Recovering from a voucher slip-up
Friday, August 5, 2011/
Supply and demand can be a precarious balance for small businesses, even more so for start-ups still trying to build up their customer base.
So when an employee unknowingly promises every single customer a special deal, how do you deal with the influx in demand?
Gold Coast entrepreneurs James Patten and Bradley Carr found themselves in this sticky situation, but somehow it all worked out for the best.
Patten and Carr are the founders of RY Hair & Beauty and Kitchenware Superstore. RY Hair & Beauty was founded in 2007 after the founders saw a gap in the market for easy access to quality hair and beauty products.
RY is renowned for its heavy discounts on big-name brands, and has built a proposition around its super speedy delivery, negating the need for consumers hit the shops.
“Our vision was simple: to provide an innovative way for consumers to research, learn and shop for all their favourite products in one convenient place,” Carr says.
However, RY almost didn’t survive when a $5 voucher was sent unintentionally to every single customer in its database, putting immense pressure on the young company.
“We had about 20,000 customers at the time. We thought, ‘We’re only new – if everyone redeems this, we could go bankrupt.’ But we decided that we weren’t going to go back on it. We would honour it,” the founders say.
Fortunately, a lot of customers ignored the email, although there were many more who decided to use the voucher. However, the potentially fatal mistake proved to be an ideal sales strategy.
“We found that when they used it, they spent a lot more than $5, so it ended up generated a lot of sales,” Patten and Carr explain.
“It also gave us a bit of a taster. It really opened our eyes about the power of looking after our customers and using newsletters and the like to communicate with them.”
The company was so happy with the result that it used the same tactic to launch its second store, Kitchenware Superstore, offering customers a $10 voucher.
“We’re a bit bigger now so we can absorb some of these costs. We used the same method and adapted it to our second online store – it’s a great way to boost a new company,” they say.
RY Hair & Beauty now has more than 100,000 members, while its sister site has already attracted 10,000 members since launching in January this year.
The business now employs around 14 staff, including the staff member who sent the voucher to the entire database, who now holds a management position.
“With regard to turnover for this financial year, we’re hoping to be around the $10 million mark,” the founders say.
“We’re hoping to create 15 to 20 online stores across a range of difference sectors.”
In addition to boosting the company’s sales, Patten and Carr say the voucher incident taught them a valuable lesson about putting customers first, regardless of the circumstances.
“If everything you do is dominated by profit, you tend to forget the customer. If you keep the customer as your main focus, the profit will come,” they say.
“We look at some of the bigger businesses with admiration. Apple, for example, allows people to go into its stores for three hours and the staff don’t ask you to buy anything.”
“Take inspiration from a company and ask yourself, how can I be as good as the company I like?”