The 80/20 rule (the law of the vital few and the principle of factor sparsity) is alive and well. It’s something you constantly read about in business articles by the likes of Forbes and Entrepreneur. Also known as Pareto Principal, the principal is named it after Italian economist Vilfredo Pareto, who observed that 80% of income in Italy went to 20% of the population. It’s also a common rule of thumb in business that 80% of your sales come from 20% of your clients.”
It is my opinion that 80% of all consumers visit Big Box Stores on a regular or semi-regular basis. Why does this happen? The reasons are varied and can range from ‘Convenience’ for those who are time-starved like I am, to families with young children who are on a modest income and to whom price is a determining factor, to people who simply believe in the culture of that organization, and/or follow the advice of friends.
This is a very sobering statistic if you own a small business. However, not all is lost. Let’s not forget about the 20% of consumers who will happily support small business, who have a strong commitment to community-based businesses and will be quite prepared to pay a fair price for their purchases – IF and only IF:
• They feel well served, and recognized when they enter the establishment.
• They receive a differentiated service that the Big Box retailers will not, or cannot deliver.
In fact, I know some consumers who will never visit a Big Box Store for cultural reasons. Therein lies the challenge. I am often shocked and dismayed at the way so many small businesses treat even their best customers. It is almost confrontational, almost a case of “us” against “them”. When I see this, I leave the establishment saying to myself, “What were they thinking?”
We have all had these experiences, and I’m sure that like me, you feel like grabbing the business owners by the shoulders and shaking some sense into them. Now, before we get all giddy about this revelation, there is another component to this theory. That 20% I referred to earlier, also support other small businesses in your area – who, coincidentally, are probably your direct competitors. So the race is on as to who can best show these customers how important they are to their businesses.
Make no mistake if your attitude has been something like, “If it wasn’t for all these customers, I would get so much work done around here!!”, you are probably suffering . . . and can’t understand why business is slow, or worse, in a decline. And in the current economic climate, this is especially important.
I recommend the following: Beginning immediately, every time one of your best customers comes into your business, or calls you to make a purchase, simply STOP everything and say to that person: “(Name of customer), I just want to take a moment and tell you personally how much I appreciate your business and also to let you know that you help me to survive and prosper in this competitive world.”
And then WAIT. It will leave him/her speechless. Why? Because not one in a hundred business owners ever does this!! And I cannot fathom why!! Is it because they are shy? Or do they think they are demeaning themselves? You are in business folks, and these consumers have a multitude of options available to them for your kind of product or service, so PLEASE understand their value in your business. They are like GOLD and should be treated as such. So, beginning tomorrow morning reach out and teach your employees to do the same and you will see immediate results!
Article Author: Roy Prevost is an internationally recognized retail trainer, keynote speaker and customer service activist. He is the author of Turbocharge Your Retail Business: How to Outmaneuver and Outperform the Big Guys. Roy has spent the last 25 years working in and with thousands of businesses worldwide helping them grow their business and increase revenues by showing them how to compete in a hyper-competitive world through relationship building and going the extra mile with customers. He is passionate about turning business owners into ‘Customer Service Superstars’. Click Here to receive your complementary guide: 10 Topics to Discuss Before You Hire a Web Design Company.
Article Resources:
Turbocharge Your Retail Business: How to outmaneuver and outperform the big guys by Roy Prevost
http://www.forbes.com/fdc/welcome_mjx.shtml
http://www.entrepreneur.com/article/229294
Photo Source: courtesy of Ambro / Free Digital Photos