By Kamron Karington
Millennials – the largest spending demographic the planet has ever seen – are coming your way. Maybe.
Shunning big houses and fancy cars, they’re flush with disposable income and spend more money in restaurants than any previous generation. They seek out fresh ingredients, organic and local. They value community, authenticity, and prefer the mom-and-pop dining experience. But here’s the ugly truth. Millennials are stampeding like wild horses to large chains, franchises and multi-units at breathtaking velocity. Case in point: Independent pizzerias in the United States controlled 52 per cent of pizza sales in 2010. By the end of 2015 they were clinging to 39 per cent. What happened?
Patrick Doyle happened. In 2010, the newly minted Domino’s Pizza CEO, boldly and decisively bet the farm on… the future. His initiative? Harness the fast-approaching wave and unprecedented purchasing power of 80 million millennials. How? Tech infrastructure focused on loyalty, digital marketing, mobile and online ordering. Components would come together. Talk to each other. Work together. In the blink of an eye, digital marketing became very smart.
Indeed, Domino’s market cap has rocketed from $300 million to over $8 billion today, outperforming every publicly traded restaurant on Wall Street. Domino’s didn’t just shake the pizza industry to its core. It opened a lead so wide, Doyle says, “small chains and independents may have fallen too far behind to ever catch up…” The other big players have taken note, and the scramble to go “smart” is at a fever pitch. Meanwhile, frozen in time, too many restaurant owners sputter along with a spaghetti of disjointed, outdated marketing complication that trains customers to wait for deals and spend less.
The carnage is just starting
As early adopters gain momentum from the shift to smart digital, others, hoping to lift sagging sales will double down on what they know best: Cheap, easy e-mail blasts and digital discount gimmicks. This is not the answer. The batch-and-blast marketing that powered restaurant sales just a few short years ago is already in a death-spiral. A blizzard of Groupons, coupons and discounts, the crack cocaine of restaurant marketing, simply fuels the descent. The digital divide is here. There will be winners. There will be losers.
Rise of the machines
Never in history has restaurant marketing been more effective, automated, or affordable. Platforms that create a max-profit scenario every single day — based on customer behavior patterns — and then deliver the marketing to make that happen are yours for the taking. Predictive analytics that detects and reactivates slowing or inactive customers before they wander off for good is here now. The power to attract an endless stream of first-time guests, at the very moment they’re searching for a new restaurant is available to even the smallest neighbourhood operation. We start there…
You don’t find Millennials. They find you. They actively seek information and crowd validation before making decisions. Now, hold your nose if you need to, but stay with me for a minute here. Yelp, and similar online review sites, are widely despised by restaurant owners of every stripe. Nothing will send a hard-working restaurateur into a demonic rage faster than a vicious, one-star review. Nothing!
I get it. But here’s the deal. Yelp is the top restaurant search engine on the planet. It’s where Millennials go when they’re looking for a new place to try. Even smaller markets see thousands of searches every month. These spend-ready consumers are looking for a new restaurant to try, right now. Turn a blind eye, and you simply surrender this traffic to your competitors.
Here’s where you start:
- Claim your profile
- Upload appealing photos
- Respond to every review
Now let’s talk about that last one. You cannot win an argument with a customer so don’t even try. Respond in a cool-headed manner, acknowledge the issue and ask the reviewer to give you another chance. Done.
TIP: Don’t offer free food to every hothead. That invites others to complain in order to scam a free meal. And here’s a secret. You actually need a few bad reviews. Searchers are skeptical when eyeballing an endless list of raving, five-star reviews. Nobody’s perfect, and they know that. They’ll see the ridiculous reviews for what they are. But they want to see how you handle the heat on a legitimate beef. Tripadvisor, Google+ and maybe Zomato also need your attention. Keep your profile current, add photos, videos, and respond to reviews.
FACT: Reputation equals revenue. We’ve seen clients appearing in Yelp search results increase by over 1000 per cent along with verifiable traffic surges by taking control of their most important asset — their reputation. It’s no longer buyer beware. It’s now seller beware. Guard your reputation like a pitbull guards its yard.
Marketing to millennials
Millennials expect a “me” experience. It’s all they’ve ever known. And they’ll give you direct access to the smartphone resting in their hand to get it. They will also block, delete, uninstall or unfollow you the instant you abuse that privilege with a spam blast. So, forget what your marketing used to do. Here’s what it does now. Fueled by data, which I’ll cover in just a minute, smart marketing unleashes three untapped revenue generators that yesterday’s marketing didn’t even know existed.
- CUSTOMER BUYING CYCLE: People are creatures of habit. They don’t buy when you feel like advertising. They buy when the timing is right for them.
So, a batch-and-blast e-mail pushed out on “Wednesday” is awkwardly out of step with most of your customers’ natural buying cycles. That’s because you’re late with Bob, he’s a Tuesday buyer. And you’re early with Sally, she orders on the weekends. Out of sight, out of mind. Over-messaging is a top reason guests opt out of loyalty or e-mail programs. Smart marketing keeps the timing right, reducing opt-out and increasing visits.
FACT: A twice-a-month customer making just one more visit a month is a 50-per-cent increase right there. Being top of mind when customers are ready to spend turns many of your irregular guests into high-profit repeaters.
- CUSTOMER SPENDING POTENTIAL: Everyone has a certain price they’re comfortable paying for something. And while they won’t hesitate to spend less, they will rarely spend more.
Bob is happy to spend $25 when he’s hungry. Sally’s more frugal – $15 is her limit. Cookie-cutter marketing is completely dumb to this. It treats all customers the same. And here’s the problem: A $20 offer has Bob spending $5 less than he would have. And Sally ends up going somewhere else because you’re $5 higher than her comfort zone. So, you end up with $20 instead of $40. Worse, you’re conditioning Bob to spend less, and you may never see Sally again. So, instead of over-discounting Bob he gets a $25 deal. And instead of losing Sally’s business she gets a $15 deal, on terms favorable to you. Now you have $40 in your pocket instead of $20. With thousands of Bobs and Sally’s, this adds up fast.
FACT: One of our clients saw a group of 262 customers spend an additional $1,065 the very first month smart offers were implemented. People will spend more – if you let them.
- CUSTOMER LIFETIME VALUE: You can’t fill a bathtub without a stopper in the drain, and you can’t grow sales while losing as many customers as you gain.
For instance, a typical restaurant can experience around 18-per-cent customer turnover each year. Yet, most do absolutely nothing about it. And the longer a customer stays away, the less likely you are to ever see them again. Since smart marketing platforms continually study each customer’s activity, they also detect inactivity. Better yet, some will identify customers at risk of defecting and re-engage them before they do.
FACT: Many of our high-volume restaurant clients, see upwards of $100,000 a year in recaptured revenue from this alone. While nothing will eliminate customer churn, predictive analytics and automated retention greatly reduce it. And that keeps you growing. From now on, as your competitors carpet-bomb customers with ill-timed e-mails and irrelevant offers (yawn), you’ll be building an unstoppable business with smart technology powered by science.
If your pulse isn’t racing by now, slap yourself. Hard.
How you get started
This smart rocket ride requires one thing: Data. And the simplest, most efficient way to collect it is through a loyalty program. That’s because loyalty programs collect a mind-bending amount of customer data that when properly analyzed and acted upon, puts you in a position to print money.
Besides that, loyalty flips the marketing model to something that makes sense for you. Instead of bribing customers with discounts to get them in the door, you reward them for spending more money with you, and only after they do.
How smart becomes brilliant
The promise of smart marketing evades many restaurant owners because they’re chained to an outdated or inadequate POS platform. They want the cool new stuff, but their POS becomes a chokepoint.
Smart marketing technology can become rather stupid under the wrong conditions. Loyalty only collects the data that feeds your smart marketing engine. Sure, most POS platforms offer a loyalty program. They collect transaction data, but you have to decipher it, run reports, segment lists, create and send e-mails, and track results. I can promise you, complex data analysis is not a do-it-yourself project. And most restaurant owners I chat with are looking for less work, not more.
Third-party marketing providers that bundle loyalty, analytics, e-mail, mobile, surveys, automation, etc. into a cohesive platform is where the money is. Each piece talks to the other, and everything works together. Brilliant!
TIP: You cannot win the digital race wearing cement boots. Choose a POS that integrates with, or allows third-party digital marketing solutions. Digital moves fast. You need freedom not shackles.
How to choose smart marketing automation
There are many good, solid providers out there, but you’ll also come across some half-baked “coded-yesterday” upstarts. Here’s what you need to look for:
Platform: Fragmentation is digital marketing’s enemy. If you have loyalty over here, e-mail over there, surveys, mobile, and data somewhere else, you have complexity. And if nothing’s talking to each other you multiply inefficiencies — the exact opposite of what technology should be doing for you. Nobody buys parts and assembles a car in their garage. Likewise, duct-taping five or six different providers together, is a project you don’t want.
Customer experience: Millennials experience the world through a smartphone. Your website, mobile app, and online ordering must load fast, look great and navigate easily. If not, click. You’re gone. Research and carefully evaluate solutions. Choose a turnkey solution that includes the marketing channels you need, in one spot, optimized for mobile.
Automation: If a provider pitches “actionable data” so you can make better marketing decisions, or e-mail integration so you can send e-mails, you better run. Fast. Data, stuck on your POS somewhere, waiting for you to act on it, is already old. Its ability to deliver a max-profit outcome for you today has passed. No human can match the data-driven, machine-learning, marketing automation technologies designed to maximize wallet-share from each customer. Do-it-yourself doesn’t stand a chance against a competitor with a cohesive auto-pilot program that acts immediately, when the opportunity is there. You need complete, hands-off automation.
Pricing: Newbies have no frame of reference on this, but grizzled veterans remember the high cost, hard work, and heartbreaking results of yesterday’s mass marketing. Direct mail campaigns that cost thousands, delivered almost nothing. Today, life-altering, done-for-you, competition-crushing digital marketing is available to any restaurant owner for less than what a small Yellow Page ad cost just a few short years ago.
Spend less. Make more.
The marketing of tomorrow is already here, it’s ridiculously affordable, and it’s very cool. It can study each customer, learn their behavior patterns, and develop a max-profit marketing scenario for tomorrow. Then, while you sleep, it creates, schedules and delivers the right message to the right customer at the right time. Its only mission – a reliable, unstoppable flow of profit for you… and Bob’s your uncle.
About the author:
While making a phone call to get tickets to the Rolling Stones – Kamron Karington ended up buying a run-down pizza restaurant (huh?). Over the next three years he increased sales from $3,000 a week to over $1.6 million a year. He founded Repeat Returns in 2007 to provide an alternative for restaurant owners looking to escape the discount-driven hamster-wheel. Today, Repeat Returns provides data-driven, automated marketing to restaurant and pizzeria owners worldwide. Learn more: www.repeatreturns.com.