When your industry suddenly heats up, how do you stay ahead of your new competitors?
By Debra Phillips
Joanne Shaw didn't get into the specialty coffee industry because it was hip. Indeed, when she launched Flushing, Michigan-based Coffee Beanery Ltd. 20 years ago, coffee was anything but the cup of caffeinated chic that it is now.
"Those were the days of freeze-dried and instant coffee," Shaw recalls. "There were few, if any, retail coffee stores--let alone coffee chains."
Of course, the industry has since percolated its way into the forefront of American culture. Yesterday, coffee was just your average joe; today, it's downright trendy. But even as the cafe lattes add up, so, too, do the competitors. And Shaw must face a dilemma that, frankly, many entrepreneurs probably wouldn't mind facing themselves: What do you do when your business becomes the darling of the marketplace? Or, to put it another way, how can you ride the wave of a hot trend without burning your own business out?
Sure, it sounds wonderful to be the center of so much attention--and, in some ways, it is wonderful. "I've always thought [the coffee trend] was good for specialty coffee and good for us," says Shaw, who began franchising The Coffee Beanery in 1985. "We've had continual sales increases at every unit."
Shaw isn't alone in recognizing the power of enhanced consumer awareness. Jake Burton, founder of Burlington, Vermont-based Burton Snowboards, initially faced an uphill battle trying to educate consumers and dealers alike on the virtues of snowboarding. When Burton started his company in 1977, the sport he was championing was barely off the ground. This forced him to expend valuable time and energy as a spokesperson for snowboarding itself rather than for Burton Snowboards.
"Early on, our ads didn't sell the company--they sold the sport," Burton reflects. "There was sort of a massive grass-roots lobbying effort that had to be done, and I think we were clearly more responsible for pulling that off than anybody."
As snowboarding escalated in popularity, however, Burton was able to shift promotional gears. So, yes, there are benefits to being swept up into a trend. "The sport [now] has its own momentum," says Burton. That leaves the 42-year-old founder free to focus on the demands of his own company.
And make no mistake: There are demands. When your industry is catapulted into the spotlight, you're faced with the prospect of growth--rapid growth. "When you've been in business for 15 years and all of a sudden you're in the middle of a hot trend, you have to learn to adapt real quickly," says Shaw. "You actually have to speed things up."
The good news is that your customer base has expanded. The bad news is, well, your customer base has expanded. And, as the multitudes flock to purchase your wares, you may find yourself torn between those customers who were with you from the beginning and those who want to jump on the bandwagon now. Can you appeal to the trendoids without alienating your core audience?
"Ideally, there should be compatibility between your core audience and your newcomers," says Jill Griffin, president of The Marketing Resource Center Inc., a strategic marketing company in Austin, Texas.
But what if there isn't? Given that situation, Griffin advises entrepreneurs to target those customers with the greatest buying potential. "All customers are not created equal. Some of them have buying habits and buying behaviors that are far more valuable to a [business owner]," she says. "The key is looking at the long-term potential of each customer segment. [Don't go solely by] what they're buying from you today but what they have the potential to buy from you. That's the group of people to zero in on."
For his part, Burton concentrates on selling his snowboarding gear to customers who indeed want it for snow--not show. "We make a lot of clothing for snowboarders," he says. "We don't, however, try to sell it to people to wear on the street. If people go out and buy it [to be fashionable], that's fine. But that's not who we're going after. Once you try to make your business bigger than it should be--or try to appeal to a broader base than you should--that's when you get into trouble."
Getting lost in a sea of customers is one way to sink your business, no question. But what of the trouble generated by forces outside your control? Specifically, what of those unsavory operators who dive into a trendy industry with the sole intention of making a fast buck--followed by an even faster getaway? Such unabashed opportunism could cast a pall over your entire industry.
"A lot of people look at [specialty coffee] as a get-rich-quick scheme," acknowledges Shaw. "They're not necessarily getting into it because they're passionate about the product. They're more in it for the high profits. That's a major negative as far as I'm concerned."
"Every facet of [snowboarding] is being invaded by people who really don't know what they're doing," echoes Burton, who sells his products worldwide. "That includes everyone from manufacturers to retailers. When you [work with] a retailer who doesn't know or understand the sport, that's when it gets scary."
All the more reason, say experts, to distinguish yourself from the pack. "You'd better be on top of what it is your customers value and continually improve your offerings to better deliver that value," cautions Griffin, who is also the author of Customer Loyalty: How to Earn It, How to Keep It (Lexington Books). "Otherwise, they will see no reason for staying [with your company]."
"Stay on top of what's happening in your industry," urges Robert Imbriale, president of Classique Inc., a Commack, New York, marketing consulting firm. "Hopefully, people will copy you because then you can continue to be the leader. You want to build your industry, but you don't want to lose market share at the same time. The only way to [prevent this] is to innovate."
By way of example, consider what Shaw did to keep The Coffee Beanery piping hot. "We looked at what we were doing," she reflects, "and said, `OK, what's different about us [compared to] all the other coffee concepts? What can we be proud of that makes us special?' "
One "special" ingredient turned out to be the company's commitment to flavoring its own coffees--a practice, according to Shaw, that many coffee retailers don't follow. What's more, in reaction to her industry's growing popularity, Shaw expanded The Coffee Beanery from its mall outlets to street-front cafes, espresso carts and kiosk locations.
"What we really did was gear everything up to do it better [than the competition]," explains Shaw, "and then talk about it--stressing our points of difference."
Stressing your company's uniqueness is essential, agrees Imbriale. "In all your marketing materials, make sure you tell your customers and prospects what it is about your business that makes you different," he says. "Make sure that difference is in the form of a true benefit to the customer. [Customers] are not interested in anything but how you can make their buying experience better or offer them more than the competition."
Ultimately, your most powerful weapon in the battle to survive--and flourish--in a high-profile industry just might be your customers. Who better to let you know how your company is performing, which products and services are the most valued, and in what areas your company needs to improve?
"The business has got to continually dialogue with the customer," Griffin maintains. "[Customer] feedback can help a business get a handle on expansion--for example, if it wants to add to its product line. A lot of times you can get a good sense of [what to add to your product line] from talking to customers and finding out what they're buying elsewhere that they might buy from you."
"The only way you're going to find out what the customer wants is to ask," agrees Imbriale. You can do that informally through customer interaction or more formally through customer surveys.
Don't automatically assume you know precisely what your customers--either longtimers or newcomers--want. "A mistake I see even world-class companies make is they think they know what is really valuable to their customers," says Griffin. "So they do things they later find out weren't important to their customers at all."
Keep in mind, too, that there's no rule against learning from those competitors that have jumped into your now-trendy industry. To the contrary, as an industry undergoes a metamorphosis, it's incumbent upon you to stay abreast of--and incorporate--those changes that most benefit your business.
The Coffee Beanery, for instance, responded to the new-found hipness of specialty coffee by adding seating to its mall locations, as well as offering entertainment and more food and bakery items throughout The Coffee Beanery's franchises (which number about 180 nationwide). It's a simple, yet all-too-easy adage to forget: Give the people what they want, when they want it.
As banal as it may sound, there is one clear advantage both JoAnne Shaw and Jake Burton have over many of their Johnny-come-lately competitors: They're genuinely excited by the products they sell.
"I love this business--I love the product, and I love the people," enthuses Shaw, who estimates The Coffee Beanery has enjoyed 300 percent growth in the last three years. "I feel like we've got so much more to do and so much more growth in our future. It's exciting."
Similarly, Burton isn't traversing the snowboarding landscape just because it's--forgive the pun--cool. Ever since he was a teenager, Burton thrilled to the feel of gliding on the snow. "I really felt there was an opportunity for [snowboarding] to evolve into a sport," he says. "I've always felt that way."
Not everyone plunges into a hip business heart-first, however. Shaw tells of one fellow specialty coffee retailer who discovered firsthand that business and pleasure don't always mix. "Someone came in [to her store] and said he wanted to learn all about the business," recounts Shaw. "So [the retailer] said to him, `Well, grab a cup of coffee, and I'll sit down and talk to you.' "
The punchline? You guessed it: The would-be coffee mogul didn't even like coffee.
Burton Snowboards, 80 Industrial Pkwy., Burlington, VT 05401, (800) 881-3138, (802) 862-4500;
Classique Inc., 203 Commack Rd., #135, Commack, NY 11725-3437, (516) 754-9144;
The Coffee Beanery Ltd., 3429 Pierson Pl., Flushing, MI 48433, (810) 733-1020;
The Marketing Resource Center Inc., 2729 Exposition Blvd., Austin, TX 78703, (512) 469-1757.