• Larger companies can aﬀord to pursue tactics like direct mail,print, and TV because they have the advantage of scale• Larger companies have full-time marketing managers who canspend months optimizing online marketing spendYou have some disadvantages
What should your focus be?• Highest return for your limited time• Highest return for your limited marketingbudget• Marketing that is fun & easy to execute
Red Robin partially attributesits turnaround to the successof its loyalty program.Red Robin: Red RoyaltyThrough revamped advertising eﬀorts,cost cutting and BEEFING UP OURLOYALTY PROGRAM, the company hasaccomplished a full year of proﬁtability.”In the third quarter, Red Robin swung toa proﬁt of $2.1 million, as revenue andmargin rose from improving same-storesales, guest traﬃc and average check.Shares rose 9.2%,representingnearly 35%growth last year.An article published on November 4, 2011 in the Wall Street Journal stated:“”
In its 2012 10-K report, Paneras CEO shared thattheir MyPanera program had grown to morethan 13.8 million registered members. Panera Bread: MyPaneraStockholder letter, April 16, 2012“”In 2011, we beneﬁted from ourinvestments in a few key areas:quality of our food, our increasedmarketing expenditures, andTHE ROLLOUT OF OURMYPANERA LOYALTY PROGRAM.
Retailers withloyalty programs,on average, are88% moreproﬁtable thancompetitors whodo not.It is 6 to 7 timesmore costly toacquire a newcustomer than toretain an existingone.Opinions on Loyalty MarketingExperts agree that loyalty is the mosteﬀective and highest return marketing“”“”“”Customer loyaltyis the single mostimportant driverof growth andproﬁtability.
Lifetime Value of a Customer“”Increasing Lifetime Value of Customers:the key to running a successful, long-term businessThe development and retention of proﬁtable customer relationshipsis VITAL TO THE HEALTH OF EVERY BUSINESS... Companies needto be concerned with the future revenue & proﬁt streams associatedwith the ongoing satisfaction & retention of their core, proﬁtablecustomer bases. The companies that FAIL TO RECOGNIZE THISTRUTH overspend in marketing to acquire & retain less proﬁtable, oreven unproﬁtable customers and DO NOT SPEND ENOUGH ONKEEPING PROFITABLE ONES.
Loyalty for Small BusinessesLoyalty marketing is more relevant today forsmall businesses than it has ever been• Your biggest asset isyour existingcustomer base andfoot traﬃc• Data shows thatloyalty programs canincrease customervisits by 20 percentor more• With social media, each ofyour customers can nowshare your brand withhundreds of others• Technology can nowautomate most of yourloyalty marketing needs.It’s marketing that’s funand makes sense!
Driving ROI from LoyaltyLoyalty marketing ROI is traditionally driven byincreasing visits, spend, and response to promotions
Increasing VisitsOnce a customer becomes engaged with your loyaltyprogram, you will begin to see them come back morefrequently
Increasing Visits: TpumpsCase Study: Tpumps After FiveStars:Customer VisitsBefore FiveStars:Customer VisitsADDITIONAL VISITSFROM FIVESTARSGross ProﬁtADDITIONAL PROFITPER MEMBERNumber of VIPsADDITIONAL PROFITWITH FIVESTARS2.5 visits/month1.85 visits/month0.65 visit/month$4 per visit$2.60X4,000$10,400X
Increasing Spend Per VisitRevenue perCustomerVisit(Illustrative)Only possible if you have rewards based on spend
LOYALTY PROGRAM MECHANICS:Instead of giving one point per visit, give one pointfor every $5 to encourage more spend per visit.Increasing Spend Per VisitIdeas to encourage customersto spend more per visitCROSS-SELL:Starbucks gets customers to spend more by promotingtheir baked goods and other food items at the point ofpurchase.BUNDLING:Create compelling bundles - buy entrée, dessert, and drinkfor $12. Or create compelling packages for groups - buy alarge pizza and get an additional medium pizza for halfprice.
Use TextMessaging toDrive Loyalty• Brings your best customers inthe door immediately• Customers prefer gettingtimely messages from placesthey already go to, especiallyplaces they frequent• Text message promotions canreach customers throughoutthe day, they don’t need tobe in front of a TV orcomputer• Good text messagecampaigns can complementyour other marketing eﬀorts.Driving Promotions91% of peoplekeep theirphones within3 feet ofthemselves24/7People look attheir cell phones150xper day
Driving PromotionsPROMOTIONS SUCCESS STORYSoulman’s BBQ had a 4 percentresponse rate from texting a timely,relevant promotion to its customersOne of our Client Success Managers convinced Jim, a FiveStarsbusiness owner in Texas, to send out a Valentine’s Day textmessage to their customer base using our Merchant Toolkit.Jim had never used our texting services before,and wasn’t convinced it was going to bring people in the door.“Got 3 already.One within 5 minutes!”ACTUAL COMMENTS RECEIVEDFROM OWNER AROUND NOON THESAME DAY: “Well, you have convinced Don and oneof my staﬀ. I actually did get $107.40 insales. I will have to try it againsometime”LATER THAT DAY:Text Sent: 11:15amFeb. 14, 2013
Driving Promotions: Soulman’s BBQCampaign Proﬁt Total Revenue GeneratedCost of Goods SoldCost of Text CampaignProﬁt from Text Campaign——XTotal Loyalty MembersPrice Per TextCost of Text CampaignSoulman’s BBQ achieved Revenue/Cost Multiple of18x from its promotion to loyalty program members$107.40$32.22$6$69.18400 1.5 ¢ $6.00
Loyalty Automation PlatformWE TAKE CARE OF EVERYTHING• Customer information righton the POS• Never slow down your line• Built in fraud controlPoint-of-Sale Relationship Manager FiveStars Card Merchant Toolkit• Simple technologyeveryone can use• Impossible to lose• Hundreds ofthousands of cardmembers• Simple customersegmentation• Text message &email campaigns• Social mediaintegration
Thank You To learn more about how FiveStars automates loyalty,visit http://bit.ly/ﬁvestarsloyaltyTo get more free resources on small business marketing,visit http://blog.ﬁvestars.comChris Luochris@ﬁvestars.com