I don't think I'll get much of an argument if I try to convince you that innovation is important. But let's take a minute to remind ourselves why innovation is so critical now.
The customer today is not the customer you knew five years ago. The year 2010 marked the point when the Millennial population--the age group from 16 to 34--surpassed both Baby Boomers and Gen-Xers to assume the coveted mantle of most significant consumer sector in the U.S. The sheer size, spending power, and affluence of the Millennials cannot be denied. The business challenge is communicating with this technology-savvy, socially aware audience in a way that builds brand loyalty and connectedness.
American Millennials: Deciphering the Enigma Generation, is an in-depth study conducted by Boston Consulting Group, Barkley, and SMG. The research, based on more than 5,000 consumer surveys, presents a fascinating profile of the Millennial consumer as well as insights showing how these younger consumers are different. Bottom line: To capture a chunk of this newer consumer market, you'll have to change. (Those who are interested can get the report from www.smg.com/research).
Of course it is no surprise that the economy booms and busts and that generations evolve new buying habits. Business, like life, is cyclical: birth, growth, maturity, and decline. The storyline is predictable.
Despite this natural business lifecycle, "no growth" is simply not an acceptable option. It is management's responsibility to anticipate these cyclical forces and to take action to generate sustainable growth. Sales and profits must be growing for the brand and the vast majority of franchisees. Here are three reminders why:
To sum it up, a successful franchise requires continuous growth in sales and profits. "No growth" means being consigned to the heap of "has-beens" on the way to "gone." The only way to defy gravity and avoid becoming a dying concept in a saturated market is to get out in front of the business lifecycle by constantly introducing new offerings and appealing to new customers. To guide your innovation initiatives, here are some customer measures to analyze :
With Millennials growing in influence, you must look outside of the four walls of your business more often. Otherwise, you could end up like some franchise companies that have improved their customer satisfaction measurements over the last few years, even as their transaction counts steadily declined. This data anomaly occurs when the customer base implodes, leaving only a diminishing base of hard-core customers who will buy. That situation demands innovation. Better execution is not enough.
Customer satisfaction among existing customers will always be an essential measure of success, but satisfying a shrinking group of customers is a losing hand. It means your brand is out of touch with the times. If you don't face those brutal facts and figure out the reasons why, you become irrelevant.
Jack Mackey is vice president of Service Management Group (SMG), a leading customer experience analytics agency that improves performance for franchise and multi-unit firms. You can reach him at email@example.com.
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