The Big Bang (for your buck)

I have yet to meet a business person who wants to squander their money; but I have observed many projects and initiatives that end up being a waste of time and resources. All businesses —private companies, publically traded corporations, government agencies and non-profit corporations — want to make smart investments. Everyone recognizes that you have to spend money to get results; but they would like to obtain maximum impact from a minimum investment — which I totally understand: we all want that. So the question for businesses is how can you leverage your investments to generate the best results? The obvious answer is by understanding what business issue or opportunity you need to address, and what specific outcome you are hoping to achieve. But what does that mean concretely?

Recently, I spent some time attempting to organize my office. Part of that process involved digitizing all kinds of clippings that I have been saving. They cover a wide range topics and come from a number of sources. (Sidebar: I have started using “Evernote” to keep track of ideas and activities. While I am not as consistent as I would like to be, Evernote seems to provide a very good solution to keep related ideas, from a variety of sources and media, unified in a single digital platform.)

One of the clippings caught my attention because it related to work one of my clients is doing. He is trying to understand, in a very specific and detailed manner, what he needs to do to “move the needle” (his language) on customer experience. Obviously he believes that improving the customer experience will encourage his guests to visit more often. But there are so many factors that influence customer experience, that he wants to determine which of the possible investment options would yield the best results.

And he is right to be thinking in this way. If you are a casino operator, will customers report higher satisfaction and modify their behaviour if you open more table games, add new dining amenities, change your slot mix, add more customer service representatives, increase staffing, or give away more free-play? All of these factors (and more) contribute to the total customer experience. How can you know which will have the greatest impact on player behaviour? If you start tinkering with a number of these areas at the same time and results change, how will you know what made the difference?

The article I found dates back to February 28, 2015 and came from the British daily newspaper The Telegraph, which regular readers will know contains lots of material I use in these blog entries (and in my work). The article by Oliver Smith was called “Poor service is main gripe in bad TripAdvisor reviews.” The information in the article was based on a survey of 5,000 Telegraph readers which probed how reliable respondents found the user-review platform to be, explored concerns around authenticity of the reviews, as well as identifying the most common customer issues that lead to bad reviews. For context, you should know that this paper has a robust travel section and offers tours and packages to a variety of destinations, which I suspect serves as an innovative revenue stream to keep the paper going.

Because I have concerns with user-review sites, I was interested to learn that the vast majority of respondents – over 80 percent - felt they could confidently trust the reviews from the site (no doubt the reason I elected to keep the article). More interesting to me as I reviewed the article, was the way in which the author suggested businesses could use the information to improve their ratings, and therefore their results. The survey found that 58 percent of respondents would reject a hotel based on TripAdvisor reviews, and a staggering 96 percent of this well-qualified travel audience consult TripAdvisor before booking. As suggested by the headline, the survey found that poor service was more likely to generate unfavourable reviews than the quality of the property or the room itself. Which is, by the way, not the same thing as saying the rooms and amenities are irrelevant: they are important but the aspect of the hotel stay that people most prominently react to is the service (for proof of this, please see Helen’s blog “The Death of Luxury Hotel Experience” from March 26, 2016). The Telegraph article suggests that smart hotels need to use this information to improve their properties by investing in customer service training for employees.

Exactly! That is actionable business information because it validates what the majority of experienced travelers value and respond to. In our consulting practice, we have observed that a lot of businesses, including those in the casino industry, think they have to make huge capital investments in order to change customer behaviour or to attract new customers. We always counsel our clients not to act on assumptions or gut instincts, but to find business data to help validate their assumptions before spending serious money. There may be ways to influence behaviour that have shorter timelines to execute and lower operating costs. Which is exactly what my smart client is exploring at his property. Of course, you need to be targeted and strategic about these investments as well. It is easy to throw away money on small projects without a clear idea or strategy.

So the advice for today:

1. Before you start throwing money at a problem make sure you are specific about the nature of the issue you want to address. The more focused you are, the more strategic you can be. Support your case with data. And please, make sure the actions you take are aligned with the higher business objectives you have defined in your business plan.

2. Be critical of your ideas as you brainstorm solutions. Consider which path forward will resonate with your customers. If you aren’t sure, look at industry information, consider best practices, and ask your customers and employees what they think. Through this process you can identify a market-specific solution that’s right for your business. Even small investments can be strategic.

3. Don’t default to big investments. There may be faster, more cost effective options that will have an immediate impact. Of course if the big investment seems like the best idea, then build a business case and make it happen. You can make smaller investments that will have short-term impacts on your results while you consider longer-term capital investments.

4. Think beyond activating the solution you choose and develop a long-term strategy to implement the idea on a day-to-day operational basis. We have seen too many great ideas fail at this stage not because the idea was wrong, but because the execution was weak.

5. Measure, evaluate and course correct!

It is possible to make meaningful changes to your business. Even a small adjustment, if strategic, can be impactful and your money will work for you, rather than going up in smoke!

#Planning #Insights #ResearchActivation