What comes into your mind when you think of the phrase “value for money” or “value pricing”?
When I ask clients what their thoughts are, it’s usually followed by a similar response to what’s probably going through your mind right now.
When most people think of “value for money” or “value pricing” or even “pricing for value”, the first words that come to mind are; discounts, offers, and cheap. But most hospitality business owners are quick to put out offers and discounts in a bid to drive more people through the door. Why do we do this if we’ve got a poor perception of what we’re doing?
But what if I said the phrase “added value”? Does that change your thought process, or the mental picture you’ve just been painting of Subway, McDonalds, the local boozer, or even most restaurants in January when the offers are out?
What if I asked you if you value your friends, your family, your business, or your money? Or whether all of these add value to your life?
The answer is a definitive “yes”. So, what’s changed between the perception of value associated with the products that you sell, and the products that your family, your friends, or someone else’s business sells? It might sound daft, but everyone is selling, all the time. Your friends and family are selling you’re their time, their opinions, their thoughts, and their friendship (obviously not in the tradition perception of the word “sales”, but they are trading their time, thoughts, and opinions for yours).
So why do you value your time less than that of others? Make no mistake, your business, the people that you employ, and the products that you sell are a direct reflection of the way that you perceive yourself, and if you’re constantly reducing selling prices, offering deals, or reducing the value of your offering, then you’re simply saying that you don’t value yourself or what you do.
Let’s go back to “adding value”. What are your thoughts here? It’s simple, really, you’re thinking about how the value of something can be increased, and you’re probably thinking about adding 20p on a pint or £1 to one of the dishes on your menu- this isn’t adding value. This is a price increase, and no extra value has been added.
When we talk about adding value, what we’re actually talking about is adding to the perceived value of a product or service from the position of a customer, not just a blanket price increase off the back of a supplier price increase.
What do I have to do?
The easiest way to wrap your head around this is to change how you ask one simple question. Instead of asking “how much more can I get from my customers?”, you should start asking “how much more can I give to my customers?”
This isn’t about upselling. Upselling is an important skill, but not one that I’m covering here. Right now, we’re more concerned with how your customers perceive the value of what you’re selling, rather than what you actually sell. Offering more food, more drinks, or extra sides is one thing, but changing someone’s perception of the value in what you’re selling to them is a whole different boardgame.
Recently, my company held a team meeting at one of our client’s restaurants- Queens Wine Bar & Bistro. I’d arranged for us to get there for 10am, have our meeting, tea and coffee, then stay for lunch. We got there for 10am and the lights were off- I had a mini panic as I’d been up for half of the night planning out what I was going to go through and putting together a slide deck. Also, I’d already told the team that when the meeting was finished they could have an early dart, and it was starting to look like I was about to give them a full day off. Sure enough, Lucas arrived literally 20 seconds later. I asked him why all the lights were off, and it was because they’d stopped doing breakfast during the week, and so Lucas came down to open up just for our meeting.
We got ourselves settled, and Lucas came down to take our tea and coffee orders. A couple of minutes after we’d finished our drinks, Lucas came by again with another round of tea and coffee and table water. A little while after that, Lucas came in with pastries, fresh fruit, and more drinks.
I’d only asked about tea and coffee when I emailed Lucas to ask about using the downstairs room in Queens, but he went over and above to provide a better experience, and to add value to what he was doing. My perception of the value of what I was going to pay for changed quite quickly- any restaurant can do check backs and bring out more drinks, but very few would think to do what Lucas did without asking and for the sole reason of the experience of the customer.
When we’d finished our meeting, we went upstairs to have lunch. After much debate, everyone ordered their drinks, and their food shortly after. One or two of the team asked for recommendations on both the food and wine menu, and instead of being met with the response of “I haven’t tried that, but I’ve been told it’s nice”, they were told “My personal favourite is X, but if you like Y, then you should go with Z, and this is what you should drink with it”. Further on in the afternoon, when one of our glasses was empty, a member of staff came over to fill them (whether that be water or wine), and anyone who didn’t want topping up simply placed their hand over their glass. This way, the flow of our conversation wasn’t disturbed either.
The team at Queens Wine Bar and Bistro had taken our order and brought out our food and our drinks- just like any other restaurant. However, they knew exactly what they were talking about, but hadn’t directly tried to upsell any sides, or larger drinks. Price wasn’t mentioned once, nor did they talk to us about any discounts or offers. The experience that they provided changed our perception of the value of what we were paying for. And once customers perceive that the value that they’re getting is greater than the price that they are paying, that’s when price contention disappears.
I paid around £150 for drinks, fruit, some pastries, and lunch for 6 of us. That’s an average spend per head of £30 which is 37.96% higher than the rest of the UK (according to an article in the Guardian, the average spend per head in a restaurant is £21.80). It’s not hard to see from this that the higher the spend per head, the less customers you need to reach your goals.
I recently spoke with one of our newer clients who has a venue that is a little off the beaten track. He told me that “no one wants to come here when the weather is bad- it’s too far to walk from the train station if it’s raining or really windy”.
I told him that it isn’t because people don’t want to come to his restaurant, it’s be because they don’t want to get to his restaurant. We then spoke about what he could do to get people there- he talked about offers, discounts, quizzes, and DJs to draw in a crowd.
What I actually meant was; “how can you get customers from the train station or bus station, to your restaurant, in bad weather?”- he didn’t know how to answer this.
I said 4 words; “book them a taxi”.
He thought I was mad, “I can’t possibly book taxis for everyone visiting”.
Me; “Why not? I thought you were quiet when the weather was bad?”
Him; long pause whilst the cogs whirred.
Me; “If you’ve taken a booking, ask them how they’re going to get there if the weather is bad. Then offer to get them there from the station. I can almost guarantee that no other restaurant near you has thought about it, let alone done it. You can charge this back to the customer, and they’ll be happy to pay for it- you’ve come up with a solution to their problem, and yours at the same time. You might have to have one of your team spend 30 minutes arranging taxis, but if that then brings in 10 more customers for that 30 minutes of work, then it’s more than paid for itself. Hell, you could even book them a taxi for when they’re finished!”
Remember, it all starts with one small change to one very simple question; instead of asking “how much more can I get from my customers?”, start asking yourself “how much more can I give to my customers?”.
Just because it hasn’t been done before, or it isn’t the norm, doesn’t mean that it shouldn’t be done.
Enhance your customer’s experience.
Increase their perception of your value.
Build a better business.