Guest Sacrifice: A Sure Trip to Prison or a Path to Profitability?
By Randy White
© 2000 White Hutchinson Leisure & Learning Group
This article is about guest sacrifice. Perhaps, therefore, I should begin by making something perfectly clear. I am not advocating cannibalism. Guests should not be sacrifice*d* at your location-based leisure (LBL) facility. While there are some guests for whom this might be an appropriate action, let me state again that this is not my intended message. My lawyer says that's clear enough, so now let's proceed.
Your guests would never tell you this, but every time they visit your LBL, they are making sacrifices. In their minds, they have a picture of the most perfect day at the best possible LBL ever. If yours isn't exactly it, don't take it personally, but don't expect to maximize profits, either.
The Rise of -Tainment
Life was once much simpler in the location-based leisure (LBL) industry. You knew who your competition was and there wasn't all that much of it. But today we have entered the experience economy.
Every type of consumer destination is trying to become an entertainment experience. There is eater-tainment (themed restaurants); shopper-tainment (retail stores and entertainment/lifestyle malls); culture-tainment (museums, zoos, aquariums and historical attractions); sport-tainment (stadiums as entertainment extravaganzas). There's even agri-tainment, with farms as entertainment destinations. Cinemas, which used to just offer movies, are now building giant mega-plexes with attached FECs and restaurants. And then there are an increasing number of fairs, festivals, and expos, all vying for a chunk of the consumer's out-of-home leisure time.
With consumers being more time-pressured, location-based entertainment supply now exceeds available consumer leisure time demand. And as we all know, when supply exceeds demand, some LBL's are sure to suffer, or even fail.
Rising Guest Expectations
Simultaneously, guest expectations are rising. Consumer expectations are conditioned by the sum total of their total experiences at all out-of-home destinations. For example, if they have received exceptional customer service at a hotel or restaurant, they will also expect it at your LBL. The bar has been raised.
Moreover, customers today expect to be satisfied. A satisfied customer, then, is nearly as likely to defect as one who is dissatisfied. Satisfaction no longer differentiates a business. It no longer creates loyal, repeat guests, the very backbone of success.
Guest Sacrifice Is the New Measure of Performance
LBLs can meet this challenge by redefining themselves using a new performance measure-guest sacrifice.
Why is this better than customer satisfaction? Customer satisfaction only measures the difference between what guests expect to get minus what they perceive they get. For example, a study of satisfaction among grocery shoppers found that customers were most satisfied with canned food. Did they love canned food? No. But they got exactly what they expected to get.
Guest sacrifice is the difference between what a guest exactly wants and what they are forced to accept. To woo guests away from competing leisure offerings, you need to reduce your business's guest sacrifice. Luckily, guests have grown so used to standard industry practices that an offering with reduced sacrifice will easily make your LBL stand out. If guests have to sacrifice less, you create significant value for them.
Let's look at an example that illustrates the advantage of closing the sacrifice gap. Suppose you like steak. You have a favorite restaurant where you like the KC strip steak and they always cook it exactly the way you prefer it, medium-rare. But the steak they serve is a 12-ounce cut and, because you hate to leave any, you end up feeling stuffed afterwards. Then a new restaurant opens. They also have a good KC strip steak for the same price. But at only 9 ounces, their steak is just the right size. Guess which restaurant you will return to next time? The one with the lesser sacrifice gap, even though you get less quantity at the same price.
One of the primary causes of guest sacrifice is designing for the average-one size fits all. The problem is that the average customer doesn't really exist. In just about every industry consumers spend less money than they could or they don't buy at all, postpone purchases, purchase less frequently or buy a lower-priced selection because existing choices don't include what they really want.
Simultaneously trying to meet the distinct wants of different groups of guests only results in each group making sacrifices. Eliminating guest sacrifice generally requires focusing on a narrow market niche. The new steak restaurant does a good job of eliminating guest sacrifice for steak lovers, but it can't also simultaneously be a great seafood restaurant or Italian restaurant. Eliminating guest sacrifice requires focusing on a market niche.
Focus Reduces Guest Sacrifice
In the LBL industry, family used to be defined as everyone. That no longer works. 'Everyone' is a very broad universe. Offering everyone a little bit only results in everyone making sacrifices. Today, for LBLs to win in the competitive leisure marketplace, target markets need to be more narrowly defined.
LBLs can target three basic age groups:
- children 8/9 years and younger with their parents,
- tweens and teens, or
- young adults.
Then within each group, different affinity groups visit. There can be children alone, parents and children, grandparents with children, school groups, etc. There are different socio-economic groups. The needs, wants and tastes of each affinity group and each socio-economic group are very different.
To succeed, smaller LBLs - those under about 40,000 square feet - should focus on just one basic group as their primary market. Larger facilities can possibly focus on more than one age group, but only if the different groups are kept separate.
Nor can you target two different socio-economics groups in the same facility. Diverse socio-economic groups do not like to mix. Their tastes vary greatly, and birds of a feather prefer to stick together. An upscale facility would make a lower-socio-economic group feel uncomfortable. A white-collar group will not visit a blue-collar facility.
The Benefits of Focusing on Guest Sacrifice
Provide your guest with the LBL experience that closely matches his or her ideal, and you will benefit. Some of these benefits include:
- Premium prices. Guests receive greater value and will be willing to pay a premium price because they are getting what they really want.
- Reduced discounts. Discounting prices is really the result of needing to pay guests to experience sacrifice. If they don't have to sacrifice, you don't have to offer discounts.
- Increased length of stay and per capita expenditures. Happy guests stay longer and spend more.
- Increased frequency of visits. If your business gives guests exactly what they want; there is no excuse not to return. You get the competition's business, plus some business that didn't previously exist when guests used to just stay home.
- Increased retention, fewer defections. If you're happy, why defect?
- New guests. There is no marketing more powerful than word-of-mouth marketing. The friends your guests will recommend your facility to will most likely be just like them.
But squeezing guest sacrifice out of an LBL is no easy task.
Eliminating Guest Sacrifice in New Projects
The best, easiest and least expensive time to eliminate guest sacrifice is to avoid creating it before your LBL is developed and opened.
Based upon demographic, socio-economic/lifestyle and competitive analysis, a target market for the center should first be defined. Then, in-depth research is conducted into the needs and wants of that market. This research includes focus groups, informal interviews, observational analysis of the niche market in other settings, anthropometric analysis, analysis of children's development if children are a guest component, and cultural studies. This research then guides all design decisions about not only the mix of events and programming and the design of the physical facility, but also the design of the marketing, operations and management organization's culture, staffing and training. Once the schematic operational and facility design is worked out, components of it are further tested and fine-tuned with representative target users in both informal and formal focus groups.
Attention to details, details, details is critical to avoiding introduction of guest sacrifice into the design. In the conventional development process, the market and guest research is conducted and then the wand is passed on to a design team. This approach is ineffective in preventing guest sacrifice, as the researchers who have the knowledge of what guests want and who can serve as the voice of the guests are not a part of the design team. The other problem is that the design process is anthrocentric (male-biased and therefore discriminatory against women and children) based upon years of men's domination of the design profession. There should be a strong advocate on the development team for women and children to reduce this problem.
What is required is a concurrent production process where the researchers and management are integral members of the design team and all parties interact simultaneously throughout the entire development process. But even this process will not eliminate all guest sacrifice. Guest interviews and observation need to follow the opening to identify initial errors and then to constantly adjust the facility and its operations to the changing needs and wants of the center's primary guests.
Reducing Guest Sacrifice in Existing LBLs
Narrowing the guest sacrifice gap for an existing facility requires methodical analysis. In any business, there is a wide selection of sacrifices that could be eliminated. The ones that will generate the greatest benefit are those that are common to all guests. Once those have been eliminated, you need to identify the niche of guests on which you will then focus.
The best way to determine which niche of guests will result in the greatest benefit is to segment your guests and see which segment produces the most revenue. If 10% of your guests generate 60% of your business, target them. This may seem counterintuitive, as one would think that concentrating on the guests who are giving you the least business would give the greatest gain. But if you make changes for the group that does not generate the most business, you may increase their business at the same time you lose your most valuable guest segment by introducing new sacrifices for them.
One way to identify guest sacrifice with existing guests is with a combination of interview exit surveys, focus groups and informal discussions. And use open-ended questions. Because guests are so accustomed to settling for what they are offered, it takes considerable probing to help them identify and verbalize sacrifices they are making.
Another way to identify guest sacrifice is to conduct an audit using knowledgeable evaluators who understand the needs of different guest segments. Using both assessments of the physical facility and operations, evaluators will be able to identify where the guest sacrifice gap can be narrowed.
Yhis process needs to be ongoing, as no market is static and guests' wants change. Develop a learning relationship with your guests. Involve your entire staff as the communication channel for identifying guest sacrifice. Use every staff interaction with guests as an opportunity to learn, and you'll create loyal guests. On a more formal level, consider forming 'guest boards' to serve as consultants.
Closing the guest sacrifice gap is not easy and requires a persistent, ongoing effort. In today's competitive marketplace, that may be the only answer to survival and prosperity. But most importantly, don't cook your guests in a cast-iron pot over open flame. My lawyer and I stress; it's not that kind of sacrifice.
B. Joseph Pine and James H. Gilmore were the first to write extensively about the dimension of customer sacrifice in their book The Experience Economy-Work is Theatre & Every Business a Stage and more recently in their introduction to Markets of One-Creating Customer-Unique Value through Mass Customization which they edited. Much of the content of this article was adapted from material in those two books.
Randy White is the CEO of the White Hutchinson Leisure & Learning Group, a Kansas City, Missouri, U.S. firm that specializes in market feasibility, consulting and design of FECs and family and children's venues. The firm has won many awards for the design of its domestic and international FECs. Mr. White can be reach at voice: +1.816.931.1040, fax: +1.816.756.5058, or via e-mail
