Ask The Small Business Professor?

Dear Professor Bruce:

 As the owner of a small retail business, there's just no way I can match the lower prices my customers can get at the giant retail outlets. I'm feeling the squeeze, and don’t like the thought of losing a business that's been in my family for two generations. Can you help?

Answer:

In most towns you can find at least one business that's famous for always having lines of eager customers. It's the kind of place residents always proudly show off to visiting family and friends.

Paul Levesque, author of Customer Service from the Inside Out Made Easy (Entrepreneur Press), describes these as "flashpoint businesses"--ones where employee motivation and customer satisfaction fuel each other in a virtual chain reaction of contagious enthusiasm. These businesses do not achieve this flashpoint effect by putting their workers through “smile training” (which seldom makes things better, according to Levesque, and often makes things worse by intensifying employee cynicism and resistance.) Instead, these businesses do it by encouraging workers to come up with their own ideas for improving the customer experience, and then by helping the workers successfully implement their ideas. Positive feedback from delighted customers has a profoundly motivational effect on the workers involved.

In short, flashpoint businesses don’t set out to “fix their employees.” Their focus is on fixing the culture of the business, so that workers are motivated to always go the extra mile for customers—not because their boss demands it, but because the raves they get from delighted customers makes it all seem extremely worthwhile. And note, Levesque stresses in his book, that these are almost always smaller businesses, and it is they who are often putting the squeeze on their larger competitors. As Levesque explains, it's easier for smaller businesses to create this kind of culture and build the "personal touch" into the customer experience. When they do, customers are often happy to pay a little more for what they perceive as a better total experience overall.

A customer’s perception of value is not based solely on the basic product alone. Other elements which support the product (such as customer service and personal attention) can expand the perception of value in a way that offsets slightly higher prices.
 

Customers are often happy to pay a little more for what they perceive as a better total experience overall.