The $15,000 Bucket of Tomatoes

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The $15,000 Bucket of Tomatoes

By John Stanley I know what your thinking, how can a bucket of 12 tomatoes cost $15,000? Nobody would pay such an exhorbitant amount of money for tomatoes! But read on, these tomatoes cost $15,000 Australian dollars. The actual bucket did exist and was located in a small fruit and vegetable shop down the road from where Linda and I live in Perth, Western Australia. I say did exist, because they were located at the shop 15 years ago. They were positioned in a primary location to catch the eye. They achieved their goal as Linda�s eye zoomed in on this farm fresh bucket. It had a price sticker on it that said $2. Linda could not resist the temptation of the luscious red tomatoes and she purchased the $2 bucket of tomatoes. She was so impressed with the eye appeal of the fresh fruit and vegetables on display that she carried on to spend a total of $20 on produce. At that time $20 was our average weekly spend on fresh fruit and vegetables. The produce was brought home and unpacked. When Linda got to the tomatoes and started taking them out of the bucket, the bottom layer of the bucket was full of rotten tomatoes. Some will argue we should have gone back and complained, but like so many people in the market place we did not have time, could not be bothered and was it worth it for a $2 purchase. Linda took the option most consumers take, she never went back. Now we purchase fruit and vegetables twice a week elsewhere and pass that store each time. When Linda purchased those tomatoes it was the first time (and the last time) that she had visited that corner farm stall. She was giving them an opportunity to be her fresh fruit and vegetable supplier for life, but alas that was not the case. Linda pointed the store out to me this week and told me that the shop keeper had once sold her a $15,000 bucket of tomatoes. When I asked her to explain, this is how she calculated the cost of that bucket of tomatoes to that store holder: $20 per week x 52 weeks x 15 years = $15,600 (and that is without inflation being taken into account). The moral of the story? How much is a customer worth to your store? What is their life time value to your business and do all the team know that figure. Everything we do in the business should be aimed at maintaining and building the lifetime value for every customer. Most people will tell on average about 15 other people about a bad experience and that means the $2 bucket which had a lifetime value of one person of $15,600, from the, at least, 15 people that Linda has told, has now potentially lost that stall holder 15 people and become a $234,000 bucket of tomatoes. But, lets take a different scenario. Lets assume that when Linda purchased the bucket of fruit the sales person did not just take the money, but built a relationship with her and they had become friends. Then when we got home and discovered the rotten tomatoes, we would have felt obliged to go back to the store to let them know what had happened. They would have then been given an opportunity to make amends and could have replaced the bucket for free and gifted in a fruit basket as a means of saying sorry. Okay, they would have lost the $2 sale and an extra $15 on the fruit basket. Sales that day would have been down $17. People talk! We get together with local friends on a Friday evening to chat about the week. Linda brought up her negative tomato story and spread the negative news to the surrounding guests, but if she had had a positive story then the good news story would have been spread around the community. Now lets look at the figures $20 per week x 52 weeks x 15 years = $15,600. Viral marketing has now meant that the company could have picked up at least 10 new customers and the company now generates $156,000 for the investment cost of $17. An excellent investment by anyone�s terms. Viral Marketing is so powerful We often forget how powerful viral marketing can be in the marketplace. We often think that it is something that big business can do, but out of the realms of the local retailer. I beg to differ with this scenario. I believe that local businesses have much to gain from viral marketing. It works and can build a business greatly. On the same weekend that we discussed the fruit and vegetable shop, I dropped in to see our local florist, �How is it going?� I asked. �Tremendously well� he said, It has never been better�. I realized I needed to stop and talk. �Why are you doing so well?� I queried. He went on to explain that on one of our previous discussions I had mentioned to him that he could not continue to rely on the customer coming to him becauset buying flowers in supermarkets was a growing trend and not going to disappear, it was now part of the retail sector for flower purchases. He realized he needed to be proactive in the marketplace. He visited the supermarket over the road and suggested to the supermarket owner that the quality of flowers on offer in the store were damaging both the reputation of the supermarket and the florist. He suggested he provide the flowers for the supermarket. The owner agreed to give it a try. Flowers were provided of a superior quality for which the consumer had to pay more, but they got a better product with a longer shelf life. Sales of flowers in the supermarket increased and a win:win situation was created for all concerned. The story does not finish there. The florist then contacted all the local supermarkets and he now supplies flowers to all the local food outlets. His name is attached to all flower bunches and the consumer knows if they want arrangements that his is the shop to go to for the best service. Within our small town within one weekend we have seen one business that is flourishing as they can see the opportunities and one that has stagnated because nobody trusts them. The same is true across every town and every retail store around the world. Viral marketing is the key and it is a powerful tool, but it starts with the retailer. We have recently been working in Spain, where we saw a restaurant in a small village in Northern Spain that has a sign up that says “We give preference to serving locals first�. We were told about the restaurant well before we got to the village and we were advised not to stay in that village, but travel on to the next village where the restaurant is more welcoming. That viral marketing not only affected the restaurant, but all the other businesses in that village. The Key To Success The most loyal customer and the one that will be your most powerful viral marketer is the one that complains to you. If you build a positive relationship with the consumer when they come into the store then if something goes wrong, they are more likely to come back and let you know. This gives you an opportunity to deal with the situation and ensures the customer will walk away singing your praises. If they do, you can guarantee they will pass on their goodwill story about your store to their friends. This should not happen by luck, it should be part of your business marketing strategy to build your customer base. Ensure the following is in place: If a customer complains to a member of your team, that team member must take ownership of the complaint and must not pass it on up the business structure. Owners and managers must support team members in the decision making process with the customer, even if they would have handled it differently. Team members should ensure the customer knows the team members name so a relationship can be built quickly. Have a �gift� policy in place that all your team understand and know when it should kick into the situation. Ensure all the team know the lifetime value of the customer and how this can affect the business. It is never the customers fault. It is more likely a fault with the system internally. It is our communications system that has failed in most situations. Keep a record of complaints. It is rare, but occasionally a consumer will try and play the system. If they do, you need to be aware of this to enable you to take the appropriate action. Do train the team so they know how to handle a situation with the consumer. Have the policy written down so all the team members can check with what the company believes in. Be flexible in the way you handle situations, do not throw the company policy at the customer, each situation will be different and needs to be handled with an individual who will react differently.