Home > Uncategorized > Why identifying the problem is half the challenge

Why identifying the problem is half the challenge

problem

Over the last few weeks, two very different types of establishment, from different parts of the world, have hit the headlines thanks to their unorthodox approaches in dealing with frustrating patrons.

In the process they gave the old adage about the ‘customer always being right’ a bit of a kicking, but that’s not what’s bothered me.

You can’t solve a problem that you haven’t identified

The madness started when a store in Australia imposed a $5 ‘browsing’ fee to combat ‘showrooming’. Then, a Californian restaurateur went one step further by naming and shaming the people who hadn’t turned up for their reservations on Twitter.

As we all know, when we want to encourage a behaviour, we reward it and seek to remove any barriers that might be impeding it. Conversely, when we want to stop a behaviour, we punish it and insert barriers.

Neither establishment is the first to seek ways to overcome these particular business challenges. Both caused plenty of debate with their novel approaches with many commentators critical of the decision to take the latter ‘punitive’ method, accusing them of being heavy-handed and ‘demonising’ their patrons.

However, my issue with what both businesses have done is that neither policy will solve the problem facing the business. And that’s because neither business has really identified the problem they are trying to solve.

From Showrooming in Australia

Let’s look at the Australian store first – ‘Celiac Supplies‘ in Brisbane. As its name suggests, it caters to people with a very particular need.

Their gripe is that these people come to the store for advice, and then leave without purchasing, in the (mistaken, according to the store) belief that the products will be available cheaper elsewhere.

Their frustration is understandable but by charging people to browse, they are likely to reduce footfall, when their challenge was all about increasing conversion. Their solution doesn’t really match their problem.

So, could they have approached the problem from another angle?

Many articles suggesting ways to deal with ‘showrooming‘ recommend investing in staff education and offering price-matching as key ways to increase the likelihood of closing a sale in-store.

In the case of Celiac Supplies, their staff knowledge is one of the main footfall drivers in the first place. And in their explanatory note, they highlight their competitive pricing. On the face of it, they seem to be well placed to overcome the dangers of showrooming.

celiacstores

The barrier to converting their footfall was simply the perception that they were more expensive. All they needed to do is find a way to overcome this.

It’s something that could easily be achieved by providing internet access in-store so that shoppers could check competitor prices before they left the store, or by listing the prices of nearby stores. By facilitating price comparison, the store would empower shoppers and reassure them that they are getting a good deal in-store. Better still, being a physical store means that they can immediately fulfil a shopper’s needs, eliminating the need to wait for an online order to be delivered.

So, rather than start from a position of mistrust, wouldn’t it have been better for Celiac Supplies to welcome potential shoppers, confront the problem of price perception, thereby overcoming their fears of overpaying and turn them into loyal customers?

To No-Shows in California

While showrooming is a relatively modern problem for retailers, restaurants have been dealing with ‘no-shows’ for years. What’s changed is that social media has given restaurants the platform to ‘name and shame’ the people who cost them money by not keeping their reservations.

Frustrated at having to turn away guests because empty tables were being kept for people who had didn’t turn up as anticipated, Noah Ellis, the owner of Vietnamese fusion restaurant Red Medicine took full advantage of this opportunity. He took to Twitter, and under the guise of explaining why restaurants often overbook, proceeded to name all of the people who had recently no-showed at his establishment.

redmedicine

His annoyance is understandable, but there are a number of reasons why this is a bad idea.

Primarily, because like Celiac Supplies charging people for entry to their shop, it won’t solve the problem plaguing the business.

On one hand, people may not care about being named, which completely negates the impact of his actions. Worse still, potential diners may be so worried at being called out if they can’t make their appointment that they decide to book elsewhere to reduce the risk of embarrassment.

People are pretty quick at finding solutions to challenges, and Ellis’ approach could be easily circumvented by booking under a false name.

It could also backfire. What if perversely, being named and shamed became a ‘badge of honour’? Or Red Medicine found itself targeted by pranksters who reserve tables under a friend’s name? Both of which would exacerbate, rather than solve, the problem of no-shows.

And if a regular visitor fails to turn up, do you risk alienating them too with an angry Tweet?

Adopting such a confrontational approach is fraught with danger. Red Medicine isn’t alone in suffering from no-shows, and as this Wall Street Journal article demonstrates, many different solutions have been implemented to deal with them. The number of hoops a prospective diner is prepared to jump through in order to make a reservation will depend on how desirable the restaurant is.

It may be that no-shows are something that can’t be eliminated, and so the challenge becomes to minimise the consequences that they have on business. Looking at the problem this way, we can see why Ellis’s approach won’t solve the problem. He’s engaging with people AFTER they’ve cost him business.

If Red Medicine is so popular with walk-in trade, then limiting the number of tables available for reservations, particularly to new people or those with a history of no-shows would help reduce the impact on business. Similarly, releasing tables that aren’t taken within 15 minutes of their reservation time would allow them to be given to people turning up without a booking.

Sometimes the human touch works too. Rather than ranting after the event or imposing a system or barriers, simply ringing people on the day to confirm their reservation could help identify whether or not they were going to turn up on time.

Perversely, the publicity generated by both businesses could see a short term increase in interest. Their challenge now is to adopt policies that will remove any barriers that could prevent these new shoppers becoming loyal customers.

Let’s hope they identify it.

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  1. April 22, 2013 at 5:01 pm | #1

    Very interesting reading. I think your analysis is spot on. Just in case the people of Celiac Supplies are reading: a re-brand would also help. So many people like a gluten free diet these days, the majority of your potential customers don’t even have celiac. Gluten Free World – with a focus on overall health benefits – would bring in more traffic. Never name your business after a disease.

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