Ep 1: How to Recover Your Revenue Stream
In this episode, Stephen & Shafique answer a question from a restaurant owner: “How can I possibly stay open with such little foot traffic?”
Below are the links to download the examples referenced in the podcast.
DOWNLOAD LINK
TRANSCRIPT
STEPHEN:
Howdy, my name is Stephen White.
On behalf of Shafique Pappa, aka Startup Dad …
Welcome to A BETTER WAY, where we help business owners and startup founders like YOU to overcome business challenges faster, cheaper, and with better quality outcomes using lean principles.
During this stressful time, Shafique and I are here to address questions and challenges that small business owners and startup founders are facing during
the pandemic by using lean business principles because we believe there’s A BETTER WAY to get through the weeks ahead.
SHAFIQUE:
That’s right, Stephen.
We know a lot of you are struggling to figure out how to navigate the next 60-90 days
Well, Stephen and I have been busy fielding lots of questions from our network.
And over the next few days we will attempt to answer as many of them as possible.
So Stephen, let’s jump into this with answering today’s question.
STEPHEN:
Today’s question comes from a restaurant owner who’s asked to remain anonymous but wants to know:
How can I possibly stay open with such little foot traffic?
SHAFIQUE:
That is a great question… Many of you are asking how you can restore the revenue stream so you can survive the next 60-90 days. While cutting costs is important, if all of us engaged only in cutting costs, we would ensure the whole economy would collapse. So today, instead of focusing on cutting costs. let’s focus on restoring revenue streams…
When this pandemic is over, you will have lost some customers because they no longer have the ability to purchase from you. So you need to right now focus on finding new customers to replace the ones you will lose over the next 60-90 days.
Now returning to the question asked by our restaurant owner… Let’s start with some lean thinking…
Stephen, how about you start us off by summarizing the challenge a retail business, like a restaurant, faces in restoring their revenue stream during the crises.
STEPHEN:
For most retail shop owners, their products are delivered through their storefront, which means that it’s not easy to shift to a remote delivery model immediately.
Restaurants, in particular, are generally located close to dense populations during particular times of day, such as the food halls downtown that serve office workers.
The addition of social distancing restrictions further discourages people from leaving their homes to patronize restaurants near where they live.
SHAFIQUE:
That’s a great summary, Stephen.
The challenge faced by these business owners is how to quickly adjust their service and start to deliver their value to the customers nearby where they’re located.
This means we need to develop an approach to reach those customers quickly with messaging that fulfills a pain that your missing customers have, while only slightly changing how your business works since this pandemic will eventually pass.
Now to be clear, this strategy only works for those retail shops that serve their neighborhoods, rather than destination shopping stores like Ikea or Gallery Furniture right here in Houston.
So, let’s talk about those retail shops that serve local neighborhoods, specifically a restaurant owner who may have seen a 90% drop in foot traffic.
STEPHEN:
Well, in thinking lean, business owners focus on first solving their customer’s problems.
The challenge faced by retail shops that are serving their local neighborhoods is how to shift their product or service so their customers don’t have to spend any time inside their store.
More specifically, this restaurant previously solved their customer’s problem of having a nice night out with their family while having a quality meal at a reasonable price.
Since people aren’t going out to eat as much, it seems like that a restaurant owner needs to adjust their solution so they can solve the original problem their customers have in the new reality of social distancing. In the new reality, their solution needs to be safely delivered to the same customer in an environment that is also safe. In case of food, that means either home delivery or curbside pickup. Having made that adjustment, the restaurant owner now needs to get the word out to their neighbors that they are open for business and ready to serve their customers in the new reality.
Now how can they quickly test this assumption fast?
SHAFIQUE:
You’re right … following a lean business approach, all customer messaging starts with making the customer aware of the problem they are suffering from. And any solution we conceive is based on some assumptions that need quick validation.
In our restaurant owners’ example, their customers are hungry or just tired of eating their home-cooked meals. Or worse, they don’t have enough food at home.
So their message would start with reminding the customer of the problem they are suffering from … something like this:
“Tired of eating the same sandwiches every day? Pick up our hot, delicious, fresh chicken, or beef tacos … your choice, just $2.50 each. Call in your order and we’ll have it ready for easy curbside pickup within 15 minutes. You don’t even have to leave your car. And as always, we ensure your food is safely prepared and delivered to you hot and fresh.”
STEPHEN:
That’s easy to implement solution!
Now how are restaurant owners supposed to get the word out quickly and cheaply so they can test if the above message is going to work?
That’s gotta be the HARDEST part!
SHAFIQUE:
That is the biggest challenge now that the restaurant owner has an idea about how to solve the customers old problem in the new reality, they need to get quick validation before they commit all their resources. In lean thinking we need to know our assumption is going to work before we spend our whole marketing budget on an unproven idea.
STEPHEN:
What are their options to do that?
Are they supposed to get new signs printed for their store or have one of those inflatable wavy things out front of their store so people will notice if they happen to drive by.
SHAFIQUE:
Unfortunately, none of those options will work since everyone is hunkered down.
But FORTUNATELY, there are a couple of options that are easy and quick to do.
One low cost way to do it is to advertise on Facebook or NextDoor, both of which are great options since traffic has dramatically increased on both apps over the past few days as people attempt to stay in touch and find out the latest news.
Another very quick option is to use FedEx kinko’s and print 200-300 flyers and walk the neighborhood and deliver the flyers to the homes… This is a great way to act quickly and get the message out.
If you are not into walking, then you can use USPS’s online service at
[LINK DISPLAYS BELOW VIDEO: https://www.usps.com/business/every-door-direct-mail.htm]
This is a great, under used service that allows you to target a very specific geography. A business owner can prepare the flyer in less than 24 hours. Just upload it, then USPS will print and deliver it with 72 hours.
STEPHEN
That’s awesome … you just gave us 2 very cost effective and fast methods for reaching our target customers to quickly validate, along with a message that addresses the problem the restaurant owner’s customers are experiencing, along with how to deliver that solution.
Now how will they know if their test worked.
SHAFIQUE:
Excellent question… when running a quick test, we have to know what success looks like. There are two ways to determine the success criteria. You can use existing benchmarks as well as your own internally driven targets. We know that mailers usually get around 0.5% response if not less. So if you distributed 300 flyers and got 2 calls, then you have the response rate you were expecting. Now you can expand the reach and send the mailer to surrounding 6000 homes. That should definitely kick up the traffic. You should plan to resend the flyers every week as your response rate will increase with repeated messaging. The response rate for social campaigns can be lower or higher depending on how engaged your neighbors are on social media.
If you don’t achieve your minimum response rate, then likely your messaging is not clear or your original hypothesis is wrong. You will need to then re-run the test with a new message based on a new hypothesis until you get the response rate you need.
STEPHEN:
Wow… you just covered a lot of information… let me see if I can summarize it…
Create the message that tests your new solution based on the new reality for your customers.
Get the message out to customer in a small test.
Measure the result and re-run the test if you don’t achieve your target response rate. If you do achieve, then scale the message to the entire neighborhood.
I noticed you kind of glossed over the details on step 1. Can expand on how you came up with the message. I am sure our founders and business owners want to know how they can write good ad copy…
SHAFIQUE:
Sure, we have a message that’s comprised of 3 parts:
· The FIRST part of the message “Tired of eating the same sandwiches every day?” reminds the target customer of the problem that they are NOW experiencing.
· The SECOND part of the message “Pick up our hot, delicious, fresh chicken, or beef tacos” describes an alternative solution to how they’re feeding themselves today. You’ll also notice that even those that are not eating sandwiches will identify with the ad as they may be stuck at home repetitively eating something else instead.
· The LAST part of the message “just $2.50 each. Call in your order and we’ll have it ready for easy curb side pickup within 15 minutes. You don’t even have to leave your car” answers all of the other questions a customer would have to help them get to a quick decision. Specifically, those customers know the price, how they can place their order, and how they can safely pickup their order.
STEPHEN:
Excellent! Since that covered a lot of items, we’re providing a download of this example for you to read on you own or share with other business owners affected by the current crisis.
During our next episode, we’re going to explore A BETTER WAY to address the challenge faced by a local manufacturer who’s concerned with how to continue product assemble should their workers need to stay home in the event of a lock-down.
If you’re looking for A BETTER WAY for your business to survive during this crisis, please submit your questions so we can directly answer your concerns.
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