Pizza customers are a promiscuous bunch. Let's look at the top 10 pizza marketing strategies you're not using – but should be – to make sure your customers continue coming back.
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Pizza marketing is a unique animal. There's no other business that accepts customer orders in-store, via phone, and online. Options for pizza have exploded, from crusts to styles, ingredients, and oven temperatures. Passionate customers carry enormous weight – just think of the sheer amount of "Where should we get pizza from?" conversations taking place every day – but getting customers to this level of loyalty takes time, energy, and flawless execution.
To succeed, pizza marketers need a strategy that's outside the box. Here are the top 10 pizza marketing strategies you're not using that lead to increased revenue and drastically improved customer satisfaction.
1) Tailor Your Marketing Strategy To Millennials
According to PMQ, last year Millennials made more than 14 billion visits to restaurants and spent $95 billion (for comparison, total 2014 pizza sales were $38.5 Billion). Millennials have gone from fiery upstarts to the focal point of our economy – they make up the largest population cohort the U.S. has ever seen, they hold $200 billion in spending power, and Barrons estimates that millennials could soon generate GDP growth of 3% or more – at least a percentage point higher than the current levels.
As a result, pizza marketers need to tailor their strategy to this demographic. That's the only way to find success. Fortunately, there are two straight-forward ways to appeal to millennials:
A) Make mobile the focal point of customer communication; email (and whatever else) should be complementary
According to eMarketer, 90% of U.S. millennial smartphone users have their phones within arm's reach 24/7. So, hopefully clear: mobile = priority #1 to communicate with the economy's most important (i.e. lucrative) demographic.
What's also interesting – what's happening to email marketing: Epsilon found that email engagement rates dropped to 4% in 2014 (down 20% from a few years ago), while MailChimp shows restaurant clickthrough rates to be just 1.7%.
1.7%. Every time an email marketing campaign needs to attract 100 visitors, a pizza marketing team needs 10,000 customers on an email list. Contrast that with the 80% engagement rates created by mobile marketing – pizza marketers only need 125 customers to see 100 visits. What's more achievable – finding 10,000 customers or 125?
Millennials choose (and prefer) mobile as their primary means of communication. Those pizza brands that rely solely on email marketing will not be able to keep up (to be clear, email still has value – it just has to be the George to mobile as Seinfeld).
B) Get Rid Of Plastic / Punch Cards
A recent case study from a San Francisco-based restaurant that targets millennials revealed that, after spending $10K+ on printing plastic loyalty cards, 74% remained unregistered, 44% unused, and only 18% of customers still used their card three months after receipt. After switching to a mobile-based program, 83% of customers remained active three months after signing up.
That jump represents a 461% improvement in marketing to millennial customers.
Just like mobile vs. email, there shouldn't really be a need for a detailed explanation, plastic / punch cards don't work for the millennial audience. Focus on mobile and see better results.
2) Increase Sales Per Unit Using NPS and Retention Marketing
From the aforementioned PMQ article, most populated areas have as many pizza restaurants as they can support. Nationally, 1.2K pizza units shut their doors in 2014 while 2013 saw the closure of 2K stores. Pizza restaurants need ways to increase sales-per-unit – in addition to opening new stores – to continue growing revenue.
As such, here are two proven strategies to increase same-store sales not in use by the majority of pizza brands:
A) Track Customer Satisfaction To Identify Revenue-Generating Best Practices
A recent study of multi-location restaurants found that the average transaction at a business's best-performing location is 93% higher than its worst. By bringing low-performers up to the level of high-performers, pizza brands can eliminate this discrepancy and immediately increase sales-per-unit.
To do so, use Net Promoter Score (or other customer satisfaction metric) to track overall customer satisfaction. Implement high-performing locations' best practices at locations that aren't doing as well. This will steadily increase sales to a level where all locations generate a comparable revenue per customer and total revenue.
Then, use NPS to track new customer service initiatives designed to increase sales and promote the best initiatives across the entire brand. As a starting point, consider employee training about how to articulate the pizza brand's value proposition. Customer retention rates are 18% higher on average when employees are highly engaged.
B) Increase Average Spend Per Customer Using Easy-To-Redeem Customer Rewards
When confronted with the challenge of increasing revenue, every business in the world thinks the same thing: we need more customers. However, here at the Top 10 Pizza Marketing Strategies You're Not Using, we're trying to uncover something you don't already know.
So, focus on your existing customers as a source of new revenue. A rewards program – smartly designed – increases revenue in and of itself. From there, set up a referral program to get new customers by way of your existing ones. Incentivize existing customers to come at different times during the week. Remember, revenue is revenue, no matter the source. Spend resources on the initiatives that will add the most revenue, not the most customers.
3) Create Transparent Customer Communication
According to data from a recently-released restaurant study about consumer participation in restaurant marketing initiatives, 48% of consumers never sign up simply because they lack information. When consumers are informed, 87% chose to enroll.
So, when pizza restaurants communicate clearly about a program that benefits their customers, they can generate an 80% improvement in the number of customers that choose to participate (interestingly, this best practice applies to other industries: Michael Marino, VP of Customer Loyalty at Caesars mentioned that conversion rate for loyalty cards jumped from 24% to 80% once the marketing team "made a conscious effort to be very clear with our intentions").
To create transparency, A/B test existing communication to verify that it's effective. From there, tie communication to customer activity rather than random events (e.g. trigger a mobile notifications right after a transaction rather than the next day).
4) Do NOT Launch A Daily Deals Promotion Unless You Have A Retention Marketing Strategy In Place
A recent survey posted to Pizza Marketplace found that nearly 80% of survey respondents think online deal sites, such as LivingSocial, are successful in driving sales; 18 percent stated that online deal sites are more beneficial than other marketing channels (yes, LivingSocial sponsored the survey).
To be very clear, it's a terrible idea to launch an online/daily deal promotion without a strategy to make sure customers come back. Please read this blog post for the Microsoft Excel analysis, but it's impossible (yes, impossible) to earn a positive ROI on an online/daily deal unless the majority of customers come back – and that's before we even get to the Yelp effect.
To make sure customers return, remember best practice #1 – having an email address doesn't count. Seek out a mobile solution to see long-term results.
5) Make Transaction Data Part Of The Pizza Marketing Arsenal – Now
The same Pizza Marketplace survey found that 49% of respondents rate "difficulty tracking the ROI of marketing investments" as their most significant marketing challenge. Moreover, 86% of participants said "they make marketing decisions without any supporting data."
One of my most intelligent friends told me once, "don't ever borrow money unless you know it's going to make you more money." No brainer, but let's put it bluntly for the pizza world: "don't spend money on marketing unless you know it's going to make your more money."
To actually "know", you need transaction data. It's as simple as that. There's no other way to track the success of marketing intiatives. A coupon without transaction data does nothing for a pizza business. It's equivalent to standing on a soapbox, wearing a blindfold and earplugs, and yelling at people – imploring them to drop some money in a hat.
To establish transaction data as an asset at your pizza restaurant, ask every single marketing service provider / employee at your business: "How will this initiative affect customer recency, frequency, and lifetime value, and how will we measure this effect (h/t Dunnhumby)?" The only way to answer these questions is via transaction data.
"Top 10 Pizza Marketing Strategies You're Not Using" will continue in part 2. You can also check out pizzaloyaltyprogram.com for more best practices.