Well, that escalated quickly. A week ago I wrote a blog post about how to make sure you’re employing good, visible hygiene practices to give customers peace of mind they might need to continue to patronize your VR arcade or FEC. Since then many countries have secured their borders, banned gatherings of as few as 50 people, and some local municipalities have ordered restaurants and bars to close at least through the end of March.
We have new terms entering the lexicon. “Social Distancing” and “Flatten the Curve” have cultural, if not legal, mandates and hashtags. If you haven’t been transfixed by the news, Social Distancing is the conscious effort to reduce close contact between people. Flatten the Curve is a reference to using restrictions to limit the growth of the virus so the exponential growth curve flattens.
Our industry is in a pickle, unlike anything we have seen in our careers. Some operators are voluntarily closing their doors, like Two Bit Circus in LA and Scene 75 in the Midwest. Some smaller operators are closing shop for good, offering to sell their equipment to the highest bidder. Others are being forced to close by governmental restrictions, and more will fall into this camp in the coming days.
Despite what some people have suggested I do, I am not urging businesses to close or stay open. I’ve been involved in seven startups, mostly all bootstrapped and underfunded at some point. I understand that every business situation is unique, and I empathize with those of you that are facing this difficult decision.
I have seen a few locations that have decided to close for a few weeks contact their customers asking them to purchase gift cards to be used at some time in the future. I’d be shocked if this tactic works.
It’s been written that fear and greed are the two primary motivators, but which is the most powerful? Imagine a bright red Ferrari on one corner of the street, idling with the keys inside, and a “Free Car” sign on it. Standing right behind it is Godzilla. Which way are you going to run?
Asking people in a fear state to put their own needs aside and purchase something they can’t use until some indeterminate future, for the sake of supporting a small business, is unlikely to work. We can’t even get people to stop hoarding toilet paper so their neighbors can wipe their butts.
To try to move the market you need a compelling offer that will overcome their fear of the unknown. Here are three ideas. To my knowledge they have not been tested yet in this environment, so please take this in the manner it is intended: to kickstart some ideas and get some conversation going that might lead to meaningful sales during what will be a lean few weeks or months.
- Groupon: I know many of you hate it. And during normal times I think you need to be careful with it. But if you’ve got excess inventory now, this could be a time to take advantage of their audience of deal-driven consumers to create some cash flow.
- Subscriptions: Many companies have been experimenting with subscription models and its working. Urban Air has rolled them out nationwide to their over 150 locations. Centertec in Philadelphia has been offering them for a couple of months and will expand the program. They don’t allow members to make reservations, so it keeps them coming in during off-peak times. The concern with subscriptions is that some people could over-index and come too frequently. That’s a high-class problem right now as you’ve likely got plenty of excess capacity. This is a great time to experiment.
- Annual Pass: Theme Parks have been using them for years. Disney and Universal offer an annual pass for slightly more than the price of one ticket. Most arcades complain that they’re not getting sufficient repeat business from customers, so this could also drive repeat visitation behavior which over time you can monetize in different ways.
Andrew Weil, celebrity doctor and author said, “Fear and greed are potent motivators. When both of these forces push in the same direction, virtually no human being can resist.”
If you can create packages that offer a tremendous value and are only available for a very limited time, you might stoke the fear of missing out with the greed of a great bargain, and get people to spend, even during these uncertain times.
No matter where you are and what part of our industry you participate in, I hope you come out of this healthy and with minimal damage to your business. Drop me an email and let me know what you’re doing to cope with this unprecedented situation. And let me know how I can help.