Marketing marvels: party promotion

Randy Blair, owner of Pizza Party(formerly Pizza and Pipes) in SantaClara, California, reveals his secretsto boosting store sales by $180,000in one year.

How much do you allot for yourmonthly marketing budget?

I don’t really have a set budget,because a lot of the promotions arerun at different times of the year andcertificates get printed when they runout, etc. If I were to average everything,I probably spend about $1,000to $1,500 per month.

How do you collect informationfrom your customers to help yourmarketing efforts?

Throughout the year, we havecontests in the store, such as “Guessthe Weight of the Pumpkin,” “Guessthe Number of M & Ms” and “Win theWorld’s Largest Christmas Stocking.”Customers fill out entry forms withtheir names, addresses and email addresses.The kids win the prize (M &Ms, stocking, etc.), while the parentswin a pizza party for their family. Ourcashiers also ask people to join ourbirthday/rewards club.

What do you do with the informationyou collect?

Around 40% of my customers providetheir email addresses, so I’m ableto send out periodic announcementsabout specials, etc. I also send out three or four direct mailnewsletters each year.

What kind of traditional advertising do you conduct?

We don’t do any traditional advertising, other than a YellowPages ad for our catering service. I’ve tried it all and found thatthe return on investment is poor, and sales are hard to track unlessthe customer actually brings in a coupon. The only couponswe distribute are through the Entertainment Book and the GiftCheck Book (we don’t pay for those).

What is the best business advice you can pass on to otherpizzeria owners?

Make it easy for your customers to do business with you!Some of the ways we do this is by accepting expired coupons(it’s amazing how many restaurants will turn away businessbecause of an expired coupon), accepting coupons from otherpizzerias (we get 40 to 50 of these per month), and openlypublicizing our 100% satisfaction guarantee (we even replacecompetitors’ pizzas if customers aren’t satisfied). We also try tomake everything fun for customers.

What’s one of the ways you encouragecustomers to return?

When a customer makes a purchase, wehand out a “Hurry Back” coupon: If they returnwithin seven days, they get 20% off theirorder; within 14 days, they get 15% off theirorder; and if they return within 21 days, theyget 10% off. In 2006, this generated about$300 per week in sales that we could track.

With all of the discounts you offer,how do you stay so profitable?

Believe it or not, our discounts accountfor only about 18% of our sales—a lot of thetime, people forget to bring their couponsand certificates in to redeem. We’ve raisedour prices each year, but we’re still in linewith comparable restaurants.

Have you tried any new promotions lately?

We tried something new for the summer, since it’susually our slowest time. We called it our 45th AnniversarySpecial. Customers brought a blue punchcard with them each time they came in between June15 and September 15. Anyone who spent more than$60 and made at least three visits got a $20 giftcertificate.

What has been your most successful promotion?

Without a doubt, it’s been the Royalty Rewardsprogram run by Restaurant Marketing Systems(RMS). In June 2005, my rent was going to increaseby more than $1,000 per month, and if I didn’t somethingfast, I’d have to close the restaurant. In January joined as a Platinum Member and put my absolute all Thanks to the program and applying myself to it, I was take store sales from $640,000 to $820,000 in one year!

Can you explain how the program works?

Families sign up for a birthday reward program in whichbirthday cards are mailed out to members of the family ontheir birthdays. Our birthday card is a certificate for $10 offthe next visit. We currently have 1,600 families signed up inthe program; the system sends out more than 400 cards everymonth for us. This is a great way to stay in touch with our existingcustomer base, which a lot of businesses fail to do. Customerscan also get a swipe card when they sign up, and eachtime they come in we swipe the card through a terminal thatpiggybacks off our credit card terminal and enter the amount ofthe purchase. That information is uploaded each night, and theymail out awards certificates when customers reach a prescribedspending amount. We currently award a $10 certifi cate for each$120 they spend. We also send out Thanksgiving cards with agift certificate every year to the same database.

What is the “Red Envelope” promotion you runat Christmastime?

We hand out 3,000 sealed red envelopes beginning December18 that customers bring in on their next visits. The envelopescertificate. February 28, which is a slow time for us.

Is it true that you give away a trip to Vegas every year?

Yes. We have a scratcher card that we hand out in May.Customers aren’t allowed to scratch it until they come in,but when they do, they win either 20, 30, 40 or 50% off theirnext orders. Some win a place as a qualifier for the Vegas trip.The discounts are good all summer long, and all trip qualifiers(there’s usually 20 to 30 of them) are invited to a dinner held inOctober. Names are drawn one by one from a hat, and the lastname in the hat wins the trip. The people who don’t win still wingoodie bags that contain prizes donated by local merchants.

How do you keep track of all your promotions?

We don’t hand out “Hurry Back” coupons when we havescratchers being handed out. We try to do just one promotionat a time, and we measure and record the progress of all of ourpromotions and discounts on spreadsheets so we can tracktheir success. We track the amount of purchase and amountof discount, from which we can calculate net profit generatedfor each promotion. I also make a yearly promotions calendarand target slow periods such as summer.

How do you connect with your community?

We participate in a lot of fundraisers, team sports andwalkathons. It’s important that we put ourselves in front ofthe “circle of influence.” I consider the “circle of influence” thepeople who are setting up the events—mainly moms—in ourarea. They are the decision-makers and are the ones we need togo to if we want them to consider utilizing our product for theirnext fundraising event, etc.

How successful are your fundraising efforts?

From what we can track, the fundraising cards that groupssell for $20 each brought in at least $39,000 in additional salesin 2006—this doesn’t include our portion of the sale price of thecard, the money spent by the people the card purchasers bringwith them, or the times they return without the card or after thecard runs out, etc. We also do in-house fundraisers and off-siteevents where groups sell slices.

What is the Belly Buster Challenge, and how does itboost your business?

The Belly Buster Challenge is a contest in which an individualmust consume a 20” two-topping pizza in one hour or less. Theywin a free extra-large pizza every month for one year, a freeBelly Buster T-shirt and placement on our Hall of Fame wall.The customers love to cheer on the challengers, and everyonegets in on the fun. So far, only two people have been able tofinish the entire pizza in the time allotted. One of those wasJoey Chestnut, the hot dog-eating champion, who did it in 17minutes. About 25 people have failed.

Do you have any other promotions you’re currently running?

We have a continuity program in which people sign up tohave $16.99 deducted from their bank account each month, andin return they receive a $25 gift certificate. The idea behind thatis that we have money automatically coming into our accountevery month. We just started, so only a handful of people aresigned up so far; but I know one restaurant that has 100 members.We also just started a cold birthday mailing of 150 peoplewithin two miles of us.

How were sales in 2006 and 2007?

Sales were up another $20,000 in 2006 because I was reallyconcentrating on sales with not enough regard for profit. In2007, we refined our marketing based on measured results andreduced many discounts and expenses. I spent $22,750 on marketingin the first 10 months of 2006, but in 2007 I only spent$14,785 during the same time period (about 2.2% of income,and 35% less than 2006).While 2007 sales were down about 7%, my profit was up byabout $12,000, primarily due to labor savings, higher menu pricesand lower marketing expenses. Food cost is up only 1%, even withthe higher cheese prices, and beverage costs are about the same.

Sales in 2007 were down for five reasons:

1) In late 2006, two other businesses geared toward birthdayparties opened nearby.

2) In early 2007, a new dominant local franchise opened twomiles away, and I think they’re probably costing me $500 to$1,000 per week in sales.

3) The anchor grocery store in our strip mall closed for threemonths in the summer of 2007, and its replacement is strugglingto build foot traffic.

4) In March 2007, we changed our DBA to Pizza Party afterbeing known as Pizza and Pipes for 42 years. That move probablyhurt more than I’d like to admit, but we haven’t had a pipeorgan for 23 years, and rebranding has been part of our strategyfor a long time.

5) The economy, especially high gas prices, has curtaileddiscretionary restaurant spending.

Overall, I’d say 2007 has been a struggle, and if we didn’t havea large database and a good marketing system in place, we couldhave been knocked out of the market entirely. I really had to useall I’ve learned about marketing to stay ahead. Our newest targetis corporate catering, which holds a lot of promise for 2008.