The Five Most Dangerous Restaurant Marketing Mistakes

MISTAKE #1: Chasing the Smallest Opportunity

Problem: Increasing sales through customer acquisition is the most expensive and least productive method for driving profits. It is a restaurant's own customers who are more likely to visit and spend money, yet most owners expend 90% or more of their marketing dollars in an effort to drive "new" traffic, which in most cases represents less than 10% of a restaurants growth opportunity.

Solution: Significant sales increases are more easily obtained through staying top of mind with current customers and giving them frequent reasons to return.

Example: A customer visits your restaurant twice a month. They are continually influenced by other advertising and offers, so they are dining in other restaurants as well. Imagine if you had a way to reach out and provide them with continual and repeated reasons to visit and spend money with you. Just one more visit per month is a 50% spending increase from that customer.

MISTAKE #2: Using The Wrong Media

Problem: Yesterday's mass advertising media are in complete free-fall. They are no longer delivering the eyeballs they used to. The world has moved to the web.

FACT: Post Office losses are accelerating due to declining volume

FACT: The top 25 newspapers are hemorrhaging money

FACT: Radio has its lowest audience since Arbitron started keeping statistics

FACT: Today's 18-34-year-old customer prefers email to direct mail.

Despite the fact that mass advertising is increasingly irrelevant and terribly expensive… the most dangerous aspect, is that it doesn't work at all – unless it is discount driven. And since your offer is piled in with competitor's offers – the bigger discount wins.

Solution: Building your own database of customers allows you to connect directly with them inexpensively... with offers designed to encourage a visit – without competing with competitor's ads and offers.

MISTAKE #3: Suicidal Offers

Problem: Discounts have become the crack cocaine of restaurant marketing. And like any drug, it requires more and more to get any response at all. And, as we've just seen – the nature of the mass-advertising beast – is that the steepest discount wins.

Discounts hurt you in five ways:

    They make the restaurant appear desperate
    They reposition the restaurant as a low-end operation
    They attract bargain hunting "junk traffic"
    They murder sales and profits
They train customers to "wait" for the deal

Solution: Discounts should be used sparingly, and only for driving new traffic. Customers brought in from discounts should be immediately enrolled in a customer data base or rewards program for follow-up marketing.

MISTAKE #4: Reach & Frequency

Problem: Restaurant owners (especially independents) do not have the deep pockets to sustain an extended marketing campaign. They advertise when the budget allows or on an occasional basis in reaction to slowing sales. This leads to a downward spiral of boom and bust marketing.

FACT: Consumers buy, when they are ready to buy… not when a business owner decides to advertise.

FACT: On any particular day only 3% of your marketplace is ready to spend money with you. That explains mass-advertising's dismal response rates.

FACT: Continual repetition is required to attract new prospects – and more importantly, it is needed to prevent customer erosion from competitor advertising.

Most owners over reach with too little frequency... this squanders marketing dollars because they only reach a tiny fraction of those ready to buy now.

Solution: Narrow the reach and increase the frequency. Rather than advertise to 10,000 people once a month, you're better off reaching a zone of 2,500 people 4 times during the month. That insures that you are in front of all 2,500 at or near their dining cycle.

IMPORTANT: Enroll these people in your rewards program and then move on to the next zone. You must reach those most likely to buy from you – with enough frequency to instill a habit. Then, you must maintain that frequency (a rewards program does this automatically) – to prevent competitors from influencing YOUR customers.

Summary: Mass advertising is "expensive." Rewards marketing is "inexpensive." Discounts train customers to "wait." Rewards motivate increased "spending." Reallocate part of your marketing budget to a rewards program that gives your customers continual and repeated reasons to visit, keeps you "top of mind" - locks in loyalty, encourages increased spending, and runs on auto-pilot. It worked for my restaurant, it works for our clients...it will work for you too.