I find it interesting to see how different marketing techniques are used by businesses. Recently, I received a direct marketing piece which included a two for one coupon for a new restaurant I'd noticed nearby. I thought it would be a good opportunity to try it out. This was, after all, the intent of the direct marketing piece, right? To get me to visit the restaurant?
My husband and I made arrangements to have dinner there one evening. When we arrived, only two of about twenty tables were occupied. The young woman who met us at the door immediately noticed the coupon in my hand.
Before saying "Hello!" or "Welcome to ..." she said "We don't take those coupons on the weekend." Wow! What a way to welcome potential clients. So, did they not take those coupons because they already had plenty of business? It sure didn't seem that way. Compare their 10% of tables occupied with a 15 to 30 minute wait for a table at two similar cuisine restaurants within a mile of this restaurant.
What would the cost have been of honoring the coupon versus the upside potential? The cost in this particular case was only the food for one entrée. You might think the cost to prepare the meal should be included as well. However, the restaurant would have the expense of kitchen staff whether there were one or forty entrées prepared that evening. On the other hand, the upside of honoring the coupon is the profit margin on any business the restaurant wouldn't have had without the coupon. That includes:
the paid entrée in the two for one deal
drinks, appetizers, and desert
repeat business from the coupon holder
referrals the coupon holders make to friends and associates
And what about the wait staff? Yes, the restaurant had their wages as part of their cost regardless of how many tables they waited, but wouldn't they want the chance to earn tips?
So now, pretend you're a fly on the wall when this restaurant owner is evaluating the marketing efforts. Will they say the direct marketing effort that I tried to respond to was a flop based on the number of coupons redeemed? Will they say it didn't work because they were unable to fill tables? Will they go the route of many new restaurants which close within a year of opening their doors?
So, when you consider the cost to your business of marketing efforts, do you know what it really costs? If you want help determining your true costs contact Cheryl!
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