make it clear you want to hear the feedback.  Instead of saying “I hope everything was ok tonight”, ask them “what was the worst part of your dining experience tonight?” or “if you were forced to complain about 1 thing in your purchasing experience today, what would it be?”.  If you get someone (like me), who is happy to detail a number of problems, be encouraging and thankful and listen to them all.  At the end of it, give them a coupon or a free sample or something to thank them for the valuable information they’ve given you (which they have).  If the owner can’t handle having people criticize his baby, have someone who can smile while listening to negative feedback do this.

I’m not at all saying the business has to do what every crank tells them to (and there will get some crazy feedback, the punchline to one Dilbert cartoon is that customers want a better product for free).  Ask enough people and a pattern should emerge with what customers view as the biggest problems.  They should do what they can to fix these.

As soon as the Casa Salsa’s business started dieing out they should have done this immediately.  Have a staff member stand by the door, and when someone is leaving ask them if they could answer a few questions.  Find out what the problems are (don’t accept “fine” as an answer) and thank them with a half-price coupon or something.  Then get people out front (or a big sign) and let people know you’ve made a change (and hopefully get back some of the people who weren’t planning to return).  If you’ve cut your prices, tell people that, if the staff are friendlier, tell people that, if you’ve streamlined and simplified your ordering process, tell people about it.