Article

How a free meal can make customers for life

Taking a chance with a free meal coupon can pay off in big ways with new customers in the market.

September 6, 2016 by S.A. Whitehead — Food Editor, Net World Media Group

In a well-to-do suburb northwest of Atlanta, most of Capozzi's New York Pizza customers are hard-driving corporate types rapidly ascending their company's ranks into ever more lucrative positions. For owner John "Bud" Capozzi, this presented a bit of a problem. 

These men and women and their families were great customers for the 20-year-old Marietta, Georgia pizza place. However, they were also great corporate leaders, so they kept getting promoted out of the area, taking their pizza business with them. 

"It's mainly corporate upper-level people," Capozzi said in an interview with this site. "So a lot of them get transferred, and because of that I was losing customers and needed to find a way for those being transferred into Atlanta to find me."

Meanwhile, in the much smaller southeastern New York city of Highland, Pavese's Pizza owner, Sean Senor, needed a way to get out in front of the tiny town's hotly contested pizza wars which has seven players competing for a slice of area's pizza market.

Though he was faced a different market challenge than Capozzi, Senor also found his answer in with a coupon for free pizza, delivered by a service that welcomes new residents to town — a relatively low-tech, uncomplicated form of direct mail advertising that taps into the power of a little marketing theory known as the "power of reciprocity." 

"If someone gives you a no-strings-attached gift, it creates a connection that leads to a long-term customer," said Brian Mattingly, the founder and CEO of a service that uses lists of new residents in an area to promote local businesses.  

Mattingly's Welcomemat Services has franchises of its own across the nation, and free pizza coupons are a frequent addition to the welcome packets they distribute to new residents. After all, on a moving job, there's nothing like a well-timed, home-delivered pizza to repower the troops.

"You are really building trust and showing your appreciation right away on the very first transaction," Mattingly said in an interview with this website. "The value of that pizza customer over the long term is so huge that giving a free pizza away as a gift in the first place is well worth it."

Welcomemat Services is finding quite a bit of success with the food service concepts represented in their packets. But that's not all down to Welcomemat.

While both Capozzi's and Pavese's are working with Welcomemat in their individual markets, the owners of the two restaurants are very clear that this is not a set-it-and-forget-it type of promotion. The restaurateurs have to work hard to deliver on the free meal in a way that entices new residents to become permanent customers.

For Capozzi, this means creating a process to identify new residents when they come into the restaurant or order out — and well before they get anything to eat. 

"When people call up and say that they have a coupon, we type 'coupon' on the tickets, so that way we know it's a first-time customer," said Capozzi. "When they walk in the door, the spiel is that we ask them where they moved from and the first thing I always say is, 'Welcome to New York,'" Capozzi said, referring to his restaurant's authentic New York-style pies. "We spend some time to get to know who they are, talk about the food, show them the menu and just create that relationship so they'll hopefully come back. … Once you put the food in their mouth, they're hooked."

In tiny Highland, New York, Welcomemat Services franchisees Krissy and Kevin Many said Pavese's Pizza approaches their free pie offering in much the same way, with the promotion calling residents' attention to the restaurant and bringing them in for a first look. But the restaurateur has to pick  up the promotion and run it into the end zone.

"When someone opens the package, the first thing that hits them is the gifts," said Kevin Many in an interview with this website. "Once they get in the door and they meet Sean (Senor, the restaurant's owner) it's a great chance for a first impression."

Many's partner, Krissy, said this is particularly true during the first months after a move, when families are just trying to get situated and learn the area. 

"Think about the last time that you moved," Krissy said. "It's overwhelming. The boxes are packed. The kids are hungry. That pizza restaurant wants to be the first person that the family connects with. … Getting to them first is important."

In fact, the Manys said that in Highland, pizza is the top redemption item in their new movers packets. Add that to the fact that newly moved-in residents are five times more likely than existing ones to become faithful customers. Then add the statistic that most Americans move every 5.6 years, and you have a fairly intense engagement opportunity. 

Yes, but what's the ROI?

Mattingly said that, above all, it's critical that restaurants look at the promotion as an entryway for new customers and thus invest in the idea of "giving away" a pizza rather than just offering a discount coupon. It just works far more effectively that way, he said. 

"The monthly cost depends on the size of the area a pizza restaurant wants to target," Mattingly said. "For most pizza restaurants, they typically focus in on their local trade area. On average, they spend roughly a couple hundred dollars a month to use the Welcomemat platform."

But, it's the data that suggests the possible return on investment for this approach: It shows that most people live in a location for approximately five-and-a-half years and order pizza about four times monthly, at about $25 a crack, Mattingly said. 

"So over the course of 5.6 years you're looking at making more than $6,500," he said. "According to Forbes, the value of a loyal pizza customer can be upwards of $25,000 over the span of a lifetime."

These are the kinds of numbers that make this an increasingly enticing offer for all types of food brands, particularly with home delivery of all restaurant food types expected to grow in the coming years. Perhaps this is why services like Welcomemat are capturing new customers like Chick-fil-A, Culver's and Moe's. 

As Capozzi puts it, "It's been good for me. I feel like it's working. So if I'm getting 1,000 [new mover coupons] back a year, that's 1,000 customers who are finding me right away, and many becoming loyal customers as long as they're in the area."

About S.A. Whitehead

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Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.