How well do you know your customers?
If you’re like most executives, you probably feel that you have a pretty good handle on who buys from you and why. But do you really know who drives revenue growth for your company, and which customers have less impact overall? The answers to these questions can have a profound impact on your profitability, so it pays to dig deep to understand your buyers.
Today I had the opportunity to listen to Arby’s President Hala Moddelmog as she described Arby’s recent efforts to get an up close and personal look at their best customers.
Moddelmog rejoined Arby’s Restaurant Group as President in 2010, after working there earlier in her career. In her new role, Moddelmog was charged with rebuilding the Arby’s brand, which had suffered from years of declining revenue during the recession. Reinvigorating the company required recharging the leadership team and motivating employees to embrace the coming changes.
With her new team in place, Moddelmog set about getting a fresh understanding of the Arby’s customer base. With the help of a top tier consulting firm, Arby’s surveyed over 6,000 customers to learn how they felt about that brand.
That alone is not exceptional. Many large companies regularly sample customers to track the pulse of their brand.
But Arby’s went further. Much further.
The surveys showed that approximately 18% of Arby’s customers represented a whopping 2/3 of revenues for the chain. It was this key 18% that Arby’s decided to learn more about. Using the skills of an anthropologist and sociologist, Arby’s invited themselves into the homes of some of the “design target,” as Moddelmog described them.
These weren’t short visits. The company spent two to fours hour with these loyalists, often buying them lunch or dinner in the process (at a restaurant of their choosing) . The effort to cozy up was highly instructive for Arby’s. The company learned that some expected demographic and psychographics patterns didn’t pan out, but there were many common threads.
In the end, a picture emerged of an ideal customer, a “salt of the Earth” person that loves Arby’s for its freshness and “honest” approach to food.
In its research, Arby’s discovered a few key points that would become critical to its branding. First, customers didn’t really understand that the chain delivered fresh food, slicing beef to order in its quick service restaurants (QSRs). Only 55% of those surveyed knew this was the case, while 56% thought the same was true of Subway.
Understanding that freshness and “crave-able” food were priorities for customers – especially the 18% – Arby’s decided to educate all its customers. The firm rolled out a new, highly successful ad campaign that positioned the truth of its freshness vs. the perception of freshness Subway held in the minds of customers.
Eventually, the head-to-head comparison ads in the ‘Slicing Up The Truth About Freshness’ campaign were replaced with Arby’s latest spots which place a greater emphasis on the freshness of every order.
In addition to traditional media, Arby’s has also leveraged social media to spread the word, increasing the reach and strength of its social community dramatically over the past few years.
The Results Say it All
Moddelmog proudly shared the fact that Arby’s has enjoyed 9 consecutive quarters of same store sales increases. At the same time, the company has seen its EBIDTA increase over 70%.
If those numbers sound compelling to you, remember that success started with getting up close and personal with customers. As Moddelmog said, “We knew we had to deeply, deeply understand who our customer is.”
Shouldn’t you do the same?