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Are You Attracting the Wrong Customers To Your Small Business? You’d Better Think About It

Note: This was written during a particularly unpleasant stay at a Studio 6 motel in Toronto, Ontario in 2009. It’s a simple rant, until you think of it from a business strategy point of view, and also consider that how one positions one’s business in the marketplace is important. It’s important because you can set up a business that attracts clientele that is “high cost” and low value, that can make it increasingly difficult to grow the business, or meet customer needs.

I’m sitting in a Studio 6 motel room, with almost know sleep after dealing with a group of young people partying across the hall, and IN THE HALL 2 feet from my room. I’ve had a similar problem in another stay at the chain. Calls to the front desk at 1am and 3am were not all that successful as it was apparent that the person really couldn’t do much to address the problem. The police have more serious things to tend to on a Saturday night.

So what does this have to do with small business?

Why did this happen? Why did I run in to this twice. And as a sidelight, I was told the police were called on another matter in addition to this?

I think I know. Studio 6 is a very low cost outfit (it’s the same folks as Motel 6). Pretty much the only reason one would stay here is that it’s cheap, clean, and you can sleep here. But there’s a catch. By having a rate about 50% lower than an average motel room, who does it attract?

I’m thinking back to my youth, and we probably would have killed for a place to party for a whole night for $60. Have 30 people kick in 2 bucks and you have a night of fun, drinking, and all that jazz. No parents, no supervision. Get someone who is old enough to do the check in and you can run underage drinkers in and out all night.

So, the point is that while offering lodgings to families and business people are really low rates, they also attract the very people who will chase away those very people.

While the staff obviously tried their best, it took at least five hours (between 11pm and 4 am) to get anything resolved. A good example of how a lack of forethought about customers can interfere with a business.

Another Example:

Openx is a company that offers a free open source piece of software for serving ads. It leads the market for many reasons. But here’s the catch. Because it’s free (company income comes from ad sources), it’s virtually impossible to offer any support to the users who are paying nothing, and not coincidentally don’t usually know what they are doing. OpenX has attracted customers who expect service but openX does not use resources to hire the ten or twenty support people they would need to handle this load. It’s not the sheer numbers. It’s the nature of non-paying consumers. It costs nothing to use the program so there is no expertise barrier for people to use it, and then expect help.

It’s one reason why I believe OpenX, itself will not survive.

Yet Another:

I know of several web hosting companies that either gave away free hosting, or offered it so cheaply that once again, the customers who were attracted had almost no ability to deal with problems. Their business models rested on attracting a large volume of clients, and then upselling. Except that people who have no clue about websites, or how they work, aren’t likely to purchase higher priced packages. The result. Support ended up slow, even for the more elite customers because they were spread too thin. Inept, or ignorant customers are very high maintenance.

And Finally:

The all night convenience stores and all night fast food outlets face a similar issue with kids loitering around. I know eventually, some stores recognized who they were attracting and started instituting measures (playing classical music in the parking lots). Let’s be clear. I’m not saying that there should be no all night convenience stores,

I am saying that in any business, particularly a small business you need to think carefully about the customers you are targeting, and the cost od doing so.

Back to Studio 6

If I could have left at 3am this morning I would have. Cut my stay short, demanded a refund, and never returned. I don’t care whether Studio 6 is at fault or not because it’s about getting what I paid for. I didn’t. So, here I am writing about this horror story, and I’ll probably be so out of here as soon as I can. I’m also emailing head office, phoning them when I get a chance, and otherwise eating into their time so I can get some satisfaction. Did they think about their clientele? Did they protect me from having a hellish night (again).

No. Maybe it’s not possible to do so. But I don’t care. It’s my money.

I AM exactly the customer they want to attract. But they attract customers who chase “us” out.

There may not be a solution for Studio 6, but in small business YOU need to think very carefully about your customers, who you want, and how you will deal with those who are high maintenance or high cost.

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