.

What can you do in such a situation? It's like trying to compete with Wal-Mart on price. Don't even think of doing it. What you have to do is find another way to differentiate yourself so that you still get the business all the time when there are no live coupons out there. In other words, reality dictates that you can never really win on pricing, or discounting (which is what couponing really is). Anyone can drop prices. But you can do things that other competitors won't ever think about doing.

For instance, look at how this independent franchisee remembered me and my favorite pizza. That ability to remember, attitude and posture is a "gift"...or one heckuva lot of hard work. This really impresses customers. There are a variety of things you

Recently I was visiting some family members over the holiday season. I thought I would drop into my favorite pizza outlet and sneak one of their luscious pies that I really should not be eating. You see, (and this is my gilt-edged excuse...) I don't have one of these outlets within 500 miles of where I now live, so I figure this is a good excuse to cheat on the old diet a bit.

I had not been in this outlet for more than 18+ months, and then only a few times. The owner-franchisee (let's call him Vijay for simplicity) was in the back; but the moment he saw me, he came out with a huge smile and said: "Hello Mr. double-cheese-sausage-and-mushroom...how are you?" He did not remember my name (if he ever knew it in the first place); but he remembered my face and my favorite pizza nearly two years later!

I was shocked and delighted at this. He remembered some of our conversations when we had talked about some of my franchising experiences over the years in six different countries; particularly my being the first to open a "Burger King" in Australia, and helping to launch KFC and Pizza Hut there too. I immediately asked him how things were going.

He grimaced and did not look happy. "I am now the owner of this store. They made me an offer I thought I could not refuse, and so instead of operating it for them, I now own it and I have lost several thousand dollars this year." I was astonished. This was a huge, successful pizza franchise that was famous for making money...lot's of it. I asked him how and why he thought this was happening. He answered with two reasons: the rent was too high (which it was when he confided in me just how much he was paying for this location) and more importantly, the constant discounting by way of couponing was killing him.

Additionally, other pizza outlets had opened up not too far from him and increased the choices for the younger demographic that patronize pizza places for the most part. He has a nice sit down dining area, a super-clean, efficient store, but a lousy parking lot with bad egress and exit. Now here's the point: the franchisor, in an effort to generate sales volume (remember how the franchisor earns his money, right?) will do anything (including lots of couponing) to pump up the sales on which he earns his royalties. Today "pizza" is an almost commoditized food service offering. To get that sales volume, they cover the marketplace with multiple coupons good for two-for-ones, price off, extra toppings, you name it. This is great for them at the head office...they make a percentage of gross revenue. But the little guy, the franchisee, has to pay his bills with what's left, AFTER he has paid the franchisor, food purveyors, staff and other bills.

Usually, the franchisee doesn't have much choice about honoring those coupons either. If they are being dropped in the local newspapers, online, or advertised on local television, if he doesn't accept them, his customers will go elsewhere and he loses a hard-won customer, perhaps for life.

What can you do in such a situation? It's like trying to compete with Wal-Mart on price. Don't even think of doing it. What you have to do is find another way to differentiate yourself so that you still get the business all the time when there are no live coupons out there. In other words, reality dictates that you can never really win on pricing, or discounting (which is what couponing really is). Anyone can drop prices. But you can do things that other competitors won't ever think about doing.

For instance, look at how this independent franchisee remembered me and my favorite pizza. That ability to remember, attitude and posture is a "gift"...or one heckuva lot of hard work. This really impresses customers. There are a variety of things you m

and my favorite pizza nearly two years later!

I was shocked and delighted at this. He remembered some of our conversations when we had talked about some of my franchising experiences over the years in six different countries; particularly my being the first to open a "Burger King" in Australia, and helping to launch KFC and Pizza Hut there too. I immediately asked him how things were going.

He grimaced and did not look happy. "I am now the owner of this store. They made me an offer I thought I could not refuse, and so instead of operating it for them, I now own it and I have lost several thousand dollars this year." I was astonished. This was a huge, successful pizza franchise that was famous for making money...lot's of it. I asked him how and why he thought this was happening. He answered with two reasons: the rent was too high (which it was when he confided in me just how much he was paying for this location) and more importantly, the constant discounting by way of couponing was killing him.

Additionally, other pizza outlets had opened up not too far from him and increased the choices for the younger demographic that patronize pizza places for the most part. He has a nice sit down dining area, a super-clean, efficient store, but a lousy parking lot with bad egress and exit. Now here's the point: the franchisor, in an effort to generate sales volume (remember how the franchisor earns his money, right?) will do anything (including lots of couponing) to pump up the sales on which he earns his royalties. Today "pizza" is an almost commoditized food service offering. To get that sales volume, they cover the marketplace with multiple coupons good for two-for-ones, price off, extra toppings, you name it. This is great for them at the head office...they make a percentage of gross revenue. But the little guy, the franchisee, has to pay his bills with what's left, AFTER he has paid the franchisor, food purveyors, staff and other bills.

Usually, the franchisee doesn't have much choice about honoring those coupons either. If they are being dropped in the local newspapers, online, or advertised on local television, if he doesn't accept them, his customers will go elsewhere and he loses a hard-won customer, perhaps for life.

What can you do in such a situation? It's like trying to compete with Wal-Mart on price. Don't even think of doing it. What you have to do is find another way to differentiate yourself so that you still get the business all the time when there are no live coupons out there. In other words, reality dictates that you can never really win on pricing, or discounting (which is what couponing really is). Anyone can drop prices. But you can do things that other competitors won't ever think about doing.

For instance, look at how this independent franchisee remembered me and my favorite pizza. That ability to remember, attitude and posture is a "gift"...or one heckuva lot of hard work. This really impresses customers. There are a variety of things you

hy he thought this was happening. He answered with two reasons: the rent was too high (which it was when he confided in me just how much he was paying for this location) and more importantly, the constant discounting by way of couponing was killing him.

Additionally, other pizza outlets had opened up not too far from him and increased the choices for the younger demographic that patronize pizza places for the most part. He has a nice sit down dining area, a super-clean, efficient store, but a lousy parking lot with bad egress and exit. Now here's the point: the franchisor, in an effort to generate sales volume (remember how the franchisor earns his money, right?) will do anything (including lots of couponing) to pump up the sales on which he earns his royalties. Today "pizza" is an almost commoditized food service offering. To get that sales volume, they cover the marketplace with multiple coupons good for two-for-ones, price off, extra toppings, you name it. This is great for them at the head office...they make a percentage of gross revenue. But the little guy, the franchisee, has to pay his bills with what's left, AFTER he has paid the franchisor, food purveyors, staff and other bills.

Usually, the franchisee doesn't have much choice about honoring those coupons either. If they are being dropped in the local newspapers, online, or advertised on local television, if he doesn't accept them, his customers will go elsewhere and he loses a hard-won customer, perhaps for life.

What can you do in such a situation? It's like trying to compete with Wal-Mart on price. Don't even think of doing it. What you have to do is find another way to differentiate yourself so that you still get the business all the time when there are no live coupons out there. In other words, reality dictates that you can never really win on pricing, or discounting (which is what couponing really is). Anyone can drop prices. But you can do things that other competitors won't ever think about doing.

For instance, look at how this independent franchisee remembered me and my favorite pizza. That ability to remember, attitude and posture is a "gift"...or one heckuva lot of hard work. This really impresses customers. There are a variety of things you

which he earns his royalties. Today "pizza" is an almost commoditized food service offering. To get that sales volume, they cover the marketplace with multiple coupons good for two-for-ones, price off, extra toppings, you name it. This is great for them at the head office...they make a percentage of gross revenue. But the little guy, the franchisee, has to pay his bills with what's left, AFTER he has paid the franchisor, food purveyors, staff and other bills.

Usually, the franchisee doesn't have much choice about honoring those coupons either. If they are being dropped in the local newspapers, online, or advertised on local television, if he doesn't accept them, his customers will go elsewhere and he loses a hard-won customer, perhaps for life.

What can you do in such a situation? It's like trying to compete with Wal-Mart on price. Don't even think of doing it. What you have to do is find another way to differentiate yourself so that you still get the business all the time when there are no live coupons out there. In other words, reality dictates that you can never really win on pricing, or discounting (which is what couponing really is). Anyone can drop prices. But you can do things that other competitors won't ever think about doing.

For instance, look at how this independent franchisee remembered me and my favorite pizza. That ability to remember, attitude and posture is a "gift"...or one heckuva lot of hard work. This really impresses customers. There are a variety of things you

.

What can you do in such a situation? It's like trying to compete with Wal-Mart on price. Don't even think of doing it. What you have to do is find another way to differentiate yourself so that you still get the business all the time when there are no live coupons out there. In other words, reality dictates that you can never really win on pricing, or discounting (which is what couponing really is). Anyone can drop prices. But you can do things that other competitors won't ever think about doing.

For instance, look at how this independent franchisee remembered me and my favorite pizza. That ability to remember, attitude and posture is a "gift"...or one heckuva lot of hard work. This really impresses customers. There are a variety of things you might consider that are contained within this "label" that you might call "customer service". These are the tactics you need to employ to out-service your competition. People are always attracted to differences, not similarities. They already know by heart that when they come to this specific pizza outlet, they will receive the standard, similarly-produced, pizza that they would receive at every one of this brand's outlets.

Just like a Big Mac is a big mac is a Big Mac, all over the world. What you can provide is a wonderful, customized, personalized, HUMAN experience for the customer...one he seldom receives anywhere else. Most operators have been doing their routine job so long, they have commoditized their product and themselves and staff too. You can offer an alternative to that sameness. Offer friendliness, genuine smiles (not those "have-a-nice-day-stupid-empty-grin-smiles" that everyone knows means nothing that you get everywhere today). After each customer comes in, say: "Hey...thanks for stopping by today." Or you can try: "Hey...thanks for coming in today." They both work well. I know, I tested them with a major franchise client of mine more than a decade ago. Most important though, is to get rid of that "have a nice day" sound-like-a-robot crap.

This is not a rule just for pizza businesses. It applies to all small businesses, franchised or not. You can't do anything about the darned coupons, or the constant discounting; you are locked into a legal franchise agreement; but you can operate your business differently and this will help you compete more profitably. The other business variables seem to be fixed, but how you run your business on a day-to-day basis, depends on you.

© Copyright, Roy W. MacNaughton, 2006-7