Tom Feltenstein

Café Grumpy, a small chain in New York, charges $12 for a cup of coffee while Aida’s Grand Reserve in Baltimore sells their morning elixir for $13 a cup. These coffee houses get six times as much per cup as Starbucks because they have focused on enhancing the value of their product in the minds of their consumers. Café Grumpy’s, for instance, highlights the fact that their beans are handpicked in Ethiopia and offer connoisseurs hints of apricot, pineapple, bergamot, kiwi and lime flavorings with each sip.

Few businesses understand how important this perception of value is. If you are in a competitive area such as selling a cup of coffee, you have to find your niche and market to that particular group. Grumpy’s Café and Aida’s Grand Reserve understand the market for coffee was saturated and looked for an alternative way to enhance their offering. Your business has to have a distinguishing characteristic – which is 100% about perception of value.

The two most important words to keep in mind in developing a successful customer base are differentiation and positioning. Select your product or service carefully, and realize that the world is not your client base. Be selective. Think about the particular types of customers you want to serve and market the special features and benefits you offer. Recognizing who your most loyal customers are (measured by repeat sales, related purchases, and referrals) — and rewarding them — is the key to optimizing sales and profitability.

How do you identify and reward your most loyal customers?

No matter what business you’re in, your employees are a vital part of your organization and it is important to recognize and reward them for their hard work – but it has to be done right. You may have seen or even been a part of marketing programs in the past that were little more than popularity contests. Not only does this type of program not work, it can be very divisive and counterproductive.  It is important to recognize employees based on those criteria that are the underlying backbone of your business. This might include attitude, exceptional customer service or even teamwork. The whole idea is improve employee retention and at the same time encourage them to increase their skill set.

I recommend that you do something monthly so the idea is ever present and something employees want to strive for and achieve. The prizes you offer might be movie or sporting event tickets. Or perhaps you give them a specific management perk like an executive parking spot. This may not sound like much, but not having to hike across the frozen tundra of a huge parking lot to get to work lets your valuable employees how much you appreciate them.

The bottom line is that you are thanking your employees for their commitment to the success of the business. It is not really about the prize, but more about the fact that you recognize their contribution and want them to keep striving to improve. It is amazing, but true, that employees will work longer hours for much less pay at a job where they know they are appreciated and recognized. When you look at how much turnover costs when you have an employee quit, then you realize how much profit a good employee recognition program will bring.

What do you do to retain your best employees?

I’ve been a big advocate of change my whole working life. Change is good, but only when that change is well thought out, smart change. When you work very hard to build your brand and then decide to make sweeping change, don’t be surprised if you get buried by an avalanche of customer backlash – and even the strongest brands aren’t immune.

Twenty years ago, on April 23^rd to be exact, “new Coke” was introduced to the world. Coca Cola is arguably the most recognized brand worldwide but that didn’t ensure success of this idea. Customers were not happy that Coca Cola had changed their Coke and the CEO was bombarded with mail and telephone calls. Consumers and retail outlets complained to employees on every level of the company. After several months of pushing the new product against increasingly strong customer resistance, Coca Cola announced on July 10^th that the original formula, Coca-Cola Classic, was coming back. This was a reminder to every business owner of who’s really in control – their customers.
The public gets intimately involved with products, services, and even people. These items become family to us. People shared some of their happiest moments with the old Coke and Coca Cola capitalized on this for decades with commercials showing the family atmosphere and with jingles like “I’d like to buy the world a Coke”. Needless to say customers wanted the product associated with these good emotions and suddenly removing that product and forcing something else on them was not well accepted.

Head my warning, when you think of rebranding yourself, don’t underestimate your customers and completely take away something they have come to love. They know what they like, and may jump ship leaving you to flounder or even sink.

Watch this video to see exactly how others used Coca Cola’s “new Coke” mistake to their advantage!