Foodservice Comes Face to Face with Mass Customization

By Joseph Carbonara, Editor in Chief -- Foodservice Equipment & Supplies, 7/28/2008 8:47:00 AM

The economic realities of the day are rather simple. Customers like to feel as if they have choice and want more than a product for a price: They want a quality buying experience. How well each member of the foodservice industry embraces these parameters will go a long way in defining their profitability and prosperity in the years to come.

That’s because concepts behind mass customization allow individual businesses to get closer to their customers. In turn the suppliers can provide solutions – not a product for a price – that has meaning as defined in the eyes of the customer.

An Aug. 12 seminar presented by the Foodservice Institute of America will address this concept more in-depth. FE&S went Face to Face with one of the seminar’s featured speakers, Steve Dragoo of Service Solutions Consulting  and the author of the book “The Experience Economy: Work Is Theater and Every Business is a Stage,” to learn more about the mass customization and what foodservice equipment manufacturers, dealers and operators need to be successful in today’s business climate.

FE&S: What is the "Experience Economy”?
SD: In “The Experience Economy,” Experiences are a form of economic offering, as are Commodities, Goods and Services. It simply refers to the commercialization of experiences. Instead of the experience accompanying the selling of a good or service, it becomes part of the economic offering. On almost any given day in any industry, if you read the ad copy or listen to commercials, people would refer to having a great experience. Today, consumers are making purchase decisions based on their Experiences rather than on the basis of price or features alone. To be successful in an Experience Economy a business needs to get to know their customers and provide them with what they want.

FE&S: How does this concept apply to non-retail-oriented businesses such as foodservice equipment dealers, consultants or manufacturers?
SD: In my own case, working as a consultant, I work with businesses that are in the b2b realm. I found that the experience mindset changes the way I go to market with my offerings because I am focused on my customer and how they will benefit from what they perceive I offer instead of concentrating on such metrics as units sold, margins, etc. The focus of the experience economy is taking the notion that people buy based on benefits and elevating it to the next level by differentiating the offering by the way we orchestrate the details to ensure the person has a positive experience with our goods or commodities. It’s a little difficult to get our heads around because most businesses are focused on throughput, plant efficiency and units sold. What gets lost in all of this is how the customer relates to my economic offering and how I am different when compared to other like-type businesses. Everyone makes good products. If you don’t, you won’t be around for long. Everyone wants to get people talking about them in a positive manner and you do that by creating a positive experience for that customer.

FE&S: The term "mass customization" almost seems contradictory to me. What does it mean and how does it fit into today's foodservice industry?
SD: Mass customization is a term that was coined by a guy by the name of Stan Davis. Joe Pine expanded on the concept in his book, “Mass Customization,” in 1993. It refers to a process in which each economic offering is tailored or customized on demand to meet the customer’s specification. It is the antithesis of mass production. This takes a portfolio of capabilities and matches it to a portfolio of customers through a linking device. So at the crux of this, the business says I will provide only what my customer wants or requests.

Another part of this is the reduction of customer sacrifice. JD Power defines customer satisfaction as “the difference between what a customer expects and what the customer perceives he gets.” Customer Sacrifice refers to “the difference between what a customer settles for and what he wants exactly. Getting anything less than what you want exactly creates sacrifice and diminishes the customer experience.

For example, all fast-food restaurants offer soft drinks. But if you ask for one brand and they don’t carry it, what’s their response? They will say they are “sorry” and ask if the other brand is OK. What are you going to say? No? If you frequent this business over time, they train you to accept a level of customer sacrifice. If a business forces a customer to sacrifice what they want time and again then that customer is in peril when it comes to the company retaining the client’s business. That’s because when a customer finds a business that does a better job they will leave the old one for it.

Designing for the average is the No. 1 cause for customer sacrifice. Mass customization allows you to create what the customer wants based on your knowledge of the particular consumer.

FE&S: How does it fit into today's foodservice industry?
SD: When you are an operator it fits well because as part of providing a superior or engaging customer experience you are able to deliver at a particular point in time very specifically what the customer wants. We live during a time where people have a plethora of choices and many customers suffer from having too much choice. In mass customization, you get only the menu item you want with the features you want based on the knowledge the operator has of you. Looking at manufacturers, it’s delivering the piece of equipment how the distributor or operator wants in the size they asked for in the packaging they want. How is this done? It’s done through a dynamic linkage system and that could very simple or very complex. In order to mass customize it’s done with the consumer but it has to be done with a consumer that wants what you make available.

FE&S: Can you provide some examples of where mass customization has worked in the foodservice industry?
SD: Starbucks would be one example. They are under some fire in the media at the moment but I feel they do a wonderful job. They look at it realistically. I think their issue is more with the proliferation of stores and the desire to drive more efficiency in their operation. There is not a fundamental flaw in their value proposition. Some people may say that customers don’t want to pay that much for a cup of coffee. But they are not paying for the coffee. They are paying for the experience. If their struggles were about the price of coffee and not the experience, then why are companies like McDonald’s putting so much money behind their McCafe’s? Why invest in the furniture and creating the atmosphere? Why wouldn’t they just invest in the high-end coffees?

FE&S: How can embracing the concept of mass customization help support a company's brand proposition?
SD: It’s a way of positioning your economic offerings to an increasingly selective and savvier group of consumers in a way that resonates with them because they know that you understand them. They know you understand they have almost limitless choices and that they will not throw their loyalty behind a company that does not understand customer sacrifice.

FE&S: Are people's service preferences as consumers having an impact on how they want to interact with their suppliers or vendors as businesspeople?
SD: I definitely think so. There are several forces at work that really change the way we buy. The internet is perhaps the single greatest enabler of comparison shopping and commoditization. And the result is that things are sold at the lowest price to the lowest bidder. And you don’t have to buy just in your town any more. You can buy from anywhere in the world based on cost. Wal-Mart is another business that has driven this type of consumption. Are the lines blurred? Certainly. Very few businesspeople do not pre-shop via the internet before they go to make virtually any purchase for their company. Do I do the same as a consumer? Certainly. I am constantly looking to evaluate whether the value received is commensurate with what I paid. There’s a lot of conversation about pricing in the media today. I would challenge you to focus on the value received by the customer. How can we deliberately and consistently put in place all the steps to ensure that our target business partner will have an experience that’s deliberately engaging? It can be done. It’s codifying the process and procedures. It’s about focusing on your customers and your staff. Is it easy? No. But the alternative is a slow and painful death.

You have to change your thinking to that of the customer, asking “what is it that they want and how can I provide it?” at each touch point.

The more transactions you have with a consumer create more opportunities to learn. But you have to ask yourself, who learns more: Do they learn more about what I won’t do? Or am I learning more about what they want?

Editor’s Note: Click here to read Steve’s blog.