Competition in the pizza industry has gotten so piping hot that operators are constantly looking for unique ways to get their slice of the pie. Direct mail has evolved into one of the most effective methods to target consumers and put your specials and promotions literally in their hands. One size doesn’t fit all however. Location and budget determine exactly what type of direct mail campaign will work best for the individual pizzeria.
Advo of Greenwich, Connecticut is one of the largest direct mail companies in the country with some 37,000 employees including 500 sales reps at the local level serving 17,000 retailers. The company's revenues reached $1.2 billion in 2004. Paul Bernstein is vice president of marketing for strategic accounts, and he says direct mail (DM) can be very cost-effective if storeowners do their homework.
"Clearly, budget is going to dictate what the entrepreneur can and can't do," he says. "When it comes right down to it, out of all the forms of advertising, be it television, radio or newspapers, direct mail represents the best, effective and efficient media they can use because of cost and because it is local in nature."
Paul says Advo has pioneered targeting specific zip codes through a concept the company calls, "sub zip."
"Basically, there are approximately 7,500 households per zip code in America. We can mail at the zip code level, but we've also developed a campaign of mailing to 3,500 homes, what we call Advo Target Zones (ATZ). It's based on a very fundamental marketing principle, which is "birds of a feather flock together." The idea is that you have more in common with your neighbors than you have differences. The value of the homes is probably similar.
"We're able to put the client's message into a community of people that is most likely to respond to that client's message, the store's heavy users. We would take a map and put a dot on that map and draw a circle around that store's "trade area," which for pizza is usually their delivery zone."
Paul explained that the strategy of targeting the heavy user rather than a more occasional visitor is done in order to increase the frequency of the heavy user.
"You don't do it at the expense of trying to generate new prospects, but that is a strategy that is often employed. It ‘s seems to be the most efficient so the client can stretch their budget with direct mail. If you can get the monthly customer to come in twice a month, the pizza clients that we work with tend to find that's a more efficient use of their marketing dollars."
There are also variations between the needs of an urban location and a rural one. For example, Bernstein says, the urban location may have a variety of media options the rural one doesn't have. The urban store may have a trade area of a half a mile because of the concentration of homes. The rural area may need to go out five miles.
"We analyze our clients's specific situation and tailor the DM campaign to those needs," Bernstein said.
Share the cost, spread the wealth
Another way operators can get the most bang for their DM dollars is through the use of "shared mail." This usually entails four separate businesses being represented in a mailing through the use of a four-page jacket. Each business receives the same full-color space but pays a quarter of the cost. The advertising is all different shapes and sizes. Paul says many pizzerias actually buy two spaces and have their advertising laid out as a two-page, inside-spread.
"We've found that pizza businesses tend to get better results from a two-page spread because they can include more coupons," Paul says. "The more coupons, the better the redemption rate."
Pamela Kueber, vice president of communications for Advo adds that another benefit of the four-page shared piece is the customer might spend more time browsing a color brochure looking for a bargain. "Our research shows people spend substantial time with their mail. They're excited by mail and are looking for tools to help them shop and save money. Reading this promotional material is like shopping at home. It's like walking the mall in the privacy of your kitchen."
Take a hit
One question often asked in the direct mail industry is what are the good hit days for mailings? Should they drop early in the week? On weekends? On payday? Advo has found that some days are more effective as "hit dates" than others.
"Pizza is consumed everyday of the week," Paul declares. "There's a market everyday. But we know that Friday and Saturday tends to get a disproportional amount of business. Some people feel like they want to advertise into the strength of their week. Different markets have different in-home dates. We tell our clients that it really doesn't matter what day the consumer receives the mailing. If they receive a booklet of coupons on Tuesday, they'll hold it until the weekend, or whenever they're ready to go get pizza."
"Our pizza clients tend to do better at first of the month pay date," he continues. "There tend to be a higher proportion of coupons redeemed. We've found that paydays are good dates, either the first of the month or the fifteenth.
"Then you have certain events. The Super Bowl is pizza's biggest day of the year. On the other end of the coin, we tend to see a little trailing off in the summer months because of all the outdoor activities."
Traffic drives profits
Jeff Loudin is Eastern Regional Vice President of Money Mailer, a direct mail firm located in Garden Grove, California. The company mailed out 150 million envelopes last year to 19 million homes in service of 30,000 advertisers. Jeff says it's all in the traffic patterns.
"You have to target your marketplace. We tell our clients to look at their delivery radius and they can just about tell where they want to send their mail pieces. If they don't have delivery they have to ask themselves to decide realistically how far people will drive to come eat their pizza. They may have the best product in the world but people are realistically only going to drive three to five miles."
"The typical Money Mailer ad is going to cost $400 to mail 10,000 coupons out in an envelope," Jeff continues. "That's four cents a piece. The business owner has to know what he expects as his return. If the mailing brings in 100 people that spend $4 a piece, that's $400, so he's basically covered his cost. And we all know people will spend more than four dollars."
Like Paul, Jeff agrees that Friday is pizza day but Jeff counters that mailings have more impact if they arrive at the consumer's house late in the week.
"We mailed out a recent client's menu and wanted it to hit on a Thursday or a Friday. Chances are when the customers come home on a Friday night and want pizza, they're more likely to order from our client if they have his menu in their hand. Sure they may hold on to the mail all week to use the coupons but we feel like a real pinpoint hit date is Friday."
Jeff says another effective tool is to use the store's POS customer database to target any mailing.
"The best form of advertising is a targeted list of your customers. Eighty percent of your profits are coming from 20 percent of your customers, the repeat customer. If a restaurant can compile a list of those customers with names and addresses – it's gold. You can target those customers with coupons and specials. You can even use email."
Jeff says Money Mailer uses a larger-sized envelope (6×9) to help its mailing "break through the clutter" and get noticed by the consumer.
"You're fighting to get noticed in the box mail. When we mail menus for people we've found the larger the size the better. Not even necessarily the brightest color, but something that's a larger size – smaller than a catalog but bigger than the phone book- is going to get noticed."
Getting noticed is the essence of direct mail. Jeff says there's a reason there is more mail these days– direct mail, and even what some consider nuisance mail.
“Why is there more junk mail? Because it works.”
Feeling of Redemption
Joela Roy, Advo’s senior manager for market research, cautions operators not to necessarily expect a flood of customers after direct mailing coupons.
Unfortunately, the redemption rate is only about one to three percent. It’s really driven by the offers and the targeting. There are ways to increase that response rate. One way is make sure the offers are things that appeal to most people, that are compelling. We’ve seen a lot of success with ‘buy one get one free.’ Free is a great word that consumers respond to. Redemption tends to be higher if you have an actual picture of the item on the coupon itself. But again, targeting is so important. If you target consumers who are most likely to buy from you, you increase your response rate.”