You might not think that direct mail postcards could have anything to do with increasing your business. But according to Keith Goodman at Modern Postcard, they can help you exponentially acquire new customers. Just, not in the way you may be used to.
Goodman brought his highly anticipated Direct mail boot camp to midtown Manhattan last month. A large crowd of Metro New York City based marketers listened intently as the veteran marketing executive outlined his keys to success.
Goodman challenged throughout the seminar. “It all begins with the strength of your list of targets,” he noted. The goal should be to think of the target as a busload of customers that are perfectly suited to be your buyer. “We look at our priority at Modern Postcard to provide a suite of services that will enable you to update that list with both your existing customers and new ones to fill the pipeline,” Goodman added.
Goodman and his Modern Postcard team have developed a unique way of using distributed data to create a demographic profile of the characteristics of potential and existing customers, then do a predictive model of how you get them, and more, using yes, postcards.
Not only can Modern Postcard’s direct mail system target new people in the area most likely to come – and come again and again — to your restaurant. It can also help you keep in constant touch with your bread and butter – those customers who come twice, maybe three times a week already, the lifeblood of your operation.
Modern Postcard started out 32 years ago by CEO Steve Hoffman as a company taking great full-color photos for the real estate industry, then blossomed into a turnkey business that took the photos and created brochures for companies selling very high-end houses. Along came Sotheby’s and the company did so well it deployed a national team of photographers around the country. “But when real estate tanked in the late ‘80s, Steve bought a printing press and started doing a whole vertical type of program,” says Goodman. “They would shoot the photos, do the scanning, everything, and when the market collapsed, the company decided to use its printing press and offer 500 postcards for $95, all-inclusive — full-color postcards with no film charges, no scanning charges, no separating charges. They thought, we’ll build 32 postcards into one big sheet, charge $95, and make $3,000 for printing 500 sheets of paper. They revolutionized the print industry.”
So the company was reborn. “This was back before the Internet, Photoshop, all that,” says Goodman. “Back then, it would cost $1,000 to do the separation of film to do the color postcard alone. But within three months, they had sold 5,000 postcard orders and were off to the races.”
Modern Postcard continued to grow, adding mailing services in 1993, and marketing data in 1995-96. “Things just kept growing and they were really focused on the photographers’ market because that’s who picked up on this. Then the company decided to go after the restaurant industry,” he says. “It was the perfect thing for small restaurant owners. ‘Oh my God, I could do 5,000 postcards for practically nothing. And it’s so effective,’ they would say.”
Goodman notes that, in 2004, he was brought in to take the company to the next level. With his background in data marketing, enterprise computing and content distribution, he was already involved with the National Restaurant Association, launching a program used to write its “Bread and Butter” newsletter, where he provided monthly marketing tips. “It went gang busters, and that’s when I really started focusing on the restaurant industry,” Goodman says.
“In 2003 I said, we need to get involved with restaurants in a big way,” he recalls. “So we started small, with mom and pops, then picked up some chains, and now we’re doing a ton of work for organizations like Jack in the Box, Sammy’s Wood-Fired Pizzas, On the Border Grille. This year we’ll print a total of 700 million cards across all industries.”
Goodman says that, while direct mail may seem very 20th century, “Every type of advertising will bring in a certain type of client. If you’re advertising in a high-end magazine, a luxury living magazine, you bring in that type of clientele. You won’t bring in someone who says, what’s your cheapest hamburger, but someone who wants to see the wine list. You might not bring in a lot of customers but the ones you do will be of high value. They won’t be coming because of a 50%-off coupon but because ‘That food looks amazing!’”
If you bring in someone with Groupon, Goodman points out, they’re going into the restaurant only because they got $20 worth of food for $10. “You end up not building a customer relationship, but a food transaction. There’s a chance they’ll come back but they’re not going to ask for the wine list, they’re just going to want to know what the special is tonight,” he says.
Web-based customers do tend to be very price-conscious, and not to be as loyal as a customer gathered through other information, he says. “The thing about direct mail is that it gives you the opportunity to target those people most likely to be your best customers.”
Restaurants have customers who come in once a month when they run a 30%-off special. “And then there are others who come in three times a week, with kids, the parents share a bottle of wine, they have entrees, appetizers, their average check is $150 and you say, we love these people, how do we find more people like that, not the two kids coming from around the corner for half-off pizza,” he says. “So you only send the mail piece to those who fit the profile of your best customers. That’s what direct mail can do that nothing else can,” says Goodman. “You can’t target like that with any other kind of advertising. When we sell direct mail, we’re not selling postcards, we’re selling customer acquisition — we’re saying, if I were to tell you I could bring families in who would eat here twice a week for the next five years, what is that customer worth to you and what are you willing to pay to get that customer in the door?”
A good white tablecloth restaurant with a significant marketing budget is a perfect match for data profiling. “Say they collect information on existing customers, and create a mailing list. Once we have that list, we can run a demographic profile on them and then do a predictive model, based on the 50,000 people within a five-mile radius. Here are the 5,000 that have the highest potential match to your best customers,” Goodman says.
“We automate the entire process and we come up with ideas people would never normally think of. If I asked a restaurant, what are the attributes of your customers, they might say, they make more than $100,000, drive a luxury sedan, and have three kids. But what they don’t know is, they also like to travel internationally, have certain jobs, certain service levels, certain educations, there could be a charitable organization affiliation, they may like to watch sports on TV, or not watch sports on TV. These are all the different characteristics you normally would never be able to come up with that we’re able to dig up in these profiles and use in identifying those best prospects.”
But sometimes, restaurant owners don’t always see the ROI – at least, at first – which they’re expecting.
Says Goodman, “Most restaurant owners — until they’ve been educated – are still very transactionally-oriented – they live and die by transactions. Let’s face it, either you buy their food or you don’t buy their food. They say, ‘I ran this ad, got 19 people in, but only generated $1,200 of food and the ad cost $1,500. It was a failure.’ But six might come back twice a year for the next five years. You’re talking about acquiring lifetime value. You’re going to buy $5,000 worth of revenue over the lifetime of that customer for x amount of dollars.”
Say a restaurant has 50% food costs, and out of $5,000, they’re going to make $2,500 in gross profit off that customer. “Most business models would be willing to spend 10% of the gross profit on acquiring the customer,” he explains. “So, if their average customer spends $5,000 and they make $2,500, a restaurant should be happy spending $250 to acquire that $5,000 in revenue.”
At that point. Goodman says, restaurants need to capture their information and this is the point at which email becomes a good tool. “Email is a great way to stay in contact with existing customers. For acquisition, however, it’s dismal. You’re unlikely to get new customers as a result of an email campaign because people don’t read emails from people they don’t know. A lot of marketers will say, ‘I’m getting a great open rate on my emails, a 25% open rate.’ But what you’re saying is yes, 25% of the people who get your emails are opening them but 75% aren’t so that 75% is going completely uncovered,” he says.
“You’re just leaving them hanging for your competitors.” And Goodman says, it’s the same 25% open rate every month, it’s not another 25% next month and the month after that. “You’re still leaving the rest of your customer base uncovered. Once a quarter, send a direct mail campaign to those who don’t open their emails.”
One of Goodman’s favorite stories is about a Mediterranean restaurant in Colorado. “They were having their grand opening and wanted to do a special to get people in the store,” he says. “My big thing is, give people something free, and get them in the store. What has to happen to make them come into the restaurant? Whatever you have to give away, give away. Get people in the door, give them something aggressive, not so much they get full but enough to bring them in.”
So this restaurant offered free tapas. “We sent out 20,000 postcards with free tapas, and the first night the place was packed with people eating free tapas. The owner said, ‘This is amazing, you’re a genius.’ The second night the place was packed again, people eating free tapas and alcohol consumption rocketing. They were converting seats from the restaurant to the bar,” he remembers. “They ended up having to shut the place down for two weeks to permanently convert the whole restaurant to a bar. The opening changed the landscape of the restaurant by the way we launched the direct mail program.”
Modern Postcards is just getting ready to launch another direct mail campaign, Restaurant DM. With this, they’re best practice templates for restaurant direct mail and putting them online to allow restaurants to upload imagery of their food or use stock photos, add their own specials, then put maps into pre-fabricated templates, then acquire the data online. Mailing lists must be provided but all the initial creative is done online.
Something else the company is putting out there is a birthday club and a new mover program, sending special postcards out for customers’ birthdays. “We’ve been able to identify households who have a birthday coming up within a month, and we send them a postcard saying we’d love to introduce you to our restaurant by offering you a free meal on your birthday,” says Keith Goodman. “It gets people into the restaurant. The restaurant can send these out every month. And for new people moving into a neighborhood, take 500 people moving in within a radius of the restaurant and have a neighborhood ‘free meal’ card go out.”
Finally, they introduced at the National Restaurant Association in May is the ability to click on a code for a coupon and then transfer that coupon to a smart phone. “This allows restaurants to communicate from now on with that person over mobile,” says Goodman.