Direct Marketing, Mail Order, and E-commerce News from the National Mail Order Association


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New Business from Old
by Ray Jutkins

Several summers ago at a seminar in San Diego, I met Judd Goldfeder president of the Customer Connection and we've been in touch ever since. .Judd spent part of his business life in the restaurant business. One of the many things he learned was that restaurants — chains as well as solo units — spend good advertising money to get new customers. And then they spend about zero to keep them. Judd felt this was wrong — and he set out to do something about it. He invented what is now called The Customer Connection.

A few short years before, Judd had recognized that the language we use in direct marketing was an important sales tool. So, he decided to change his corporate name.

Initially, I argued against the change because he was making it quickly — without testing, without talking to current customers, without thoroughly thinking through his direction. Boy, was I wrong!

The Customer Connection (TCC) is the perfect name for the today. Tied with his tag line — "Customer Relationship Marketing" — it screams service. It tells you in clear terms that you are to take care of your customers. Hold their hand. Be their teddy bear. Let them know you truly care.

TCC is about helping others take care of their customers. It is a simple yet sophisticated database marketing system.

Judd specializes in restaurants, with an expansion into any chain of retail stores. He started with restaurants because he knows the business — and many in the business know him from his earlier days. Today, any chain of 25 store locations or more is an honest prospect for TCC. Here's how its system works.

You go to a restaurant — maybe one you've frequented in the past, maybe a new choice. The hostess seats you and asks if you'd like to complete a simple registration card. Purpose? To become a member of the restaurant's Birthday and Anniversary Club or to join a Frequent Diner Club. This is a soft-sell request; you can choose to — or choose not to — fill out the card.

The completed cards are sent to TCC each week in a special postage-paid and pre-addressed jumbo mailing envelope provided by TCC. The information about the customer gets input into the database for that particular restaurant and for the chain generally.

Now the restaurant can do mailings to its customers — not only for birthdays and anniversaries — but all year ’round, for just about any restaurant theme promotion: Valentine's Day, St. Patrick's Day, Mother's Day. Customers can be invited back again and again.

Think about it. How many times has your favorite restaurant done anything for you? I travel on business every month and, consequently, eat out a lot. Not one restaurant has ever made any effort to invite me back. And they don't know (until they ask) if I live or work in the area and might return often.

Another advantage of the TCC program is that restaurants can invite non-customers to become customers with a "neighbors" promotion. By locating where your business is coming from, finding the high-traffic areas, merging that input against the total marketplace and your current customer base, you can reach out for new business.

Okay, once the program is in place, what kind of results can a restaurateur anticipate? Typically, 25 percent to 40 percent of all cards mailed to customers are redeemed. The average amount spent is usually slightly more than the norm. The party size is 2.75 persons — about what it is on straight walk-in traffic.

Response to "neighbors" programs runs between 6 percent and 14 percent with the average bill and party size about the same as above.

The database is used to track who redeems what offers, where they live, and how much they spend. This allows the restaurant to specifically target follow-up promotions.

Tracking also includes total redemption for every promotion, including sales, number of guests per redemption, total number for the program, number per day of the week, and even the part of the day in which the offer was used.

Does all this effort bring in extra business? You bet! How do we know? Because each year, customers receive a questionnaire asking for feedback on the program. Here is what one restaurant's customers who are on the program had to say:

►   40 percent responded to the questionnaire. All expressed pleasure with the program, and more than half added additional positive comments.
51 percent said they took advantage of the offer because the they received the card. And 36.6 percent said they would have gone anyway — with or without the card — which means the mailing worked on a large portion of what the restaurant already called its customers. Without the mailing, it would have lost 51 percent of its audience.
40 percent who did not redeem the card said they had eaten at the restaurant since receiving the mailing and that the mailing influenced their decision.

There is no doubt the program is creating loyalty and goodwill for this restaurant and this at a time when high quality and superior service are important to customers. Here are some quotes from satisfied customers who received a recent birthday promotion:

"I think it's great. It makes you feel good, and we certainly go there more often because of the good feeling."

"You make the birthday person feel special, plus the advertisement you gain is tremendous. It gets mentioned to all family and friends during the telling of presents and events."

"We occasionally eat there, but because I got the card, I brought a bunch of people with me to celebrate my birthday. Five of them had never been there before, and they all enjoyed it and said they'd come back again."

Airline frequent-flier programs are a fixture in the travel industry and have spread to hotels and rent-a-car companies. The concept of "lifetime value" in direct marketing is now truly with us. I learned its importance from the telecommunications companies, the credit card industry, and fundraisers.

Judd Goldfeder has brought the concept of repeat business to the everyday eatery. And it works. I know it works because I see The Customer Connection growing — and I see Judd driving a Ferrari.
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About Ray Jutkins, October 3rd, 1936 — January 6th, 2005. Ray was one of the NMOA’s most generous contributors. Over the years Ray supplied the NMOA with hundreds of tips and articles for members. This is just one of many. Ray worked with B-2-B and Consumer clients throughout the world ... including USA, Canada, Mexico, Asia, the South Pacific, Europe, the Middle-East, Central & South America, Africa. Keep an eye out for more of Ray’s marketing tips and how-to articles in the pages of Direct Marketing Digest and the article archive on the NMOA website.

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