Three Ways to Compete with the "Big Box"

In a recent post, I discussed the importance of being aware of economies of scale.  I explained that it is important to be aware of economies of scale so that we can strategically innovate our businesses to gain a competitive advantage.  This becomes increasingly important as big box corporations are able to cut prices further and further so that we can no longer compete on price.  The good news is that big box companies leave many "holes" in the marketplace demand that need to be filled.

Every small business can compete with the "big box" by implementing three big business hacks.

Hack #1 - Customer Service

While this hack may seem obvious, customer service is a huge opportunity to gain a competitive advantage.  In my recent post on economies of scale, I discussed how Target offers slightly higher prices than Walmart, but gains a competitive advantage through customer service.  But Walmart isn't the only retailer that has customer service issues due to their size.

Two years ago I was forced into the do-it-yourself world as I experienced water damage in my home.  I have taken countless trips to Lowes, Home Depot, and Menards.  And during these countless trips, I have experienced countless frustrations.  You so, I am not a naturally handy person.  This means that I usually have a list of questions for each trip I take.  And when these questions don't get answered, I have to go back to the store because I forgot something I didn't know I needed.

What I found at each of these big box retailers was that they had the benefit of decent prices and selection, but really lacked in customer service.  This is where my local do-it-best hardware store comes in.

The local hardware is small and overpriced compared to the big box retailers, but I have learned that things always go better when I go there first.  Sure, I may pay a few dollars more or may still have to go to a big box store for a part, but I know that they are going to answer my questions.  In fact, they almost always have someone standing at the door when you walk in asking you what you are looking for and if you need any help.  To me, this customer service far outweighs anything a big box store could offer.

Hack #2 - Loyalty Programs

Loyalty programs have been around for years and many large retailers use them.  Personally, I am a sucker for my Kroger gas points and am often pulled to my free Starbucks drinks.  These programs have been proven to work with consumers over the years, but why is it that so many small businesses don't utilize this hack?

Loyalty programs don't have to be a complex point system similar to Starbucks or Kroger.  It can be anything that creates a loyalty to your business.

For example, there is a local micro-brewery in my town called Mad Anthony's.  Their restaurant, known as Munchies, serves this local beer.  One of the things Munchies has done to create loyalty is to offer a "Mug Club."  As explained on their website, "it rewards the serious aficionados for their patronage."  Members of the Mug Club experience $3 beers every Wednesday and a larger serving (mug size) the rest of the week.  Other perks, such as beer tasting, are also included in the club.  Furthermore, each member has his mug displayed on the Mug Wall.

Members love this and the Mug Club really creates loyal fans.

Hack #3 - Employee Rockstars

The third hack that can be implemented to compete against the economies of scale of a large corporation is to create employee rockstars.

The Pike Place Fish Market inspired the famous FISH philosophy on customer service.  Most of us have seen a FISH video or read the book, and the focus is usually on customer service.  The greatest thing this company did, however, was that they created employee rockstars.  People all over the world have come to watch how these rockstarts throw fish across the store.  And they have fun doing it.

But employee rockstars can look different from store to store.  Trader Joe's has done a great job in hiring rockstars that fit the culture of what their company values.  Some of these employees have eccentric personalities, and I am always intrigued by who is going to check me out when I am done shopping.

At Ed Debevic's hamburger restaurant in Chicago, you can expect that your server will be rude and get upset with you.  It isn't that they have bad customer service.  They have actually created a culture where it is fun to have your server intentionally give you rude service.  Ed Debevic's has mastered the art of creating employee rockstars that draw business to the restaurant.

Application

How have you seen these hacks successfully applied to a business?