Know-How Exchange : Strategy

Dear jms.hoang

Every dollar you spend on marketing needs to bring in a return of thee to four dollars. Marketing should NOT cost you money.

The point here is to work your marketing dollars more smartly, not work them harder.

Look at the everything you offer on the menu as part of a total presentation. Then choose the offerings that cost you the least in terms of wholesale, prep, and presentation, and that offer you the highest net return AND that are the most desirable in terms of your diner's choices.

Many frequent dining plans fail because the people putting them together focus on their bottom line, not on the bottom line of the customer.

Price is what an offer costs you as the restaurant owner. Value is what your customer takes away with them. Focus on lowering the former (as a cost to you) and on raising the latter (as an investment on the part of the customer), not the other way around.

Those items are probably going to be wines, non-mixed drinks, children's meals, or desserts: these are the things on most menus that have higher perceived values but that, when diners are cutting back, that are the first things they cut from their selections.

Then, consider reducing the scarcity periods in which people can obtain these things: make it easier for people to take advantage of getting a free (to them) bottle of wine by cutting the number of visits to five, not ten. This then increases the number of times the same customer eats in your restaurant. Over time, this customer then generates more in terms of net sales that they do in terms of any "losses" you might clock up.

Consider a "kids eat free" policy (with a certain number of acceptable and clearly posted limitations). While parents "think" they're saving money by their kids eating for free, they're more likely to spend more on themselves.

The other thing about your frequent diner plan is to limit it to a free dessert, or to free drinks NOT a free meal. The other thing you could do is to offer a referral plan whereby customers that give out coupons on your behalf get to eat at half price. These things are all easy to do, cost effective to put in place, and they ought not to cost you an arm and a leg.

Good luck to you. And here's the other thing: you are in total control. You can test a program for 30, 60, or 90 days on a small group and then tweak things accordingly until you arrive at a point where the offer works well for you AND for your customers.

I hope this helps.

Gary Bloomer
Princeton, NJ, USA

"Initial trial" promotions are usually NOT discounts, because if someone hasn't even tried the product or service, you don't want to introduce yourself to them as being overpriced or too hungry for new business. What you charge is a reflection of what you think your product or service is worth. If you discount right off the bat, you're saying, "We're not really worth what we normally charge."

There are more subtle ways to discount -- like "Your first drink is on us," or "We welcome you on your first visit with a complimentary appetizer," etc. The idea there is to offer something that has high apparent value to the customer (e.g., the price of a drink) but costs you considerably less.

Your objective should be to get people in the door the first time, and then let your superb offering (including service, ambiance, presentation, etc.) motivate the repeat visit and thus act as your "loyalty program."

A loyalty program isn't going to succeed unless the customer believes the restaurant is a good value. Who would be loyal to a lousy restaurant just because they get an effective 10% discount after eating there 10 times?