Hello all. I have posted a few times on here, and have read just about every topic ever posted. I am a dine in(60 seat)/carryout only, Mon-Sat 11-9, 10 on Fri-Sat, closed Sundays. Nov 26 is my 1 year aniversary. I am looking for that next level. The Lord has blessed me so far. Im doing steady 11.5 weeks. I am yet to advertise. I have some new menus being made at present and will start my mailout program when they are done. I know its a lame question, but how much in general will a mailout program generate? I have been told around 10% but is that a realistic number with no delivery? I know the question is vauge. I am just wondering what other setups like mine have experienced after their first run at advertising. Thanks for any replies.
Congratulations!
Have you contacted your franchisor for recommendations? They may be able to supply you with specific mailings that have worked well for other franchisees, as well as provide vendor contacts.
I spoke with a rep from Valassis this weekend. He said they generally project a 1.5% return.
Thanks for the replies…guess i’ll continue to lurk around.
I usually see about a 2% return rate on “cold drops”, i.e. mass mailings. 10% is probably much too optimisitc.
What is more important is your ROI on the mailer. I like to see at least a 60% ROI on mass mail. Anything less than that and I know I have a bad offer, bad piece, or both. When I hit on a great offer I can sometimes see a 60% ROI with only a 1.5% redemption rate.
Database mailers are a completely different story. I consider those a failure if I don’t see at least a 300% ROI.
I have delivery, but it is only about 15% of my business. My shop seems fairly similar to yours.
Piper can you please clarify your data…When you say 60% ROI are you meaning your sales are 160% of the cost of the mailing?..I am not in the pizza business but I want 7 to 12 times the amount I spend on a mailing in sales…This can sometimes be 1 order on a 1,000 pieces…
Not sales… I want to see my gross profit be at least 160% of the cost of the mailing (meaning after food cost.) On a mass mailing, I usually see a Sales/Cost ratio of about 3.5 to 1.
For database mailers to existing customers, the Sales/Cost ratio is usually over 14 to 1, which brings in the over 400% ROI that I mentioned.
Piper does this math come close?..
$100 in mailing costs generates $350.00 in sales (3.5 to 1)…Gross profit after food cost (30%) is $245.00 - $100.00 = $145.00…Or 145% return on investment…That makes it worth it…I did this so other folks can have an example of how to calculate there return…
It is also important to alter the frequency of the mailouts…Go shorter and go longer until you determine what the best frequency is…In my experience in a larger city every 5 weeks worked best and in a smaller city we had to go every 3 weeks…And keep at it forever…
Yep, that’s pretty much the math right there, although on the offers I’m currently running I’m at closer to 40% food cost. We bundle a pizza with items that don’t take much (or any) labor like bread sticks or 2 liters. We give up that 10% extra in food cost but are able to offset it with a low marginal labor rate, keeping the prime cost at 50% or so.
I misspoke in my last post. My Sales/Cost ratio for database mailers is usually on the order of 10 to 1. I accidentally calculated the 14 to 1 based on the cost of saturation mail; addressed mail is significantly more expensive. So, for my current database mailer (1,000 pieces to existing customers) my total cost was $244. It generated $2,204 in sales. We had an estimated food cost of $841.93 and gross profit of $1362.07. (1362.07-244)/244 yields a 458% ROI for the drop.
This is actually something we look at every single day. Each offer has a spreadsheet and I enter what the sales were and how many were received. The spreadsheet then calculates the estimated gross profit for the orders based on the offer and how much was upsold (the amount of sales above and beyond the offer price.)
Just don’t get bogged down with your redemption rate. You can send out an offer for $1.00 large pizzas and get a 50% redemption rate, but guess what your ROI is going to be! Like Royce said, he can get 1 out of 1000 back and have it be a very sucessful campaign.
I’ll echo what he said on experimenting with your frequency too. I’ve found I can maximize the ROI on database mailings by sending every other week. Every week was too often, every three weeks and I was leaving some money on the table. For mass mailings, five weeks seems to be the magic number for us. We just keep rotating through all of the zones over and over and over again.
I thought that 10% was a bit much. This will be my first time mailing so as i said before i am rather clueless to the whole game. Word of mouth has been the only advo we have done. I also have a tv spot starting monday so i am interested to see what happens with that. Just gotta a text from my brother and so far looks like a great night. I pray all goes well for everyone tonight and the years ahead. Thanks again for the insight.