Where to spend your marketing $$$?

Pizza Shop Talk The Think Tank
1

So over the past year we’ve been tracking each of our marketing. How much we spend on each different type as compared to the extra income coming in. And essentially, we’re getting no where.

Here are things we’ve done and or feedback.

Our area consists of 3 closes towns, about 5k people each. So with 15k people within a 8 minute radius from our shop (we have an 8 minute max delivery area)

Marketing idea 1
EDDM, full letter size page front and back. Includes the menu, specials, coupons.
Cost for 5000 pcs sent in our main town $1200. Increase in sales for that week, $1500
$1500 increase
-$450 food cost
-$450 extra labor + utilities
-$1200 for the EDDM
= Loss of -$600

Marketing idea 2
Menu inserted in local paper, full letter size page front and back. Includes the menu, specials, coupons.
Cost for 5000 pcs sent in our main town $700. Increase in sales for that week, $900
$900 increase
-$270 food cost
-$270 extra labor + utilities
-$700 for the Insert
= Loss of -$340

Marketing idea 3
Menu inserted in local paper, full letter size page front and back. Includes the menu, specials, coupons.
Cost for 5000 pcs sent in each of the other 2 towns $1400. Increase in sales for that week, $400
$400 increase
-$120 food cost
-$120 extra labor + utilities
-$1400 for the Insert
= Loss of -$1240

Marketing idea 4
3x5 size color or black and white ad in local paper (front page). Includes new items, coupons.
Cost for 15,000 pcs sent in all 3 towns $250. Increase in sales for that week, $700
$700 increase
-$210 food cost
-$210 extra labor + utilities
-$700 for the EDDM
= Profit of $30

Marketing idea 5
Menu inserted in local coupon-er/paper, full letter size page front and back. Includes the menu, specials, coupons.
Cost for 15,000 pcs sent in each of all 3 towns $700. Increase in sales for that week, $200
$200 increase
-$60 food cost
-$0 extra labor + utilities (to small to need extra staff)
-$700 for the Insert
= Loss of -$560

Marketing idea 6
E-mail Blasts. 1-2x’s per week. 500 subscribers. Includes the link to the menu & online ordering, specials, coupons.
Cost for $0. Increase in sales for that week, ? Only a couple people utilize the coupons and/or click to the website from the email.
This form as compared to not using the advertising results in no change in sales (from what we can tell)

Marketing idea 7
Donations, 2-6 $10 gift cards given to the organization. Includes the menus and coupons paper.
Cost for donations $10 ea. Feedback, none until the customer whom one the donation comes in to buy $10 worth of food… something $15 worth.

It seems as we have a profit cap in this area. No matter how frequently these marketing strategies are utilized a compared to absolutely NO marketing… there is basically no difference in overall income. We even tested 2 straight months with no advertising what so ever… and the income was the same as it always was. Blows my mind.

Ideas?

2

Welcome to the hard truth of the pizza world. I to, spent many a year trying to figure out how to throw around marketing dollars and make money doing it. 18 years to be exact. In 2006 I scrapped all marketing with the exception of our printed menu that we hand out with each order. In 2009 we added a website and online ordering that I apply to our marketing dollar. I also apply our uniforms, car signs and charitable donations to marketing. With all those items combined our marketing came in at .3% last year. ( Not 3%, 1/3 of a percent)

Put all those dollars into your product and employees and you will get much better results from your customers. Its a slow burn though. When we did this 10 years ago our sales went down about 10% for around 6 months. By the next year we were up 10%. In 5 years ( 2012 ) we had doubled sales and today we are triple of what we were in 2006.

I used to do mailer inserts with a marketing company back in 2006. My bill was about 20K a month. I would drive the check over to the office once a month and shoot the breeze with the owner of the company. He told me about a great marketing book I should read ( Purple Cow by Seth Godin ). I read the book that night and fired the marketing company the next day.

Its great that you have done the math on all these marketing ideas. Most people, including myself, just keep throwing the money out there and hoping for the best.

3

We are pondering getting a van to wrap and park all over the 3 towns to see if we get a reaction better then the other marketing. Has anyone done this and gotten a good response enough to cover the cost of the vehicle, wrap, insurance, stickers, and maintenance (although not much seeing as it dosent go far and just sits all day)

4

Sounds a lot like the list of things I have tried and costs associated with them… frustrating stuff for sure. A few comments:

  1. I track 2-3 weeks for most promotions and I generally pick up an increase for that long. With mailings the second week is usually the best for us.
  2. On something that only produces a pickup of $100 per day I don’t see any extra labor cost.
  3. Are you tracking new customer acquisition? If you are gaining new customers that stick with you the payback over the next year should be considered.

Other things that have been good for us:

  1. Run a report of your best customers for the last 90 or 180 days. Take the top 40 and call them and say thank you. Time invested about two hours. Cost $0.00
  2. Facebook is something we spend a good amount of time and some money (~$100-$150 per month). Hard to measure but I can tell you that when I active and posting we tend to be up.
  3. We spend more on marketing for name recognition and position than we do sending out deals. Very hard to measure for sure but I am convinced it is the way to go. It does not produce sales the way a coupon does but in the end I think it is more important.
5

our last big marketing year we spent 42k and made approx 35k net ( x had marketing degree) i was in the doghouse for not making enough to support family, suddenly i found out i was sole owner, first move was to ax all marketing, never spent another dime on marketing with attitude !, like PP concentrated on food quality and service and employees, net took a huge nose dive, straight up, 15 years now no advertising , looking forward to opening new place in 2 or 3 weeks ! no advertising planned, every person who walks in to check out the looooong build out, 8 months, gets a personal tour, they love it !

6

While there are certainly scenarios where zero marketing works (we owned a slice business for 10 years and spent zero dollars on marketing) that is the exception and most often occurs in specific locations where the rent is basically the marketing. It also helps to be in a market with limited competition and a static customer base. To the extent that you have new customers coming and going and a noisy marketplace marketing is more important to reach customers in time to influence their decisions.

For the rest of us, competing effectively for the awareness of the consumer base is crucial. That is not to say that you have to blow a hole in the market… Chinese water torture works too… it just takes longer. The operative word here is “awareness”. If you think that the only desired benefit of money spent is sales this week you are missing the main benefit of marketing.

Can money be wasted? No question about it. It is possible to spend money ineffectively or to overspend. Will all money spent have a pay-off? Probably yes… it just may not be what you hoped for.

In general, marketing is cumulative. The messages you put out there add up. Some cancel each other out (when you send conflicting signals). If all your marketing budget spent offering deals to drive immediate sales rather than build an image and give reasons to prefer your product you are telling the customer that the reason to buy from you is the deal… and when that deal is not present the customer you have cultivated has no reason to call.

7

A couple things I noticed. 1) ON your eddm mailing you spent $1200 for 5,000 mailers the cost of mailing should have been about $725 leaving 475 for print so you spent $95 per 1000 for print that is to much! I just ordered 15,000 5.5 x 11.5 full color glossy cards both sides for $400 ( I currently run the marketing dept for a small casino) . Never order increments of less than 15k for 5k they wanted $300 you want to get volume discounts. that would have changed your loss from 600 to 255. But here is the big thing how many new customers did you get? with a $1500 sales increase I’m guessing you had 100-125 orders. if 10% of those are new customers, and half of those become twice monthly regulars that is 10-12 orders a month at $15 per that is 1500-1800 per year in sales. suddenly you find out how profitable it really was.
I have been there advertise to fight cash flow issues, but in reality you don’t always get an instant cash flow positive result. But that doesn’t mean it wasn’t worth the money you spent.

8

as a guy from a small market (I mean Small 4500 pop) I decided to go with MailShark. they were very helpful in design and communication
I went with the 500pcs a week for $199 I can honestly say that my sales increased 20% on avg (no BS)
the 199 is about 4-5% of my income but it is well worth it I don’t have to do anything except schedule for the mail dates

9

I feel like your the exception to every rule in pizza lol.

10

I too also used Mailshark last year, and i am just finishing up my new menu and box toppers with them to start up again. My sales got bumped by about $200 a day for spending $200 a week (on the average).

I stopped for a few months last year and compared my results to a non advertising year and over 3 months it really helped.

Every market and store is different, you just need to find what works for you and your customers. Also you need to remember that money spent now, may not bring you a instant return. It might be the few new customers who will become regulars and pay off long term. And as you keep up the advertising you start gaining more and more long term customers.

Advertising is not about the short term return (tho it is nice), it is about getting and keeping LONG term customers that support your business and keep it growing.

my two cents

11

WOW a $200 a day increase in sales from a $200 a week spend thats an awesome return! how many new customers from it?

12

We got about an extra 5 to 10 new customers a week while it was running (We use Revention and it tracks new customers based on a 90 day order history).

13

We do a lot of eddm I have found this to be the most effective form of advertising because of the long term effect. Even though people might now use them right away they do hold on to them. I have had customers use the mailer months after they received it. We see a significant increase in sales the day they are delivered and for the next 2-3 days. Definitely works well for us. As far as marketing goes find the one thing that puts you in front of peoples faces all the time and stick with it. Eventually I am going to do car toppers because im sick of seeing to big 3 drive around. At some point I will also try a wrapped vehicle and have that assigned to 1 driver every shift so its constantly on the road.

14

I like the wraped vehicle idea i read a story years ago about a place that bought old VW beetles and painted them crazy like hippy 60s look. So everyone would talk about the goofy looking cars they had. It paid off huge.