Here’s a simple question for you: how much is knowing each of your guests really worth to you? What if you knew what they liked, what they don’t, everything they’ve ever purchased from you, where they live, how much money they make, how many kids they have, what their favorite team is, or what allergies they have?
Or how about something a bit more detailed like what they like to drink…on Wednesday nights…when they are having pasta…when they are with four others…at your location in Poughkeepsie…when it’s their 2nd visit of the month?
How much would data like this be worth? What could you do with it and how much extra revenue could you drive if you used it properly?
There are a few important pieces to this. First, how do you decide what the data would be worth? Second, what would you do with the data if it suddenly dropped in your lap? And finally, and perhaps most important, how would you even begin to put this all together?
Today’s post is going to discuss that last question and over the coming weeks we’ll tackle the rest. You’ll see some pretty amazing examples of what can be done when you properly analyze this type of data (in the restaurant industry). You’ll also see how you can take action on the data without hiring a team of 50 math and marketing whizzes to constantly manage it all. But, for now, let’s start at the beginning…where do you begin?
For starters, the underlying premise here is that if you truly understand your guests then you will be able to create more compelling content and offers for each and every one of them. Read that again. Notice that it didn’t say “You’ll be able to send everyone the same thing.” I receive something different from you (and at a different time). She receives something different from him and on and on. It’s one to one marketing and it is possible with technology available today. There are plenty of case studies from nearly every industry that show that targeted marketing is much more effective than blast messaging (sending everyone the same thing) at driving purchases and creating a deeper connection with the brand. I think we can all agree on that. So with that starting premise, we’ll move on.
In order to deliver targeted messaging, before I can do anything else, I need one thing. Without this, all the data and all the data scientists in the world can’t help you. Do you know what it is?
An email. Specifically, an guest’s email and their permission to send them messages. Without this, there is no targeted marketing because I have no way to reach the guest. (Yes, there are other ways like SMS or in-app push notifications, but we’re starting with the basics here.)
So, you’ve agreed that targeted marketing is much more effective than blast messaging. You’ve also agreed that you need an email address opt in to be able to even think about delivering a targeted message. That begs the next question: do you have the email address and permission of EVERY one of your customers?
I’m guessing the answer is no, which is okay…you’re in good company. There are probably very few companies that could claim this and they likely don’t have many customers.
Now, here’s the problem: you need these email addresses (and the permission to send messages of course) to deliver your targeted marketing. It’s the foundation of all of this. The foundation of a program that you know will deliver results. So, the question is simple: how much would you be willing to pay for these email addresses?
To be sure, I’m not telling you to go out and buy some bulk email list. Never, ever do this. And “pay” is sort of a loose term here. A better question might be: what would you be willing to give in exchange for these email address? To really answer that, you need to understand what value that email address has to you. To know that, you need to understand (or begin to estimate) how much in incremental sales you can drive because you have that email address and do some effective marketing with it. Could you eventually get to a point where your messages are (on average) getting each guest to visit one extra time per year (or more)? You know how much this would be worth to you, so how much would you be willing to pay for the foundation of all of this…the email address?
There are, of course, some very complex analyses and A/B testing you could do to find precisely what your marketing efforts can deliver, but these take a long time and are difficult to administer. You should do this someday and we’ll cover in a future post just how this works. But for now, let’s do some estimating.
Could you create some email campaigns that get me to order one extra dessert a year?
You net, let’s say, $2.50 per dessert so, the value of that email address is at least $2.49. That’s if you only manage to somehow upsell me one dessert with all your messaging. And yes, we’re leaving out some other marketing costs, but we’re estimating to make a point, so stick with it.
What about if you could create campaigns that get me to visit one extra time per year?
You net, let’s say, $20 per visit. The value of that email just went up…it’s now worth at least $19.99.
You get the picture.
The good news is that you don’t have to pay $2.49 or $19.99 in cash, but you might have to entice your guests a bit to get them to hand over their email address. The good news is that you have plenty to hand over in the form of food. Going back to our example, where you drove one extra visit and netted $20, how much could you give away comfortably to get that email? Considering your cost of the food, could you give away one entrée? Two? A dessert and entrée? You know your costs and can figure this out. Imagine if you could drive two more visits? In that case, purely from an ROI standpoint, you could give me one free visit in exchange for my email address and still be very profitable.
These are examples, of course, to prove a simple point. You’re probably not valuing those guest email addresses highly enough. You’re not investing enough to get your database populated. We understand that some of you don’t like the idea of giving away or discounting your food under any circumstances. This doesn’t let you off the hook. Come up with something else to give in exchange for that email address. How about some merchandise if you have a beloved brand? How about some perk like skipping the waitlist? How about a random prize giveaway (and a really good one)?
The email address is the foundation of all the targeted, one to one communications that marketers dream about. So, make sure you’re investing enough to get people to click this button.
You know what it’s worth, so are you paying accordingly?
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