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Be it snail mail or e-mail, pizza operators — like no other retailers — have incredible and varied opportunities to market directly to their customers.

February 7, 2005

It's mind boggling to consider the volume of direct mail delivered by the United States Postal Service.

And it's nauseating to know the garbage man hauls at least 95 percent of it away — unread.

On average, blanket mail marketing campaigns yield an "underwhelming" 2 percent response. That means for every dollar spent trying to lure in a customer, the operator a gets a lousy 2 cents back.

But don't throw out the marketing baby with the bad-return bath water, experts say. Not all direct mail marketing is bad; in fact, much of it is first-rate when properly targeted, cost effective for the operator and enticing to customers.

And unlike the vast majority of retailers in business today, pizza operators (especially those who deliver

What's Important Direct marketing comes in many forms, but not all are equally successful at attaining customers. The most effective offers are targeted to customer desires, not simply generic "coupons." Operators looking to reduce costs and improve efficiencies should consider e-mail marketing.

and maintain a detailed database) have an incredible advantage when it comes to accessing their customers. They know who those customers are, where they live and from experience, exactly what they like — right down to the last topping.

The question for operators is: Are you using that information to bring them back for more? Or are you simply playing the coupon game, indiscriminately mailing to your trade area in hopes someone will respond?

Let's have a relationship

When Kamron Karington owned and operated four Red Rock Pizza stores, he tried mass mailing to stir up some business. But like many other operators, he didn't get much return.

He then started mailing out personalized letters only to his trade areas, and eventually to his best customers. Before long, routine nibbles became regular bites and he figured out how to set the hook through relationship marketing.

"When you send a letter out, it's not perceived as advertising. When they read something that says, 'Dear neighbor, I just opened a place near you ...,' they look at it differently," said Karington, now a marketing consultant and author of the "Black Book" of pizzeria marketing. "(Letters) make them aware of you, they introduce your business, they stand out from other offers."

Not that Karington is against using mass mailing services like Val-Pak or Money Mailer. "If you've written letters, your customers know your place by the time you transition to junk mail. It's not just one pizza coupon among a bunch of others in a Val-Pak. I've done it both ways, and I found I got a much better return if I sent letters first."

Moving Targets co-founder Jay Siff said relationship building is everything when it comes to direct mail. His company conducts direct mail programs geared toward people who've moved to new residences. Out of their comfort zone and away from the businesses they used to frequent, potential customers are open to new possibilities, which gives pizza operators a golden opportunity to wow them.

"These people are a very different audience from the rest of your customers," said Siff, whose business is in Perkasie, Pa. "Typically, a move is caused by lifestyle change, such as a marriage or a new job. ... Now they have this strange new underlying set of needs, and they become risk takers" who are more inclined to try a new business.

Since junk mail doesn't follow a person when he moves, there's also less competition for share of mailbox, Siff said. "Early on after they move, you're not trying to win them over from your competition, you're just trying to build a relationship with them."

Siff advises his pizza clients to make that first offer generous, such as a free pizza. The "welcome to the neighborhood" gesture is perceived as a gift, much like the "nice lady across the street who brings you a pie when you move in."

He said the trick is to ensure that, whatever the offer, it can't have strings attached. Leading them in to buy something else will offend. Plus, if the free pizza they get is no good, it's likely they'll never return. "Then they're thinking, 'That's all they wanted us in there for was to buy something else.' Or, 'No wonder it was free. It's no good."

So risky is this "irresistible offer" maneuver that Siff tries to talk new operators out of using his service. "After three to six months, when you've got all the bugs worked out, then give us a call."

E-mail: cheap, instant, efficient, targeted

Were it not for increased competition in Punxsutawney, Pa., where Scott Anthony operates a unit for Fox's Pizza Den, he'd rarely do mail marketing. Quite simply, his e-mail marketing program is less expensive and more efficient.

"Now that we have more competitors in my town, I have to stay on a level playing field with them, so we use more mail marketing," said Anthony. "It's valuable to do it, but it's expensive."

Prior to when Anthony started advertising via e-mail, a comparable mail campaign cost him $6,000. When he switched to e-mail only, his business never suffered. "I lost no customers, no loss in sales, nothing."

On top of mailing quarterly postcard offers, he sends out e-mail offers twice monthly to customers who've signed up at his Web site to receive them.

The cost of sending the messages is next to nothing, he said. When he started the service more than three years ago, he paid a one-time $300 start-up fee to Fox's corporate Web master. All he invests now is the time required to add content to each message.

"We like to use the e-mails to train our customers to go to the Web and print their own coupons. It's so much more cost-effective for me than printing them," said Anthony. "I save so much on printing and mailing that I can afford to give them an extra buck off."

Which he does. "When they go to the Web site, they can find a coupon for an offer that's only on the Web and which is 5 to 10 percent cheaper than the best offer they can find on our printed material."

Mining the data

Long before he'd even heard the term "database marketing," Brian Dickmann

We like to use the e-mails to train our customers to go to the Web and print their own coupons. It's so much more cost-effective for me than printing them. -- Scott Anthony, Fox's Pizza Den franchisee

was doing it at Pizza Rita, the three-unit Spokane, Wash., company he and wife, June, founded in 1989. "We'd have fliers printed up with a headline that said, 'Pizza Lover,' and we'd hand-write the names and addresses in and mail them."

Rudimentary as the execution was, the plan was successful because it targeted existing Pizza Rita customers.

"That's where the money is, in your existing customer base," he said. "The pizza business is the perfect example of the 80-20 rule."

Karington agreed with Dickmann, in that operators who know how to mine their databases are the ones who are the most successful direct marketers. They know who loves them the most, and they make regular efforts to fan the flames of those romances by offering customers deals for what they like, not just what the operator wants to sell.

Still, a good direct mail piece will carry a broad-enough range of offers to entice multiple buyers at multiple levels.

"It should have three to five offers max, otherwise it's a coupon sheet," said Karington. Offers that cost more should be bundled and bear variety, such as a side item or salad or dessert. "I'd try offers at $9.99, $15.99 and maybe $19.99. That addresses buyers at every level."

What kind of result can you expect from well targeted marketing? Siff said his Moving Targets service typically yields about a 40 percent response; Anthony said he gets a 60 percent to 100 percent response from using Moving Targets. The nature of the offer — typically a free pizza — plus the type of customer and the limited number of recipients likely helps those averages, too. But for $1.34 per piece (which includes graphic design and content composition services) the bang for the buck is solid, said "Big Dave" Ostrander, who used the service when he ran a pizzeria several years ago. "I was skeptical at first, but it turned out to be worth it. They tell you how many new movers you have each month and you decide how many offers you want to send out. It's that simple."

Both Anthony and Karington said good offers yield a spike in business in the week or so immediately after they're mailed, but the best, said Anthony, are the ones "where business stays up 3 to 5 percent for a while after that."

That group, said operators and experts, is where the long-term customers come from.