del.icio.us
Digg
Sphere
Stumble
Technorati
Twitter
Small Is Beautiful
By Bizbox
What do you do when you're a business with not enough cash? Forbes takes a crack at answering this never-more-timely question.
Our favorite suggestions center around the success of the owner of Mirror Lake Inn, a quaint, 84-year-old boutique hotel in Lake Placid, N.Y. Mirror Lake has seen its bookings rise 10% recently, even during a time when most folks have precious little discretionary income to spend. It has accomplished this success, moreover, on its own terms: by taking advantage of its own smallness (now you see why this is our favorite example).
Mirror Lake has figured out that roughly 70% of its business comes either from repeat customers or referrals. Roughly 70% of its business comes, in other words, from the fact that previous visitors have had a good experience, so much that they have been inclined either to come back for more or to recommend it to their friends. So Mirror Lake is big on listening to feedback in order to improve customers' experiences as well as to satisfy individual customers who may be more inclined to return or refer others if they feel they were heard this time around. Every visitor, upon leaving, receives a comment card--postage prepaid!--and is encouraged to send it in; weekly staff meetings open with a reading of the cards. The hotel claims it receives thousands annually.
Another thing Mirror Lake has done is to offer discounts with a twist: instead of docking prices per se, it adds perks on for free: so-called value-added packages. Maybe they will upgrade your room for free if you stay multiple nights, or give you a $50 credit at their spa or one of their restaurants. Discounting is crucial during these times, but these value-added packages may be the wiser way to go about doing so. You're not cutting the price of the baseline service you're offering, and therefore not cutting into your profit margin there; it's much easier to control the costs of the few small perks that you're giving away (in fact, in many cases--such as upgrading a room when they're not at capacity--Mirror Inn's free perks don't really cost them any extra); the fact that you're charging full price for one thing and giving away another makes your math really easy; and your customer is probably going to feel a greater thrill at getting something extra for free rather than getting the same thing for a little bit cheaper. People still want luxury: in fact, they want it more than ever. Value-added packages enable them to get that same feeling of luxury without having to pay too much, so they are ideal.
The strategies Mirror Inn has deployed involve extreme attention and care to customer feedback and great flexibility with pricing and tinkering with the business's profit structure. Which is to say, they involve Mirror Inn's being a small business. How will you use your smallness to your advantage?
Comments (0)November 7, 2008 11:17 AM
