Tom Feltenstein

Last week I spoke at Restaurant Leadership Conference where restaurant owners and experts gather to share ideas, network, and learn from the best in the industry. The tone and message of  Restaurant Leadership 2010 was clear: Your business must adapt or become insignificant. I presented this message alongside an extraordinary lineup of speakers who all agreed that this past year brought tremendous market challenges to every facet of our business.

Here are four key lessons learned from the conference:

• Remain true to your organization’s fundamental profit drivers in a chaotic market
• As individuals and as leaders, it is our perspective that allows us to see options for success amid the challenges
• There is no doubt that social media is changing the landscape of restaurant leadership, but social media tactics are only as good as the underlying value the business provides
• With technology being able to share one person’s message to millions in a matter of minutes, providing great service to your customers as well as your employees (your internal customers) is more important than ever

The basics of a successful business haven’t changed. Offer something of value, do it well and give great service. That hasn’t changed for decades. But the environment we do that business in changes on a daily basis. In order to be a market leader you must see innovation where others only see challenges and grasp opportunities when others play it safe.

Are you stuck and in need of a breakthrough? We want to know! What tools and techniques will you be most likely to implement this year and why?

Sometimes increasing sales is is not about discounting or offering special deals. Customers want to know that they matter and that you value their business. With Mother’s Day rapidly approaching, why not combine forces with another local business and give the Mom’s in your area a special thank you for their patronage?

Any business can offer Mother’s Day specials or discounts, but the business that can offer a value added item on top of their usual mother’s day offerings will attract more customers. Invite families to take their mothers to lunch or dinner in your restaurant or to go shopping in your store and give each Mom a rose, small bouquet of flowers or tiny potted plant. This tactic makes a great partnership promotion because you can team up with a local florist that wants to draw in more customers as well.

You can also prepare a bounce back coupon and present it to all of the visitors on Mother’s Day, encouraging them to return to your restaurant or store within the next month. By combining forces with the florist you can give customers at both locations flowers adorned with ribbons that say, “Happy Mother’s Day from (Your Business Name) and (Florist’s Name) and have your coupon attached. Every time Mom gazes at that small gesture of kindness, she’ll be reminded of your business, the florist, and all of your generosity which will result in positive results for your bottom line.

How many different ways have you tried to connect with your customers this month? Two or three? Did your traffic increase? More importantly, how much did your sales increase? The primary goal of customer promotions is to see results, specifically in the form of more money in your pocket. So many businesses think too small in terms of promotions. They think they have to offer only what they’re selling. You may have read that and thought, “Tom, you’re nuts! I can’t promote what I don’t have.” Oh, but you can.

I didn’t earn the nickname of, “The Profit Prophet” for nothing. You have the ability to look at your customers and figure out what their deepest desires are, then help them fulfill those desires. For example, have you ever said, “If I could just win the lottery…” This is something the majority of people dream about. They fantasize about purchasing the golden ticket, the one that can make all their dreams come true.

Why not tap into this emotional dream that so many people, including your customers, already have? If your business is located in an area where there’s a lottery, giving away tickets is a productive (and fun) way to increase your traffic. The best time to do this is when the jackpot swells to a sizeable amount like over $20 million.

For example, if you own a bar you can hand out lottery tickets with the purchase of the featured drink. Make sure to tell your staff to call your customers’ attention to the potential for a big time pay day. You can even have them say something like, “If you purchase our special Margarita today you will also get a chance to win $47 Million dollars and never work another day in your life!” This is fun for everyone and creates a happy and excited atmosphere within your business. Grab people’s attention with posters strategically placed in visible areas that show people living their dream with money raining down. You can even have servers pin play money to their shirts.

The important concept here is to think beyond your usual promotions and tap into the emotional desires of your customers. We all want to believe we are that one in a million and who knows, with the right ideas and promotions your business just might be.

Last week, I visited with my good friend David Oreck about how he got started…and grew to become a household name across the United States. Tune in and comment below to let us know: What is the most valuable piece of information you learned from this amazing discussion?

So you say you’ve created a product or service that everyone loves. There isn’t one person on this planet that doesn’t want or need what you have to offer, right? Fat chance. In a perfect world this may be the case, but in the real world this doesn’t exist. No matter how hard you try you can’t please everyone. Yet businesses can get caught up in wanting to offer something for everyone and this can lead to less profit rather than more.

One of the hardest things to do is to eliminate inventory or services to increase profit because on the surface it seems so counter intuitive. However, it is a well known fact that restaurants with smaller menus are more profitable than those with large menus because they do tremendous volume on those few items that make them money rather than having cash tied up in product sitting on the shelf waiting for the occasional order. The same is true of retail. If you own a boutique specializing in ladies shoes, does it make sense to also offer a lot of other accessories like purses, hats and jewelry just because you can? How much of this inventory will end up in a clearance bin or gathering dust on a shelf?

In any business it is vital to make a continual assessment of what’s selling and what’s not and adapt to the behavior of your consumers. Remember that for most businesses 80% of your revenue comes from just 20% of your customers. In the case of the shoe boutique, you can bet that all of your customers need shoes whereas only a few may need a hat even though everyone talks about how beautiful they are. Are you spending valuable dollars on inventory that goes stagnate because you’re trying to please the largest group of customers that are likely to be only producing a small fraction of your revenue?

We have to understand the most profitable segments of our customer base in an effort to increase revenue. Think about your customers and try to understand their actual behavior – not the behavior you want them to have. I see many business owners that have the idea that more is always better, but if it doesn’t make you more profitable, is it really better? Don’t base your decisions on assumptions of how you think your customers behave as that is the fastest way I know to go broke. Evaluate what is selling and what is not and let the facts dictate what you put in your store.

I’m constantly amazed at what I’ve seen and heard over the years. Several years ago, I read a story about a woman who broke her thumb trying to bang a nail into the wall with her high heeled shoe. A hammer would seem the better choice in hindsight but it points out the fact that we often do what’s easiest instead of what’s best. Why is it that we waste our time looking for the quick fix or that elusive “something” to make our business better when the answer is right in front of our eyes? So many businesses search for the newest methods to find and keep customers without realizing that their best avenue is standing right in front of them – their employees.

Your employees, or internal customers, are an integral part of your business. I saw a sign one time in a restaurant that said “If mamma ain’t happy ain’t nobody happy” and I remember thinking to myself the same can be said for employees. If you want your external customers to have an exceptional experience, you have to meet the needs of your internal customers. Your employees have to be happy and satisfied with all aspects of their job otherwise you’ll experience high turnover and a potential loss of revenue as a result.

Don’t fall into the trap of taking the attitude that you are doing your employees a favor by giving them a paycheck. We as business owners and managers need employees just as much as they need us. When your internal customers don’t feel you appreciate them, they’re going to find an employer that does. Making an internal customer feel valued and a part of the company doesn’t have to cost money. One of the best ways I’ve found to show a new employee your appreciation is to stick a congratulatory note in with their first paycheck thanking them for all of their hard work. Recognizing the contribution of all your employees is a simple as saying thank you on a regular basis.

Today, social media is heralded as the end all be all to help grow your business. It seems that endless opportunities abound for anyone who has mastered this revolutionary practice. Once your Facebook and Twitter accounts are active and videos posted on YouTube, with the wave of a wand and an utter of the magic word – Abracadabra – you’ll have more customers than ever before and you can sit back and watch your bank account grow. As if! Social media can’t and won’t magically build your business. What most people don’t realize is that building your friend or fan list on this type of media is not the same as developing an effective marketing strategy.

The number of views or followers doesn’t determine your actual success. Fans, apps, tweets, or videos don’t constitute a solid marketing strategy. How much money are you making with social media? Can you make a direct correlation to internet sales and the number of fans you have? Have your YouTube videos demonstrating how great your products and/or services are increased the number of new customers?

While I’m not discounting the value of social media, which for small businesses or ones with a niche product or service is a great way to get your name in front of a large customer base for a relatively low cost, the problem is that the majority of companies focus too much on the latest social media trends rather than on their customers. When it is all said and done your customers don’t care about how many fans or video testimonials you have. They want to feel valued and be treated with respect. While I believe social media is valid and has its place, I know from experience that social media will never replace the personal touch.