| A few years ago, I bought my first restaurant. It | | | | than subsidize the very expensive pocket card. |
| was a turnkey operation; a charming small and | | | | Obviously these cards were gone from my |
| upscale Italian restaurant with loyal clientele in a great | | | | marketing list really fast. |
| location. | | | | The direct discount coupon fared better, but I |
| The previous owner, an experienced guy who spent | | | | realized that it brought very cheap customers who |
| all his life in the restaurant business. I still remember | | | | just came to my restaurant looking for a bargain. I |
| what he told us about the restaurant: "It is working | | | | looked at the package that included our coupon and |
| fine. Don't change anything..." | | | | realized that ours was the only fancy restaurant in |
| For a while, I complied. I didn't have really much | | | | the list. Most of the others were pizza places and |
| experience running a restaurant, and as they say: "If | | | | fast food chains. Not a good place to be. Again, after |
| it ain't broke, don't fix it" right? So we kept on | | | | compiling coupons for several months, I realized that |
| running the business as he was doing, including | | | | it wasn't worth it to keep bringing bargain hunters, so |
| repeating his marketing investments and advertising | | | | I also discontinued this marketing strategy. |
| expenses. | | | | Next was the Passport card. I had mixed feelings - |
| Well, after a few months I realized that we were | | | | and results - with this one. On the one hand, it |
| spending a large amount of money (several thousand | | | | brought us many new customers that only go to |
| dollars each month) in marketing. Now, I am fine with | | | | participating restaurants in the Passport card program. |
| spending marketing dollars if I can see the results of | | | | On the other hand, it also brought "the abusers": |
| my marketing expenses, which, in the case of a | | | | parties of two eating just a salad each, nothing to |
| restaurant, appears as people walking through the | | | | drink (but free water) and three hours of |
| door and having a meal at your place. | | | | conversation. Total spent: $12 + free water + free |
| You as a restaurateur have a really big advantage | | | | bread + service. And they tipped poorly as well |
| over many other businesses: when a person walks in | | | | (tipping after the discount - even if the rules of the |
| your door and sits at your table, you've pretty much | | | | Passport program explained that members should tip |
| have made the sale (unless your service is so slow or | | | | before the discount). I decided to keep it for a while, |
| your staff screws up so badly that your customers | | | | since I wasn't brave enough to cut all the marketing |
| leave your place without paying!). | | | | from the previous owner. |
| Very few other industries can claim this advantage. | | | | So this left us with the non-measurable marketing: |
| Many businesses spend thousands of dollars in | | | | Yellow Pages ad, weekly magazine ads and |
| marketing campaigns just to bring people to their | | | | CitySearch premium positioning. |
| stores or websites without any guarantee that these | | | | Before dropping these strategies, I decided to test |
| people will spend any money on their goods or | | | | them. To do this is simple: I just needed to place an |
| services. | | | | attractive discount coupon in the ad and see how |
| So - going back to my experience - after seeing that | | | | many people presented them. |
| my marketing budget wasn't producing enough, I | | | | So I did that. We placed a 15% discount coupon in |
| started questioning all these expenses. (I used my | | | | the weekly magazine and same in the Yellow Pages. |
| business experience at a a large Information | | | | To get the discount, the customers needed to either |
| Technology company as a reference). I asked | | | | bring the original coupon (from the weekly magazine) |
| myself: Why wasn't my marketing working? How can | | | | or a unique code (printed in the Yellow Pages book). I |
| I measure if a marketing campaign is working? What | | | | then asked our servers to keep all the coupons and |
| kind of advertising brings in clients? Was I throwing | | | | code discounts (and store them in our special |
| money in the garbage? | | | | marketing box). After a few months, we counted |
| The first steps were to collect and analyze all the | | | | them. |
| marketing expenses. I realized that I was spending | | | | Total disaster! We only got a few coupons a month |
| money in the following marketing initiatives: | | | | from both ads. In order to break even, we needed |
| 1. Pocket cards distributed in hotels, some businesses, | | | | to bring at least 100 or more customers from these |
| etc. (Very expensive!) | | | | ads. We weren't even close to that number, so I had |
| 2. Ads in a weekly local Seattle magazine | | | | to cut losses - and discontinue these marketing |
| 3. Big and very expensive ad (1/4 of a page) in one | | | | systems as well. |
| of the Yellow Pages Book | | | | This left me with the online directory for local |
| 4. Premium positioning in a well-known online city | | | | establishments. I asked myself: Was it worth it to |
| directory. | | | | pay extra to have a big heading in an effort to get |
| 5. Passport Card program | | | | more people looking at our restaurant review and |
| 6. Direct mail coupons | | | | web site? Well, the answer wasn't simple. |
| All together, these marketing efforts represented a | | | | First, I went to our restaurant review link in the |
| considerable amount of cash. But how many of these | | | | online directory, and realized that we had less than |
| were really working for me? | | | | perfect reviews. |
| To make an objective decision, first I looked at | | | | Some people can be really mean when they post |
| which of these campaigns could be measured. | | | | restaurant reviews, and I was confronted with a |
| To my dismay, I realized that only half of them | | | | very harsh reality about what some people thought |
| (numbers 1, 5 and 6) could actually be measured. The | | | | of our service, our food, etc. |
| pocket cards have a free dessert as an incentive so | | | | If you have read my blogs or subscribed to my free |
| we could know how many people actually came to | | | | reports or newsletters, you are already familiar with |
| the restaurant with them. Same with the direct mail | | | | my take on how much you need to make your |
| discount coupons and passport cards, since people | | | | clients feel special. I learned this the hard way by |
| needed to present them to get a discount (coupons) | | | | looking at these reviews. |
| or free entrée (Passport card). | | | | I realized that it didn't matter if the premium |
| The ads in the local magazine and Yellow Pages were | | | | positioning worked or not. With the negative reviews |
| a total mystery. I assumed that they brought | | | | posted there, I actually wanted people to avoid |
| customers. But how many? No idea. | | | | clicking the link! Obviously, we had lots of |
| The CitySearch was an interesting one. I could get | | | | improvements to do in our service to make our |
| specific analytics about how many people clicked in | | | | clients happy before we could even think about |
| the ad to access our web site (the previous owner | | | | promoting our place. I decided to cancel the premium |
| only had a very basic and amateurish website so I | | | | positioning. |
| hired a company to create a new one), but this didn't | | | | So, "Great", I thought, "From all the money that I'm |
| tell me how many people actually came to the | | | | spending on marketing, I'm left with only one |
| restaurant because of our web presence. | | | | marketing campaign: the Passport program." And I |
| So with this data in hand, I started by looking at the | | | | wasn't even really happy with it! |
| campaigns that I could measure. Were they | | | | The one positive about the Passport program is that |
| effective? | | | | it didn't cost me anything (other than the free entree |
| The pocket cards (I won't mention the name but I'm | | | | available through the program) so at least, I wasn't |
| sure that many of you will recognize them) were | | | | wasting money for nothing - as I was doing with the |
| extremely expensive, so I asked my servers to | | | | rest of my marketing efforts. |
| collect them and keep them in a special box that I | | | | So the bad news was that nothing that I was doing |
| bought for that purpose. After three months, I | | | | up until that point was really working. The good news |
| counted the cards: we had only received around 20 | | | | was that I started saving lots of money in marketing |
| cards and the funny part was that most of the | | | | with no noticeable negative results in the number of |
| customers were usually single diners. | | | | clients. |
| Of course, this made sense since the main distribution | | | | However, this left me with a dilemma about how to |
| center for these cards were hotels and the audience | | | | invest in marketing wisely. What could I do that really |
| business travelers. This was double bad news: | | | | brings in more clients? How could I maximize my |
| 1. These were seldom repeat clients (since they didn't | | | | marketing budget? |
| live in the area). If I was lucky they would come | | | | It was obvious that I needed to invest in marketing |
| once every few months - if they travelled frequently | | | | campaigns and advertising techniques that were |
| to Seattle. | | | | measurable (clearly measurable) and inexpensive (if |
| 2. They came alone, so their average ticket was | | | | possible). The million-dollar question was: How could I |
| small. | | | | promote my business efficiently? |
| So with these pocket cards, I was losing an incredible | | | | In my next newsletter, I will talk about what I did |
| amount of money. I could just give away free food | | | | and how well it worked. |
| to these people and it would've been cheaper for me | | | | |