When The Pie Shrinks
by Michael Greenberg | COO
A recent article in The New York Times discussed the big dropoff in the restaurant business in Las Vegas. Vegas restaurants are almost entirely acquisition driven – that is, they compete to grab attention and bring a customer in the door without worrying too much about bringing them back in the future. When the pie shrank there was little repeat business to fall back on.
Their plight illustrates why investing in customer relationships over the long term is so important. When customers flat out reduce spending, revenue goes down without any change in market share. If you don’t change how you operate, your best case is to maintain market share, which means your revenue is guaranteed to decline. To maintain revenue, you must take it from someone else.
Ratcheting up acquisition spending is easy, but its likely all of your competitors are doing the same. With a retention marketing program in place, you have many more options that are difficult for your competitors to match.
Because you’ll know a) who your customers are and b) what they buy, you have an unfair advantage over your competitors, and can use many tactics to take market share from them.
Use that advantage as much as possible, and you’ll be able to defend your position and hopefully take share from competitors with less developed programs.
