Kickbacks

What do you guys think about offering monetary kickbacks for hotel/tourism employees to direct business your way? Is this legal? I have a friend who thinks that it would be a good idea to offer the concierge at a very large hotel (1500 rooms) a 5% kickback for the orders that sent to us, but my gut tells me that this isn’t a good idea. Any ideas or comments on this one? Thanks.

Sounds like a fantastic idea.

Throw a free pizza his way too. So he can recommend without reservation, and get some $ on the side.

There is nothing wrong with giving someone a commission, and that’s a better way to refer to it than a “kickback,” which infers something sleazy.

Good hotels have rules against the concierge getting a commission, since it influences a reference that may not be in the best interest of their guest. A poor recommendation reflects poorly on the hotel.

A better way might be to offer a regular “appreciation day special” (only pay for drinks) to local hotel front desk staff or concierge once every couple of months.

We ran this promo:

Every time someone from the hotel ordered, we dropped a biz card off at the front desk. After they collected so many cards, they got a free medium 1 top. I always thought that was a good start, but could have went farther.

3 cards = order of breadsticks
5 cards = medium 1 top
7 cards = large 1 top
10 cards = large 1 top, breadsticks & drink

…also, always thought it would be a good idea to hit up the hotel manager with a few substantial gift certificates every couple of months that he could use however he wanted–for himself, employee awards, or going that extra mile for the hotel guest.

A lot of people think hotels are full of transient non-returning customers too. This is not the case. Many times, a hotel will have regular guests return on a consistent basis. I always thought there should be some kind of way to tap into this market and hold on to it too, but haven’t really thought of anything yet as there is no great way to track these people without the hotel’s help.

i used to work in at a Super 8 and they enlisted several businesses in town to offer a discount to their loyalty program members. It was told to every guest that walked through the doors and everytime they asked for recommendations. Pizza Hut gave a 5% discount other places gave upto 10%.

To collect they just had to show their VIP card.

Bryan

I work with a marketing company that does all of the work for the pizzerias in terms of marketing to the hotels, hotel staff, hotel guests on a regular daily basis throughout the year. This frees up the pizzeria to focus on what they do best, making quality pizzas and providing consistent and timely deliveries to guests.

The marketing company charges a flat marketing fee, “commission”, “Kickback”, whatever you want to call it…of $3.00 per delivery.

Here’s how I look at it. If someone were to walk into my pizzeria and say, “I would like to be a sales person for your pizzeria. Would you pay me a $3.00 commission for every delivery order I bring to you, with no out of pocket cost to you for advertising, would you hire me”?

My answer would be absolutely! I would gladly pay anyone $3 per order.

Curious to know how many operators out there would be willing to do the same if this opportunity was presented to them?

Thanks for your replies…

I for one would not consider a $3.00 commission for motel deliveries.
Look at this scenareo,
Business traveller pulls into hotel. Does not want to go out to eat. Calls me up orders a sandwich and 2 cokes (2 so he can make min. for delivery). Food cost ~45% (Coke is killing me on cost) Labor ~16%. Now I have to pay you $3.00, how much do you think that leaves for me.
It may be different in other areas, but we have one motel in our area and orders there are typically one pizza or one sandwich and an order of wings, or something like that. Orders are rarely over 15 dollars. So basically you would be making a huge percentage, whilst I would be working for nothing or less than nothing. I do not mind someone else making money if they are increasing my income in the process, but siphoning off my profits, which are a little too thin right now, does not sit well with me.

Rick

I tried the 3.00 commission last year and i blew up in my face, first the company charged a set up fee to change over all the in room pieces, That never happened soooo, when a customer thinking they were calling dominoes got my store, they became very very mad and especially when I couldn’t match the 7.99 large 2 topping pizza. I also was a fan of the 800 number they had to call to get my store, lastly every time a guest calls to see if we have any specials…3.00, if they call and change there order…3.00…if they call to say hey we want to put that on a cc…3.00…so its not 3.00 an order its 3.00 a call

Never!!! $3 in most cases would be at 10% or more on the order plus the cost of delivery ($3 in my case) Minimum delivery order is $15 so on those orders I would be in the hole. I would rather give a credit toward a pizza to the front desk because the cost on that pizza is only 25-30% of the perceived value.

What if the marketing service didn’t charge for any calls that were less than a minute (which allows for duplicate calls to pay with a cc or change the order, etc., as well as calls that don’t turn into orders). So basically, you’d only be paying for actual orders.

Rockstar, do you happen to remember the name (contact info) of the company that was offering this service to you? It would be really helpful for us…thanks in advance!

Marc

Posts: 2
Joined: Sat Sep 04, 2010 10:35 am
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Your still wanting 20% of the average order, I don’t know what you think the margins are in this business, but most of us won’t be giving up 20% to a marketeer.

I’ve been told that some operators offset this cost by charging a $3 delivery fee to the hotel guest. Yes, this lowers the response rate, but it then essentially becomes a no-cost marketing program for the operator. Would this make more sense? Others do it 50/50. They charge a $1.50 delivery fee, and they cover the other $1.50, to reach the $3.00 per order charged. Thoughts?

Maybe it would work in another market where customers and shop owners don’t care about money, but in my corner of the world I could not get away with adding another 3.00 delivery fee on top of the existing delivery fee, my customers would cancel and hang up after getting the total and asking for an explanation of the charges. Then they would call another pizza shop and place the same order without the excess fee, and I would owe you $3.00 because they were on the phone long enough to make you think I got an order.

If somebody sees this different, speak up. But I can not see how motel orders are worth a $3.00 comission each.

Rick

I am curious since you would gladly pay for your service…would you post a listing of your current pizzeria customers that use your service that we may contact and hear first-hand how well this all works?

I think one part of this discussions needs to be whether or not you need the property that is under contract of the marketing company…Many hotels/motels sign exclusive deals with a single marketing company/pizzeria in exchange for what many may call a kickback…On a recent trip I noticed the yellow pages in my room had the pages for taxis, pizzerias, chinese food, etc. removed and only 1 of each in the directory in the room…

You may think that 3.00 is too high a price to pay, however, if it is the only access you have to a property it may be the price you have to pay…But I think you have to look at averages to determine if the cost is actually 20%…And even if it is, can these still be profitable orders if your other expenses are charged against your other orders?..

Royce
I haven’t used a directory in a motel/hotel since I got a cell that gives me access to that type of information. It takes way less time to use the search on my phone than using the paper directory. You may be right but I still think $3 off my profit is way too big of chunk for me to ever consider using a service of this kind.

Marc
There has been a challenge for you to produce a happy reference. Are you up to the challenge?

I believe Royster makes serveral good points here.

  1. If the marketing company has an exclusive relationship with the hotel, and you want to get into that particular property, than $3/order may make sense (especially if it is amortized over all of your orders).

  2. Although some people exclusively use thier cell phones/smart phones to access info (even if its the majority of people), there are still going to be ones that use in-room printed directories, phone books, etc. to find a place to order food).

The good thing about a Pay Per Order program, is that you only pay if there are results. I would think this would be a better (less risky and more profitable) plan than the old-school approach of paying a flat fee for advertsing (wether or not the advertsising produces any results whatsoever). Thoughts?

Let me see what I can do to provide a reference, thanks.

Not to question your math Marc…but how is the $3 fee amoritzed over all of your orders? You are charging $3 per order so it is a direct deduction from any profit seen on said order. Now, if you spend an extra $200 a month marketing to a larger hotel directly, then you can spread the cost of the additional marketing across the entire gross sales that were generated within that hotel. You can’t have it both ways. :idea:

Oh, I am also with Daddio… I do not remember the last time I looked at a hoter phone book or directory. It’s all in the phone, computer, or asking where the good places are. That is where marketing directly to the hotel staff will pay off.

Mike
I think Marc is trying to get us to think it is reasonable to have the non-hotel customers subsidize the extra $3 for the hotel customers. This is an unfair tax on the customers that are not hotel guests.