Feb. 17, 2005
Want to frustrate Duessa Holscher?
Buy her POS system ... and then ignore its marketing features.
She'll feel like she's sold you a Ferrari for grocery runs or a Mont Blanc for use on crossword puzzles.
What's ironic, said Holscher, a partner in POS manufacturer FireFly Technologies, hearing about the near-boundless marketing potential of her company's POS unit makes operators' eyes light up during sales presentations. And yet, she estimates fewer than 10 percent of her customers use that feature once they get the system in the store.
"The other features that improve things like order accuracy, food cost and labor cost are great, but the fact that this can help them build their business is what they get fired up about," said Holscher, whose company is in Portland, Ore. "In some ways it's as if they think they've gotten their money's worth out of it with all these other features. But the marketing area is really what makes it pay for itself."
Holscher's frustrations are shared by other POS makers. A handfull polled by PizzaMarketplace estimated as little as 5 percent of their customers use their machines' marketing components.
Several operators contacted said they know they should start a database marketing program or at least do more than they currently are, but they just haven't made the time. Saeed Kehstgar, a six-unit Round Table Pizza franchisee, is a member of that group.
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"I haven't been doing it religiously," he said, with a self-effacing chuckle. "It's one of those things that I want to do more of, but haven't."
One might assume a database marketing plan was part of 109-unit, Pittsburgh-based Vocelli Pizza's M.O. But it's not — yet, anyway.
"We're going to start database mining in the very near future," said Jim Powers, director of marketing. The chain is working with a marketing firm to develop better targeting techniques, he added. "Some (operators) in our system are doing it at this point, but what we want to do is mine the data and mail on a systemic level, not just a store level. We want to get much more advanced in that area."
Before you feel guilty about not plumbing the full potential of your POS database, know that pizza marketing experts wouldn't necessarily dub you a slacker. Jim Moran believes database marketing is an effective tactic, but he regards other methods as equally successful.
"As a general statement, point-of-sale marketing is a good tool, but it should not be the core of your marketing plan," said Moran, a former area manager for a large Domino's Pizza franchisee. He now is an operations and marketing consultant. "The core of your marketing plan should be serving a great product, delivering great service and door hanging."
Obvious enough, right?
Not always, Moran said. Many operators focus so intently on marketing that they neglect operations. "You've got store operators sitting in an office all day, looking at mountains of information the computer is spitting out. But they're not focusing on the basics. It becomes paralysis by analysis."
To his way of thinking, a 3-mile trade area serviced exceptionally well and "doorhung" completely every five weeks ensures customers never forget you.
"When you do that, there should be no lazy customers," Moran said. "Sure, mailing your database every 30, 60 and 90 days will boost sales, but will it boost profit dollar? I don't think that kind of marketing is as beneficial to profit as doorhanging."
When Kamron Karington got a POS system for his first pizza shop, he wanted it merely for its marketing abilities. His experience in music promotion taught him a lesson he applied to the pizza business: Figure out what customers want and sell it to them again and again. Database marketing was the best way to achieve this, he said, and it eventually became the backbone of his multifaceted advertising strategy.
"I liked to use doorhanging for predatory marketing ... a situation where I wanted to really put the squeeze on a nearby
competitor," said Karington, who eventually had four pizzerias before selling them several years ago. Now he's a marketing consultant. "But overall, database marketing was very effective for me."
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Despite strong sales of POS units to the pizza industry, POS makers believe less than 10 percent of their customers use the marketing components of their systems.
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Database marketing is a powerful way to pinpoint customer desires and encourage repeat purchases. To do this effectively takes a concentrated effort and a willingness to try many options.
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Even fans of POS database marketing say it's not a be-all, end-all program, but it arguably may be the best for overall customer management.
Well-done database marketing must be done surgically, Karington said, not willy-nilly. Often he divided his total customer database in two and sent a bargain offer to his lower-ticket customers, and a higher-dollar offer to customers who routinely spent more than $15. "You could even split it further, to three or four different groups, however precisely you wanted to target it. ... That's more effective than a one-size-fits-all offer."
Pinpointing customer desires and getting them to buy repeatedly is what DoubleDave's Pizzaworks hopes to use its company-wide POS database for this year. According to Chief Executive Officer Chuck Thorp, the 40-unit chain "is probably a little bit behind the curve on this — especially compared to the Big Three." The Austin, Texas-based company does "frequent diner programs ... and if an individual hasn't ordered in a month, we can narrow our database fields and send them a direct mail piece printed out at the store level."
But as "an emerging chain" with designs on regional expansion, DoubleDave's knows it must tap the technology at its fingertips, and it's calling on a Houston marketing firm for guidance. He said the agency specializes in accumulating demographic information about trade areas and blending that with customer information collected by a POS system. The result, he said, is better direct marketing.
"It's like when you hear you use only 50 percent of your brain's capacity, we'll we're probably utilizing only about 30 percent our machines' capabilities," Thorp said. "We can't keep doing that if we want to grow."
Touch through technology
Tom Jans' customers think he's "a mental genius," because when their birthdays and anniversaries come around, he's ready with a giveaway or a special offer. Though he'd like to agree with them and take the credit, he gives the recognition instead to his POS database.
"The human brain isn't built to remember all this stuff, but fortunately computers are and they can assist the ol' gray matter now and again," said Jans, owner of TJ's Take & Bake Pizza in Hilton Head, S.C. His POS' technological touches help him build personal relationships with his customers. "I just don't understand how an owner can say he's interested in his customers, but then he tries to rely on what he kind of remembers happening last year. There's no way I could do this without a POS system."
Since opening up nearly two years ago, Jans has continually poured customer data into his computer system while finding ways to retrieve it instantly and beneficially. When his most loyal patrons phone in, a flag appears on his POS screen to let order takers know "to step up their game and really take care of this customer."
According to Karington, someone like Jans smartly uses his POS database for multiple marketing opportunities, not just one. No single plan works for every operation, he added, and he suggested operators experiment with many programs until they find what works best.
In the meantime, don't forget that 80 percent of your business comes from 20 percent of your customer base, he said. A well-tended POS database will tell you who those people are, where they live, what they want and when they want it.
"It's not the answer for everything, I know that," Karington began. "But what I do know is that when it's done right, it's very effective."
Like FireFly's Holscher, Karington said the worst thing is when an operator won't try it at all. "Wouldn't it be horrible to discover 20 years later that database marketing would have doubled the business you were doing a long time ago?" he began. "And what if that was the difference between your business dying ... and being a success?"