Using the POS for strategic growth

 
March 14, 2007
Technology is transforming pizza restaurant marketing, reducing costs and dramatically improving results. Advances in point-of-sale systems combined with caller ID service and easy Internet access make it easy to build a customer database, track customer demographics and ordering habits, and use that information to build sales and increase profits.
 
"The biggest obstacle for most operators is that they are pizza makers, not marketers," said Jennifer Wiebe , marketing manager for Speedline Solutions Inc., a point-of-sale company with offices in Lynden , Wash. and Vancouver , British Columbia . "And even the marketing professionals at many chains may not realize all the ways that they can tap into their POS systems for marketing."
 
The customer database as marketing engine
 
Delivery operations lend themselves to database marketing for the simple reason that delivery customers willingly provide their names, addresses and telephone numbers in order to receive service. Database marketing makes effective use of marketing dollars by targeting your existing customers.
 
If a significant percentage of your business is carryout or dine-in, building a customer database can be a greater challenge. "It's just as important to capture mailing addresses for carryout customers in the restaurant's point-of-sale system," said Scott Davis, a multiunit Pizza Ranch franchisee and president of Cedar Falls, Iowa-based Bulldog Mark eting. "It's important, though, to get the correct information," he said.
 
"To have an address of 'Richard at the corner bar' doesn't do you any good," Davis said. "If you don't watch it, 30 or 40 percent of your addresses can end up being bad because people pick up a carryout order and don't give their name and address."
 
Doug Phillips , marketing director for Abby's Legendary Pizza in Eugene , Ore. , cites the double whammy of a need for speedy transactions at the point-of-sale, and employees occasionally taking incorrect customer information on phone orders, as key causes of sloppy customer data.
 
"This is one of the most significant hurdles I face in really leveraging the customer information," Phillips said. Correcting or deleting incorrect and incomplete customer records in order to do a customer mailing can be costly or time consuming, and he adds, "This can eliminate a fair chunk of my data."
 
Some restaurant operators also choose to preload the POS system with a prospect database, Wiebe said, that includes mailing addresses and phone numbers for all of the households in their trade area. When new customers call, their information already is available in the customer database.
 
Working the data
 
Many POS systems can be programmed to spot first-time customers and reward them; for example, prompting an order-taker to give a new customer a menu and a refrigerator magnet with the restaurant's phone number, or to remind a frequent customer that there is a special coupon at the bottom of their receipt for next time.
 
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"Fish where the fish are biting," said Aaron Allen, restaurant marketing consultant for Quantified Mark eting Group in Heathrow, Fla. "The fact is, new customer acquisition is seven to ten times more expensive than building restaurant sales through increased frequency, check average and party size." And according to a study by the Wharton School of Business at the University of Pennsylvania , increasing customer retention by 5 percent to 11 percent can increase profits by 25 percent to 75 percent.
 
Probably the most popular database marketing strategy is the lapsed or "lazy" customer mailing — where a report from the POS of customers who haven't visited the restaurant in a certain period of time triggers reminder mailings designed to recapture the business.
 
When the targeted customer redeems the offer, some POS systems also can be programmed to display a message to remind the order-taker to welcome them back. The prompt can alert the restaurant to give that customer the royal treatment.
 
"For most people, pizza is a regular occasion — once a week, twice a month, or every Tuesday and Friday," Wiebe said. "If a customer who used to order regularly stops calling for 60 days, typically something has happened. Maybe they're trying a new pizzeria. Maybe their last two pizza deliveries arrived cold. Maybe they had a bad service experience."
 
Similarly, new and frequent customers can be targeted with mailings and other promotional tools designed to build loyalty and increase order frequency.
 
Local store database marketing is a challenge because it's time consuming, and time is the one commodity that's in short supply at every restaurant.
 
"Most pizza operators understand how effective customer database marketing is, but very few of them find the time to do it regularly," Wiebe said. Automation can make the process easier.
 
To eliminate the time factor, SpeedLine developed SpeedMail, a turnkey service offered in partnership with the database marketing company Mailmark Direct Mark eting Services.
 
The restaurant operator decides which customer groups to target and what the offers should be. Each week, the SpeedLine POS automatically sends the customer data from the restaurant to Mailmark, and Mailmark designs, prints and mails personalized postcards for the restaurant.
 
"SpeedMail customers are recovering an average of 27 percent of the lost or inactive customers who receive their weekly reminder postcards," Wiebe said. "Those results are in a league of their own compared with the 1 percen to 2 percent response typical with traditional bulk mail marketing."
 
 Beyond the database
 
Your marketing efforts have been successful, and a brand-new customer is standing at the counter ready to order. What now?
 
Upselling, or suggesting add-on items to a customer's order, can add thousands of dollars to a restaurant's bottom line. Research shows that customers often will add additional items to their order simply if they are asked the right question.
 
In today's world, training an unskilled worker to upsell can be difficult if not impossible without the right tools.
 
Most point of sale systems can be programmed to prompt the order taker to suggest chicken wings, a two-liter or an order of breadsticks. Operators often can see a profit boost through the upselling of higher margin items.
 
Spot promotions or manager's specials, scripted into the ordering process via the POS, also can be an easy way to push slow-moving menu items in the restaurant.
 
Because most POS systems track sales by item and by employees, such prompting can be reinforced through sales contests and incentive programs. Operators can offer prizes for upselling or promoting new products.
 
POS systems often also can track the value of an average order. Operators can give prizes for the highest or most improved ticket average each month.
 
Selling online
 
Upselling prompts can be adapted to online ordering as well.
 
"We've made ordering online intuitive to the point that it's almost like walking into the restaurant and having the experience," says Doran McLaughlin, business development director with Brygid Technologies Corp., a developer of e-commerce Web sites. "Online ordering gives the restaurants the opportunity to make sure all their specials are shown and to build in upsell opportunities. In general, restaurants average anywhere from 13 percent to 22 percent increases in ticket averages with an online ordering system."
 
In addition, because customers supply their e-mail addresses when they order online, Web ordering opens another marketing door as well.
 
"Opt-in e-mail promotions are an inexpensive and timely way to shoot out daily specials and pre-order forms," Wiebe said. "Sending these messages mid-morning can spell the difference between a lackluster lunch and a busy midday rush."

Topics: Operations Management , POS


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