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MARKETING: Nothing in the pizza business generates real cash like marketing

Everything in your business, according to Kamron Karington, costs money. Only marketing -- when done correctly -- makes money.

September 4, 2003

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Kamron Karingtonis a marketing specialist and former owner of two pizzerias. He is the author of "The Black Book: Your Guide to Creating Staggering Profits In Your Pizza Business."

Did you know that marketing is the only thing that generates any cash for your business?

Think about it. Ovens don't generate cash. Employees don't generate cash. Food stored in the walk-in doesn't generate cash. In fact everything besides marketing is not only an expense, but an expense that marketing must pay for!

Marketing yields a higher return on investment than conventional investments, things like stocks, gold and real estate that have a constant risk/reward ratio. The higher the potential reward, the higher the risk!

But it gets even better. Marketing, unlike ordinary investments, gives you infinite upside leverage -- with almost zero downside risk.

Kamron Karington

Case study

Rob McCue's Caribbean-themed restaurant in Australia has been open three-and-a-half months. There he is, minding his own business, when he gets an e-mail alert from Jim Laube, one of the fine writers contributing to this site. Anyway, who got a copy of my pizza marketing course (the Black Book). Jim was so blown away at what he discovered in the book he decided to tell all of his RestaurantOwner.com clients about it.

So Rob orders a copy and immediately takes action, using one of the many letter "templates" in the book. He adapted to his own restaurant, and sent it to nearby families. Here it is:

YOUnow have a Value for money full service restaurant in the Northern Suburbs

#1 for fresh produce, great tastes, quality and variety all at great prices that YOU haven't seen for years.

Dear Neighbor,

Hi, my name is Ben, and I've recently opened a great Caribbean-themed restaurant and bar in your neighborhood. Through our 'Caribbean Fresh' philosophy we commit to providing you with the freshest produce daily. We make most of our own sauces, our own salsa and guacamole, desserts, burger patties and more but have also managed to keep our prices at a value level for you. (Unlike some major chains)

But, since every place claims to have the best variety and food around -- and even though I have high hopes of earning your trust and confidence -- I realize I'm asking you to take a chance on us.

Now I could tell you about how we make our fresh salsa from freshly cut tomato and our fresh guacamole from ripened avocados or our vast variety of tastes and flavors available to you.

But in the end you have to try us -- you have to taste it for yourself. And that's why I'll do anything I can to get you to try us out.

If I have to give you a FREE serve of our Lip Smackin' Tongue Tingling 'Wings Over Miami' in our own West Indies Hot sauce -- I'll do it! If I have to give you a FREE coffee after dinner as well -- I'm happy to.

So come on, give us a try! Take a look at the menu I sent you -- see which one of our Island Favorites or our Island BBQ dishes gets your mouth watering -- then give us a call.

Simply book in, bring this letter and with each main meal purchase you will receive the offer stated above. It's that simple. (Offer expires 18 August 2003)

Hope to see you soon -- sincerely,

Ben

Bubba Joe's Caribbean

"Where the Caribbean comes to Life"

(Elizabeth Way, Elizabeth)

PH: 82520412

* Offer not valid with any other promotion.

Like the letter? You'll like the results even better.

Rob mailed 1,600 letters at a total cost of $310.

He got 28 customers the first week who spent $610 (average ticket $21.78). During the following week he got an additional 36 new customers who spent $891 (average ticket $24.75).

So, when we total everything for the two-week period it looks like this: 64 new customers, which equals a stunning 4 percent response. That's more than double the embarrassing direct mail industry average of 1.7 percent. These are just the results as of July 16, and the offer expires Aug. 18.

Now look at it this way: $1,501 in the door (so far). That means an almost 500 percent return on his investment!

Average ticket of $23.45.

If Rob converts only one out of 10 to a regular customer who buys just once a month -- that would be six new customers x $23.45 average ticket x 12 months = $1,688.40.

So, total return on this $310 marketing investment was $1,501 in two weeks -- plus, an additional $1,688.40 over the next 12 months. That's a total of $3,189.40 from a measly $310 dollar investment in his business!

That's 1,200 percent return on that one mailing! He's so happy with his stunning results, he's going to mail another 8,000 letters. The same math looks like this: 8,000 letters x 4 percent return = 320 new customers x $23.45 ticket average = $7,504. The mailing will cost $1,550.

That equates to about $6,000 gross profit right off the bat, and an additional $9,004.80 over the next 12 months!

Cha-ching!

Remember at the beginning of this article, when I wrote that marketing provides almost unlimited upside leverage, with almost zero downside risk?

Rob "tested" 1,600 letters for $310, and the results were phenomenal. So now that he's seen the results, he can increase his investment.

Moral of the story: Test small (limited downside risk). Don't mail 20,000 letters until you know what the results will be. When you have a winner, pony up and invest more (massive upside return on investment), then sit back and count the cash.

Who would have thought that just one idea in a pizza-marketing course would have brought such stunning results to a "Caribbean" restaurant? Well, thank Jim Laube for that one.

And, great job Rob, keep it up. And, thanks for sharing your story with us.

Discover more about the "Black Book" by clicking here.

Other articles by Kamron Karington ...

* MARKETING: Before you open, know your USP
* MARKETING: Upselling is both an art and a mind game
*MARKETING: How to make your advertising 2,400% more profitable
*MARKETING: 'Lazy' customers will turn 'a 180' on the 30/60/90 plan