Santa's on the Naughty List - How One Business is Under Fire for Giving their Loyal Customers the Benefit of their Christmas Grotto over Everyone Else.

So in this week's news, Santa is on the Naughty List!

I read an article written in a well-known broadsheet today about a certain high-profile Knightsbridge retailer; (Let's call it 'Harrolds') only allowing families who have spent at least £2000 in-store, to book tickets to visit their famous Swarovski-encrusted Santa's grotto. According to said broadsheet, this has been met with utter outrage from people who have been making the annual pilgrimage to the grotto for forty-billion eons with their now 15 year old child. There has been outrage on social media  'if you're not happy with what they've done, then don't shop there!' and 'so only rich people will be allowed in, and we'll have to window shop!' But one of my favourite comments - 'It's Harrold's, why are we so shocked?' - That comment was bang on the money, quite literally speaking. I agree with Harrold's decision to ditch some of the people who made the annual pilgrimage to re-position this offering at their target audience - their most loyal customers, and here's why.....

Harrold's have very carefully considered their 7 P's of marketing (product, price, place, promotion, people, process and physical evidence) in order to maintain a successful business model. I know, it's a lot of words that begin with P and I'll explain them all in detail another day - but hear me out....Every successful business has to regularly consider, revise and re-position these P's if things aren't going to plan, or if the offering they are providing is actually costing them more than they are making from it.

 Careful Positioning

Harrold's have always positioned themselves as a decadent shopping experience for those who can afford it, right down to where their store is located. Answer me this - if it was located in a warehouse in Essex (no offence to Essex - I am an 'Essex Bird' myself), would they be in the right location for their rich patrons? The answer is unequivocally, NO! So that's the first P they got right - Place. Swiftly followed by the second and third P - Product...they certainly make sure that they procure only the finest of everything possible and the finest products generally come at a Price, which they are more than happy to set high - reassuringly expensive. So another two ticks off the list for pitching themselves at their target audience with the right sorts of P's.

 Loyal Customers Matter

I'll go into the other P's on another day BUT as part of their long-standing grotto experience, Harrold's have had to vastly reconsider their offering (Process and Physical Evidence). Why? Because demand was outstripping supply, it was getting too busy and actually, when they drilled down into their figures, they weren't even breaking even on their fully-staffed grotto if a family came through the doors who had no intention of spending anything other than their £20 admittance fee; They were losing money as their genuine regular customers (or target audience) found it harder to book in for the experience - the very people that would have then shopped in-store with them whilst they were there for the grotto. The Physical Evidence of their grotto positioning was shouting loudly at them 'I'm not working for your business or your loyal customers!'.

Harrold's have come up against what appears to be a big backlash with many of their grotto frequenters, but here's the rub - it was costing them more money than they were making to provide the experience, limiting the space their own loyal customers had to shop as the queues were so large, (more than 4000 slots were available).

Making the Right Decision for your Loyal Customers and Your Business

So did they make the right decision for their customers, their target audience by limiting who could book? It doesn't matter if you love or hate Harrold's, the answer is YES they did, and they made the right decision for their business too. The people that are most up in arms over the change in tack are very likely not Harrold's loyal customers - otherwise they'd have spent at least £2000 there in a year, which when you look at it relative to the net worth of Harrold's loyal customers, is still not a massive amount by comparison. In the short-term, it's created a lot of conversation about their business, which IMO is always a good a thing. They've pivoted on a business model they've long held so that they can be more profitable and provide their loyal customers the best possible experience.

If it Isn't Working, You Have to Fix It

The best advice you can be given as a business owner is - if it's costing you money and you aren't seeing the benefit of a return and it's not benefiting your loyal customers either, then it's time to look at your offering and go back to the drawing board!