Learning From the Big Leagues
Spring is here, which means my favorite Queens business is back: Citi Field re-opened its gates April 5th for another season of Mets baseball - and with this opening come 2 great lessons for small businesses!
A brief lesson on the Mets for those who don’t live and die by sports like myself: In 2006, the Mets were the best team in baseball, but fell just short of the World Series because of injuries and a few unlucky breaks. The team had a great, young group of players and the future looked bright.
Cut to the present, and anything that could have went wrong, did go wrong. Legal troubles from the Bernie Madoff scandal, injuries, public relations missteps, front office mistakes, poor attendance, collapses and bad contracts are part of the laundry list of errors that define the modern era Mets. Over the past five years, the franchise has become the poster child for running a bad New York City business.
Two challenges the Mets face are declining revenues and unhappy customers. Scaled down, these challenges are relatable to all types of small businesses. Below are two smart business solutions used by the Mets that small business owners should take note.
1. Listen to Your Customers and Adapt
The Issue: The Mets spent 2½ years and $900 million to build a state of the art ball park. The fans found faults about the stadium’s design, which pays homage to both Ebbets Field and the Polo Grounds, homes of two teams that are no longer in NYC. Mets fans wanted their own identity, and few have any connection with the teams that left NYC more than 50 years ago. The fans also were unhappy with the large dimensions of the ball park, which led to fewer home runs.
The Response: Three years later, ownership decided to respond. Better late than never! The Mets brought in the fences, expecting a 15% increase in the number of home runs. They made major changes like adding the Mets Hall of Fame and minor changes painting the fences blue to slowly create the distinct Mets’ identity that the fans craved.
Apply It: Do not ignore feedback! Your customers are your most valuable resource, so treat them that way. If a customer gives you advice, another customer is probably thinking the same thing. Ask customers how you can improve or what is missing from the business. Apply this by having a suggestion box, or handing out a survey. Monitor your feedback on your website, or relevant sites like yelp.com. You may not like what you read, but it’s better to fix the problem than ignore it. Customers like to know their voice is heard and adapting to their concerns builds long-term loyalty.
2. Loss Leaders
The Issue: After 3 losing seasons, a bad economy, and the loss of their best player, the Mets knew it would be a tough year for attendance. Unless the Mets owners planned on signing Tim Tebow, it was going to take some new ideas to sell tickets.
The Response: The Mets applied a loss leader strategy, drastically reducing ticket prices in hopes that fans will spend money at the ball park and improve the atmosphere at the games. A ticket sold at $5.00 can be profitable. That person will probably buy a $5.00 hot dog, $8.00 beer and a $60.00 jacket on a cold April night. Get the customers in the door and the wallets will open.
In order to minimize the decline of ticket sales, the Mets offered several new strategies.
- Dynamic Ticket Pricing: The Mets applied dynamic pricing on Opening Day - adjusting the cost of seats depending on demand. A $30 ticket may go down to $20. The Opening Day game set a Citi Field record in attendance.
- Ticket Specials: While promotions and specials are standard, the Mets introduced several new specials this year. For example, they offered $2.50 tickets on 4/11 to celebrate their 50th birthday with prices rolled back to 1962 prices.
- Social Media: If you follow @Mets or @SNY on twitter, a tweet had a link for free tickets for the game on 4/8, Easter Sunday. This helped fill the stadium – and it increase the value of their Social Media tools because fans learned it’s a place for deals.
Apply It: See the big picture in your pricing. Breaking even or taking a loss on 1 item could lead to a customer spending money on something else that is more profitable.
- Clothing Store: A clothing store might offer 70% off select items, but place the item in the back of the store. A customer will walk past the full price items on the way to the sale items, and probably will want to purchase these items as well.
- Restaurant: The same loss leader principle is applied to the 15 cents wing night at bars. The restaurant might lose a few bucks on the wings, but the $6.00 beers to wash down the wings are all profit.
- Supermarket: It’s common practice at supermarkets to offer a free turkey on Thanksgiving with the purchase of other items. While the turkey is free, all of the other side’s that make up the feast are not.
Take Action: Create a special too good for a customer to pass on. Tweet it; post it on your website or Facebook page; share it through a site like Groupon/Living Social. Your business will most likely see a spike in short-term sales. While you may take a temporary loss, you are acquiring new customers, or retaining old ones. If they are happy with your deal, they are likely to come back and look for more deals. Remember to put a limit and expiration date on your deals!
Brad Seader is the Director of the in Queens. If you have a question or comment for Brad, drop him a note below. And, please share his blog entry with your colleagues on Facebook and Twitter.