“We have had a lot of success driving revenue and foot traffic. Before I go into stats, the first thing you should all think about is customer. What would they like and what is the best method to deliver that key "something" to them. Many restaurants and QSR’s have seen great results using simple text message coupons/offers and sweepstakes off their TV commercials. Meaning you can embed a ‘call-to-action’ in your video to drive response. The text message drives the traffic/redemption. Example, you see a commercial for KFC with a visual and/or audio call-to-action that says/reads, "text KFC to 12345 to get $2 off your chicken meal". The consumer texts and gets an immediate text response. This text message has details on how and where to redeem. On average we see a 1% response rate, based on Nielsen estimates.

Here’s the best part, follow up with a second text message asking the consumer to join your exclusive database for more savings. We typically see ~33% opt-in rate (we call this a double opt-in). That rate fluctuates based on brand and if there is an additional offer in the DOI message (get a free appetizer and more info from XYZ Restaurant, reply YES).

We typically see between 52%-113% redemption rates (based on the number of people that requested the offer and then went to the store and used the coupon). Village Inn in Phoenix ran a Bogo entree and saw a 113% redemption rate, that means that people forwarded the text to friends and they redeemed too.

Perceived SPAM is as BAD as SPAM!!! (even if you are not legally spamming, if the consumer thinks you are… that’s bad for business)

Here are the stats:

• 97% or more cell phones in the USA are text (SMS) enabled. basically, everyone.
• Response rates on TV ads: ~1%
• Redemption rates: 52-113%
• Database opt-in: averages 33%.
• Re-marketing to your database: 60% or more redemption rates on average
• Opt-out of database, we see less that 1%, but it is all in how you manage your database.
• Only 21% of American wireless subscribers are using a smartphone as of the fourth quarter 2009
• Smartphone owners in the U.S. tend to be male, younger (between the ages of 18–34), affluent (income of $75k+), and they use the phones for a mix of both personal and business purposes, with more emphasis on business usage.
• iPhone user is similar, but skews even higher for the more affluent (twice as many in the $100k+ income group).

Want to setup your own mobile campaign? It’s surprisingly affordable. email: zn.oc.gnitekramlatigidnull@nivek

Making communications more personal and relevant, as well as more targeted and timely the key to profits

The international audit during 2008 of some 650 senior marketers revealed that making communications more personal and relevant, as well as more targeted and timely, was among the top strategies for realizing greater revenue and profitability from existing customers. Other leading strategies included addressing under-penetrated markets or new customer segments, as well as finding new ways to up-sell and cross-sell existing accounts.

The CMO study highlighted three key obstacles and deficiencies to overcome. This included:

• Lack of real-time data that captures across all customer touchpoints.
• Information not only being selectively gathered, but often inaccurate.
• Data restricted in its availability and use across the organization.

The core need for change  has been simmering for a while now. It started with that groundbreaking research by Romano and Broudy way back in 1999 who clearly established the benefits of  utilising client profiling and transactional data within marketing campaigns.

“It is inexplicable that the vast majority of marketers today are still struggling to source and extract meaningful insights from customer data at a behavioral, transactional and account value level,” noted CMO Council executive director Donovan Neale-May.

Hospitality and Retail have the biggest growth opportunities

An earlier Retail Trends Report in 2005 came to surprisingly similar conclusions to the CMO one. It concluded that retailers that take a customer-driven approach to marketing will be able to withstand the competition for dwindling discretionary income, and still have a productive and profitable. The key to success for small retailers is to identify their best customers, find potential niches to cater to, get to know what motivates customers and then interact as individually as possible.

Retail Trends Report suggests that retailers creating personal experiences and communications are those most likely to come out ahead. Personalising the selling experience and marketing messages will help to level the playing field between small and larger retailers.

According to Gary Wright, of Wright Marketing who specialise in retail strategies, "Technology today puts personalised communications within the reach of every retailer, regardless of size. With new database and digital press technology, small retailers can affordably engage in one-on-one communications which has been proven to significantly increase a customer’s brand loyalty and lifetime value."

when you communicate with a known customer, you are 5 times more likely to generate a response and a sale

Wright encourages retailers to explore database programmes and digital production opportunities that will merge customer data with promotional materials in order to produce personalised and highly relevant materials at a fraction of traditional printing costs. His report indicates that when you communicate with a known customer, you are 5 times more likely to generate a response and a sale. When you add customer-specific information from a database to that correspondence, the potential increase jumps to 13 times.

Loyalty marketing guru Rafi Albo knows all this well. He’s shown us in his own retail sector numerous examples that gained a 15-35% response / voucher redemption rate. Winston Marsh also provided some handy tips for small retailers where he touched upon the benefits of using the internet and email in innovative ways. Now, in 2009, we can add in mobile TXT messaging and QR barcodes.

The opportunities here for all retailers, restaurants and the hospitality sectors are immense, but like any marketing strategy, expert planning and execution is the key to success.  Call us on 027 244 4884 to discuss how we can together devise a retail marketing plan to suit your industry or market sector.

If you want more information on the Routes to Revenue study go to  the CMO web site at http://www.cmocouncil.org/index.asp.

Kevin Trye

• Of their visitors on the web, 74% come from Google.
• Of their visitors through mobile devices, 99% come through the iPhone (they have one of the more popular apps).
• They’re seeing more than double the revenue off of those mobile users versus normal web users.

There’s been related articles here on the use of and importance of SMS messaging for marketing  – For restaurants especially, where mobile activity is strong, the success formula is really quite simple.

For lead generation they need an integrated direct mail, mobile phone and website marketing strategy. To keep customer returning they need a means to build and track everyone via an online CRM system, linked to a mobile phone e-loyalty programme.

For an innovative link with traditional media and for lead generation, utilise individual event TXT keywords or longer term introduce QR barcodes on all printed newsletters, signs and menus. Make it super-easy for loyal customers to bookmark your website or to respond to offers on their mobile.

This allows instant subscription to SMS offers, to pass on referrals and even give out e-discount vouchers to friends. Easy

However, creatively using data about customers can contribute to the customer’s experience in so many ways.

That doesn’t mean a birthday card should be sent to every customer because data shows that below-average customers know the sentiment is hollow

For example, there’s nothing easier than sending a birthday card to your best customers. That doesn’t mean a birthday card should be sent to every customer because data shows that below-average customers know the sentiment is hollow; they know they don’t shop enough to warrant a birthday card. In addition, below-average customers spend too little anyway and the result is a negative ROI.

But when you send a creative, relevant, personalized birthday card with a gift that has no catch to a good customer, it pays dividends in relationship building that goes beyond that day’s transaction.

Data from a major retailer in the US showed that their best customers (i.e. top 30%), when they redeemed their birthday gifts, spent even more. They purchased things they normally wouldn’t as a treat for themselves and they bought more than usual in gratitude. They walked the store, discovered new merchandise and ‘connected’ more.

Real-world Case Studies

UK supermarket giant Sainsburys talked to each of its 4.5 million ‘Nector Card’ customers with an image personalized postcard mailer right on their birthday. Printed digitally with a volume of about 400,000 pieces each month.

I. The Task: Customer Care

• Gift vouchers are a good means to attract customers and are frequently redeemed.
• Sainsburys sends a mailer to each known customer, right on his or her birthday – the information about birth dates comes from the customer database.
• The mailer includes a voucher with one of the customer´s favorite products as birthday gift. These customer preferences are taken also from the customer database.

II. The Features: Outstanding Personalization

• Image personalization
  The Sainsbury´s birthday mailers impressed clients at first sight using image personalization on the front cover. Each customer´s name was integrated in a photo design in a highly realistic way. Using the latest variable print technology a highly emotional and personal look could be created, that showed customers at first sight that Sainsburys cares about them.

• Full document customization
  Additionally, each mailer was adapted to each client, not just by the customers name in the image but also by using different fonts for different age groups and by printing in an individual product as a present, including both product image and text. Also an individual e-voucher number allows fast and simple redeeming at the cash desk. The redeeming is tracked and the data are automatically sent back to the loyalty program database.

III. The Results: 40% Conversion Rate!

• The redemption rate of the coupons has risen to a stunning 40%!
• Based on the experience of previous campaigns, the return-on-investment increased by 25.5%, revenues leapt by 110% and gift redemption by 39%.

It’s already started Downunder

Myer, a major retail chain in Australia has reportedly been monitoring the Sainsbury experience. Just recently they announced their decision to slash their traditional mass advertising budget, instead sending targeted direct mailers to their 2.7 million Myer One card holders. (Myer gold customers should expect birthday promotions to start soon).

It’s a smart move which should save them millions in traditional TV and Newsprint ads, whilst paying huge dividends at the cash register. Read more about Myer’s plans here

Rafi Case Studies

For yet another highly response birthday-related case study we liked was out of Israel and outlined by Rafi Albo in his workshops here late last year. Check out our 5 min Rafi WOW Factor Video

Untapped Small Business Opportunities too

All this isn’t just for big budget retailers. Small business owners have immense opportunities by building up a database and better tracking their clients purchase patterns. Restaurants in particular have the biggest opportunities. Click here for some ideas.

Don’t forget that the aim here is to build up a history of your customer behavior and preferences. Finding out how they want to be communicated with is important too. If they prefer to be contacted by email or SMS text message, that’s fine. Often using more than one channel provides the best results. Ensure your marketing strategy and infrastructure allows for this.

The real purpose of a loyalty program is not points or rewards or plastic cards or discounts – These are just means to an end…

Loyalty programs are there to help discover who the best customers are and track their behavior, find out their preferences, cater to those preferences and keep two-way communication going. The result should be an ever-stronger relationship with customers that increases frequency, per-cheque revenue, marketing efficiency and competitive advantage.

First, start a Birthday Program

Background story from the US – Collecting birth dates is the first simple step to a building a full loyalty program. It’s all about getting to know your customers better.

Of the top 130 restaurant chains in the United States only 7 have loyalty programs to capture customer details, birthdays and generally encourage more frequent patronage.

Why? Restaurants DO fit the bill – high-frequency patronage, pre-bookings and stiff competition, characteristics shared with hotels and airlines, sectors that already have advanced online booking, retention and loyalty programs.

For the Fifth Group Restaurants of Atlanta, for example, members spend 17% more than before they joined the program. Spectrum Foods’ Table One program in San Francisco increased average sales among their 15 restaurants by 10%. And The Palm’s 837 Club is garnering a terrific return on investment.

Fix the leak!

The average restaurant loses 10-20 leads per week as the result of poor client loyalty, together with poor marketing, enquiry and online booking processes. At an estimated $100 per customer sale ($200 for birthdays), the potential loss easily exceeds a $1,000 a week for small operators and much more for larger restaurants.

Customers want to be remembered – In a quantitative study by the National Restaurant Association, 50% of table-service customers said they’d be more likely to patronize a restaurant that had a loyalty or birthday program.

So, why are restaurants missing out?

An illustrative story is told by Brian Lambert, loyalty programs manager at Rock Bottom Restaurants in Louisville. Fishbowls it seems are a big thing. You go in and drop your business card in the fishbowl. Usually the restaurant manager goes in there, gives away the free lunch, and then throws the rest of the cards away. For restaurants, names are perishable. Reservations are recorded on paper, then thrown away. Customers are forgotten.

Yet hotels and airlines have had to capture names, because the reservations were dynamic; travel plans would change. And millions of people were calling weeks or months in advance. The information had to be saved. To track this meant it was essential to have a place to store all these names and contact information electronically. Hence, databases. And to feed the databases, computerized reservation systems.

Yikes – Databases?

Yes. Fortunately setting up a modern, computerised reservation system is now far easier and very affordable. They do what the old point-of-sale (POS) systems do not. They focus more on sales and the customer.

New generation web based reservation systems are finally emerging. Now recording, managing and tracking customer reservations is really simple. And because it’s done online, it can be accessed and updated anywhere, anytime. No special software needed. Just a PC with web access.

Best of all, we can use all that collected customer data to launch slick loyalty programs as well as personalised postcards and email marketing campaigns too. It can even be linked into your website to capture online bookings automatically.

Unlike clunky desktop solutions, such systems also encourage mass bookings for private events, large groups etc. It could even allow regular business clients to securely login and plan their own dates, see menus, costs and then book online.

Much more professional. More Profitable…

Today they seem to have lost their way and risk turning into just a another commodity food and drink outlet.   In Europe Mac Cafes are becoming more popular than Starbucks. Who’d have thought that would even happen?  They’ve responded with new drinks like smoothies and more food on offer. But sometimes more means less. It hinders, doesn’t add to sales or generate happier customers – It confuses. (read more). Financial analysts and investors like more. They see more products as more profit.

Today Starbucks runs the risk of alienating much of their customer base since the Starbucks ‘experience’ is being watered down, a problem clearly identified by their new CEO.

The big lesson here for small businesses in the hospitality industry is that dining is as much about the experience as it is about the coffee or food. Below is a good summary from a small business coach Jay Erret in an interview with ……

So, what should restaurants and coffee shops learn from this? Start with three ideas:

• Firstly, look at ways to engage with customers both in-shop, online and via mobile phone. Build a simple loyalty program – We do note that Starbucks are now introducing an improved program based around your mobile phone, not plastic.
• Second, simplify your menu and choices. Take special note of the environment, making it comfortable and encouraging talk. Food and drink naturally has to be of a high standard and having a unique ‘product’ or offering helps a lot. But it’s the experience and service that they’ll remember and come back for.
• Place your restaurant and menu online in a mobile-optimised website. This ties in with the mobile phone loyalty program and helps busy customer see in an instant what’s on offer. Many may like to subscribe to TXT alerts.