Discover what needs to be done to stay afloat in times of crisis and how data can help you out.
Following the wave of COVID-19-related responses, the hospitality business has taken an unimaginable hit. Whether it’s the widespread fear of being infected, government-enforced shutdown or the implementation of social distancing, businesses in the hospitality industry are witnessing the decimation of their finances. In the space of just a few weeks, food traffic has fallen by 50%.
To stay afloat, hospitality businesses will need to move quickly and seize control of the situation before the crisis takes full effect.
Recognize that the customer’s taste has changed
With the increase in people staying at home, customer purchasing behavior has moved from in-person to online. This change has been so drastic that there are serious concerns as to whether our internet infrastructure can take the traffic surge.
In the U.S. alone, the search for “take out” food has increased by 285% in the past few weeks. Along with the increased appetite for delivery options, there has also been a lot of fear around the delivery itself being dangerous. The question “is food delivery safe?” has increased by 650% since the beginning of March.
The current consumer is looking to fulfill their needs online, while also seeking reassurance that their e-purchases will be risk-free.
Get ahead of the (flattened) curve and communicate directly to your customers
At times of uncertainty and insecurity, people seek information and reassurance. Make sure that you communicate directly with your customers about any changes to your business:
- Update any changes to your business hours across digital directories, such as Google My Business, Facebook Pages, Linkedin Pages, Bing Places for Business, etc.
- Inform your customers about any delivery options or other changes to your business operations. Even providing the knowledge that you do not offer any special solutions lowers the chance of a customer calling or waiting hopefully for a reply before being disappointed.
- Communicate extensively about the extra safety measures that you are putting in place to take care of your customers. Are your workers washing their hands more often than usual? Have you stopped operating in-person to avoid spreading the virus? Do you only accept credit cards to limit cash handling? Let the customers know just how much you care about their safety.
- And, if you haven’t already, create the digital listings mentioned above. Be available to your customers when they look you up from the safety of their homes.
Always respect the communication etiquette. Every instance of communication is an opportunity to put your customer first and bring value to their lives. This is especially relevant when discussing a sensitive topic such as COVID-19, as your customers and their families might be facing their own struggles during this time .
Embrace creative solutions to tackle shrinking demand
With the volume of orders and bookings decreasing, there are several solutions that hospitality businesses can embrace right now:
- Sell gift cards. Help customers support you by buying gift cards that can be redeemed once your business reopens or bought as a gift for others.
- Replace unfulfilled services with vouchers. Canceling your services due to COVID-19 often results in refunds, which is likely to damage your cash flow. Instead (whenever legally possible), offer your customers vouchers in value, which they can redeem once everything returns to normal.
- Resell your inventory supplies to customers. While marketplaces are running low on supplies, your inventory is probably left stagnating due to slow business. Restructure your business from a food place to a marketplace and sell directly to consumers to avoid your stock going past the best-before date.
- Organize fundraisers. Hospitality businesses lie at the heart of communities. Organize fundraisers so that your clients can support you through these tough times.
- Change the medium of business. When customers cannot come to your location, go to theirs. Organize online retreats. Reveal the secrets of your spa treatments. Deliver food to their place. Find a way to deliver your service and products to the comfort of their own home.
- Find new selling channels. From dipping your toes in local advertising campaigns to creating your first Instagram account, find new channels through which you can reach your customers.
- Access governmental relief options. Governments have responded to the economic crisis caused by COVID-19 with increased funding schemes. Tap into this pool of financial resources to help you navigate through the crisis.
- Access other financial resources. Several platforms are also giving out financial incentives that can help small- and medium-sized businesses, such as free Google Ads credits.
- Renegotiate your expenses. From rent to subscription fees, do not be afraid to ask for a payment delay. These can help to lower your burn rate.
Decisions need to be based on data, not on gut feeling
There simply isn’t enough room for error. Any hospitality business hoping to survive (or even thrive) in these times needs to establish and review several data sources:
- Near real-time operational data. Analyze data as it comes in to identify operational issues and tackle challenges as they arise. Is the takeout service failing to deliver on time, ultimately costing you the ‘speed guarantee’ promise? Are you failing to source or produce the number of items that you are selling online, therefore resulting in more refunds?
- (Hidden) costs. Be particularly aware of the rising costs of operations. Supply chains are being usurped across the globe and costs are soaring with lower supplies.
- Explicit costs. Be aware of your largest expenses and determine which ones you can cut out without compromising your service/product delivery to customers.
- Cash flow and revenue. How much money you have at your disposal (cash flow) is different from the amount of money that your accountant wrote down (revenue). Net payment delays can cause hiccups if you’re unable to pay your staff or suppliers because you are short on cash.
- Profit margins and frequency. Know which products bring in the biggest profits and/or are in the highest demand, so you push these out before the less profitable or desired items. Remember, potential customers have a limited attention span, especially when using the internet. Showing them the right options first can mean the difference between a purchase and website abandonment.
- Outreach channels. Decide which marketing and sales channels work best, then determine how much money you can throw at them before your return on investment caps. Is it better to advertise in the local newspaper or pay for a radio ad? Should you double down on Facebook ads or pay someone to draft better emails for you?
- Competition analysis. What are your competitors doing and how are they stealing your (potential) customers?
Does this feel overwhelming? There’s no need to stress. We’ll help you build a data system that can be operated easily by a single person and automates all of the daunting data tasks ahead of you.
How to choose the right strategy and avoid running yourself out of business
Whether you’re managing a multi-national chain or an independent small business, choosing the right strategy should be your number one priority right now. With demand running low, businesses do not have a lot of leeway for experimenting with new channels and marketing campaigns.
Choices need to be made:
- Is it better to concentrate on increasing cash flow to stay operational or work on profit margins to increase capital reserves?
- Although this strategy looks good in the short term, could it severely harm business once restrictions are lifted?
- What is the best data to use to make swift, informed choices?
We are offering free consultations on how to use data for making the right decisions.