Paul Sansom, Business Consultant at Vendavo, illustrates how businesses can use lessons from Singapore’s prodigious hawker culture to better understand their customers and navigate anything that comes their way.
Last month, my wife and I finally went on our long-awaited honeymoon to Southeast Asia, and we found ourselves in the place of my birth, Singapore, a polarizing city to many, but one that I love. Singapore, for the uninitiated, is home to a very curious phenomenon: really inexpensive, but incredible food through their hawker culture. Hawkers are micro-scale food proprietors that often occupy a space no larger than your closet, just enough room for a miniature kitchen, a counter, and a display case.
These types of shops exist all over Asia, but Singapore hawkers set themselves apart with exceptional quality and food safety, at an incredible price point in an otherwise very expensive city. And there are tons of them – at last estimate, there were over 6,000 food hawkers across 110 mall-like centers in the tiny city-state, with many of them selling the exact same thing. Singapore hawkers are so important to the country’s culture that in 2020 they received status from UNESCO.
With so many food stores nearby with similar menus, the question remains – how do they differentiate themselves? How do the best hawkers maintain their success over decades of changing consumer preferences, macroeconomic waves, and shifting regulatory expectations? Moreover, how can we use their lessons to navigate the turbulent waters that companies seem to be facing every day?
Lesson 1: Know the value of a good relationship
As I previously mentioned, many of the hawker stalls in Singapore sell the same thing, meaning there are hundreds of shops that sell Hainanese Chicken Rice, Char Kway Teo, or Singaporean Laksa. Singaporeans, like the swallows of Capistrano, often return to the same stall for years. Their hawker knows them. The hawker knows if they like it a little spicy, if they prefer extra noodles, or if they are a dark meat person, creating a powerful relationship. This is rewarded in customer loyalty.
A strong customer relationship can give you so much more than loyalty though. It can give you low-cost primary research and insight into the changing landscape. A good customer will be honest with you and tell you if you have recently declined in quality, an ingredient is no longer trending, or a different hawker is providing something better. A good customer will let you know if times are getting a little tough and what they can and cannot afford. We often see the downplay of the importance of building lasting customer relationships. We often focus too much on the sale and not enough on the intangible benefits your sale provides.
Lesson 2: Know what your customers are willing to pay
Did I mention that hawker food is cheap? In a city that routinely ranks among the most expensive in the world – 13th in 2022 according to ECA International – a Michelin-starred meal at a hawker will run you $8 USD or less. Therefore, a dollar difference can mean quite a bit to the discerning Singaporean.
The best hawkers know the intrinsic and extrinsic value of their food to their customers. The hawker is not just selling noodles, the hawker is selling:
- Nostalgia – “I’ve been eating this since I was a kid.”
- Pride “This is the BEST place in the city.”
- Custom preferences “She makes it just how I like it.”
When hawkers know why someone buys their Carrot Cake or what psychological need their Nasi Goreng is fulfilling, they have a powerful arrow in their pricing quiver. These details can represent an unofficial, organic conjoint analysis that can be crucial in their understanding of their pricing power.
Lesson 3: Utilize price optimization to find success
Most hawkers have spent decades honing their craft, learning their customers, and carefully balancing the two when pricing their dishes. But you don’t always have 25 years to perfect your pricing strategy. An effective price optimization solution can take much of the time and effort out of guessing what your customers are willing to pay for a product and moving them toward your targeted price guidance.
Vendavo’s Deal Price Optimizer uses historical transactional data, combined with product and customer attributes to calculate optimized prices that maximize margin and minimize the risk of losing customers during sales negotiations. Our solution sets itself apart by giving you the ability to decide what product, customer, and transactional attributes matter to your business. Deal Price Optimizer gives you absolute flexibility in both your commercial segmentation model and optimized pricing guidance.
Teams can run impact analysis on guidance levels, quickly generate as many price scenarios and models as needed, and automate the price-setting process to your quoting tool. You’ll put winning prices, based on a customer’s willingness to pay, in your sellers and sales leadership’s hands that give them an important advantage during negotiations.
It is incredible what Singapore’s most famous hawker cook can do in a highly crowded and competitive marketplace. They utilize their skills to better know their customers and their products to set themselves apart from each other and the rest of the world. Here at Vendavo, we can help you do the same.