What is the one common denominator for stores with bottom-line results over $150,000 per store? The answer may surprise you. It’s not square footage, fuel volume, number of islands, number of dispensers, or any other normal measure you might think of. Instead, the common denominator is High Customer Intimacy – knowing the target customer in complete detail and therefore the ability to exactly meet the needs of that unique customer base, maximizing the site’s profit.
Before you think this can’t be true because it is way too easy, ask yourself if you really know your best retail customers – who they are, what jobs they have, how much they earn, what type of vehicle they drive, their family status, what they prefer to eat and drink, what services they regularly need. If you succinctly know this customer information for each and every store site, it’s likely your bottom line is over $150,000 per site. If not, read on.
Most retailers have been strongly encouraged by suppliers to operate under the assumption that they should be selling to absolutely everyone – young and old, rich and poor. The old paradigm was that as long as you produced enough monthly fuel volume, you made money. Today, with zero retail fuel margins in many places, nothing could be further from the truth. Volume doesn’t guarantee profits. What’s needed to make ongoing respectable bottom-line profit is loyal customers purchasing inside goods and services at adequate margin.
Because the focus of national chains has been on reaching the broadest customer base possible (mass merchandising) for volume, convenience stores became prototype boxes, often with little or no regard for local demographics or culture. By trying to be all things to all people, there was no defined target customer and therefore, lost profits.
Today’s retailer has tremendous opportunity to focus on profitable customers, designing stores and products for only the best, most profitable customers. Under this new paradigm, the target customer base will be different from store to store. Some stores will focus on youth, some on white-collar professionals, others on seniors. Some will cater to welfare moms, others to high dollar traveling salesmen. Some will design sites that attract farmers, some to attract sophisticated urban professionals. The few marketers that have already adopted the new paradigm have a jump on the marketplace and their bottom-lines show the result of their independent thinking.
If you are not yet involved in customer intimacy, begin by getting to know your current customers through surveys, scan data, and demographic studies. Then focus on your most profitable segments. If you do, you’ll be well on your way to boosting profits. While adopting customer focus and intimacy, however, be aware that any retail site’s current customer base is the product of its current design and offerings. Mass marketing misses many unique, high margin population segments. Therefore, it’s equally important to consider potentially high profit non-customers and modify your site and offerings to attract and keep them as well.