Do You Really Need New Customers?

What the Hospitality Business Can Learn From Retail

Many in the hospitality industry felt they knew everything about the Customer Experience. Even the very definition of hospitality percolated with terms like care, attention, excitement, relaxation, special, nourishment for the body, soul and spirit - all oriented to that special cachet, which was ours alone. And, others started to borrow on our expertise, particularly with an emphasis on Customer Service. However, we still owned the distinction, and it rang throughout our brands.

The message began to morph some years ago into something less specific and more generic, and we had trouble defining our differentiation for the market. We lost our touch (and, our way)! Certainly, in the last three years our hospitality cachet has been further devalued, as we merely tried to survive. As we begin our upswing, efforts will be made to redefine our brands and regain our prominence and hospitality legacy.

Sometimes we may forget that we are a mere spoke in that wheel called retail. While our industry languished, other related businesses have taken significant steps forward through introspection - they took a hard look at their facilities, product and service and refocused their energies directly to the customer - their wants, desires, and aspirations. This used to be our domain and expertise.

These businesses have all discovered that the only thing that counts is the Customer Experience - period - and, by extension, if you focus upon your existing customer or guest and create a relationship, they will return and tell others. This gem is not a deep dark secret, but recognising the genesis of the concept and the steps needed to implement and execute such a strategy does require a transformation for many.

In a recent blog, Ellen Davis, VP and spokesperson for the US-based National Retail Federation, presents a real-time case study, featuring Peter Sachse, Chief Marketing Officer for Macy's (a major US Retail Store operation), whose unconventional premise was, 'We don't need to get new customers'.

Bolt the doors, hide the women, secure the children! What heresy is this?

Well, the company shift started last year when Macy's undertook efforts to better understand their customers. They used focus groups, personal interviews, utilised data and intelligence from automated feedback and learned a great deal about their customers' habits and purchasing patterns, resulting in what Sachse noted as an overwhelming finding: 'We realised that all we need to do is take care of those who already love us.'

The company has set out on a goal to encourage each existing customer to visit the store one more time each year. 'Half the battle is won if we can get them to walk into our store,' Sachse said. 'And if we convert them during that visit, our comp store sales will explode.'

Ms. Allen shared some tips from Peter Sachse on how Macy's is making decisions with the customer in mind - a customer-centric strategy.

Make merchandising decisions with the customer in mind.
Macy's used to let buyers make merchandising decisions strictly with P and L statements. Today, the company layers customer insight over the sales metrics, which helps buyers make more holistic decisions over how pulling a product might impact customer behaviour and overall sales. The product is no longer king anymore, said Sachse. Instead, the customer is queen. (Or king, of course.)

Start all meetings by asking 'what will our customer get out of this discussion?'
At Macy's, Sachse says, 'If there's no answer, the meeting is over.'

Create a customer-champion team.
Macy's Chairman and CEO, Terry Lundgren, calls himself the chief customer officer. Who's the customer champion in your company?

Use your website as the hub of the brand.
'Anything and everything a customer should ever want to do, they should be able to do on Macys.com.' Sachse said: 'There isn't anything more powerful that I have in my hands than Macys.com as a marketing tool.'

Find a campaign and a cause that your customers - and employees - will rally around.
For Macy's - a company with a long, storied history - that campaign came in the form of its 'Believe' campaign, launched during the 2008 holiday and again in 2009. For each letter to Santa that was brought into Macy's, the company would donate USD 1 to the Make A Wish Foundation. And if the goal of the 'Believe' campaign was to bring people to the stores, it succeeded. 'I've got to tell you, these people came,' Sachse said. 'We had classrooms that used the Santa letter as a writing lesson - then they came as a field trip to bring them all in.'

In addition, the 'Believe' campaign brought a positive unintended outcome: the pride it instilled in employees. Sachse said the company received thousands of e-mails from its own employees about how proud they were of Macy's campaign that gives back to communities. And we all know when employees feel good, that ultimately leads to a better customer experience.

How often in hospitality have we followed those 'rockets' - sure fire means to chase new customers. Or, we threw those marketing ideas against the wall and invested heavily in the one with the longest 'drip', really to negligible results. We should have spent the time and energy to embrace those who already think we are special. Take care of them, and you have a customer for life, and they will spread the good news. When you think about it (to butcher a well known phrase), if we tend to the trees, we already have a forest.

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John R Hendrie is the CEO of Hospitality Performance, Inc. and can be contacted via jhendrie@hospitalityperformance.com. The author believes that remarkable hospitality is the portal for the memorable experience.