Business and Operations
Marketing insights: December 2013
Know your customers: Manage your database to learn how to get your customers to spend more
In the film Moneyball, statistical analysis of the Oakland Athletics’
baseball team performance suggested that on-base and slugging
percentages were better indicators of offensive success than other
traditional indicators such as speed and contact.
In the film Moneyball, statistical analysis of the Oakland Athletics’ baseball team performance suggested that on-base and slugging percentages were better indicators of offensive success than other traditional indicators such as speed and contact. It’s a fabulous examination of the power contained in data.
In Moneyball, leveraging the data properly allowed the Oakland team to make the playoffs in the 2002 and 2003 seasons even though their budgets didn’t allow them to attract the athletic talent wealthier teams were able to. Sound familiar? Do you feel like a small, frugal team competing against bigger, richer competitors in the big leagues? Your path to victory most likely also lies in knowing the numbers that link to any given business problem.
There are two ways to increase your revenue: serve more people and/or serve your current clientele more. Restaurants live and die by their average cheque, so it’s important you examine the dollar value and what makes up that figure. Are there areas that seem to be underdeveloped? Food sales may be healthy but perhaps you could sell more wine? Look at each of your servers as a general manager would a baseball team. Is somebody lagging with certain segments? If a server has a strong average cheque but is not selling as much alcohol as other servers, just increasing his or her average cheque by $1.50 could have a very positive effect on revenue over time. Think of how many customers this team member serves in a year. Now multiply that by your whole team and you can see the impact.
Is your ability to serve more people constrained by how quickly you can turn tables or get deliveries to customers during peak times? In a perfect world, your customer counts would be the same at five o’clock as they are at seven. We know that doesn’t happen, but a little data analysis may allow you to coax a few into a more desirable time period. First you need to profile (yes, just like the FBI) those people who do come during slower time periods. Have those customers fill out ballots to win a free month of pizza. Ask a few questions such as gender, postal code and age range. Ask them to fill in the blank to answer the question: “Why do you like to order at this time of day?” You may learn that parents of kids who play sports within one kilometre of your business have a propensity to grab dinner before they run out to the field or arena. With this knowledge, deciding whether or not to sponsor a little league team next year may be an easier process.
If you see shifts in customer ordering patterns, it could indicate a trend that suggests an unmet need. If you notice that patrons are ordering several appetizers instead of an entrée, it could hint that customers desire a wider selection of menu items. A four or five course tasting menu would allow your fans to try smaller portions of a wider selection of the menu. Pair wines or beers with each course and see the cheque averages soar. It would be easy to assume this behaviour is motivated by a desire on the part of the customer to spend less, but if you’re wrong you’ll just end up lowering your prices and eroding your margin. Have your servers probe a bit to see if guests will tell you why they’re ordering several appetizers or add a question to your comment card or ballot. The data will lead you down the right path as long as you understand what the consumer behaviour is driving.
All businesses strive to attract new customers. The most effective way to accomplish this, generally, is to profile those customers who are your most devoted and then go out and find more like them. If you have a database of delivery information, then you have addresses and postal codes. You may notice that certain “postal walks” have a higher propensity to buy from you regularly. A wise use of this information would be to invest in a direct mail piece that you could target towards thousands of houses in those areas represented by your best customers. Birds of a feather tend to flock together, so your chances of resonating with neighbours of your most devoted brand advocates are greater when you target carefully rather than spend more money to blanket the whole city with an advertisement.
Above all, dedicate time and effort towards collecting and organizing your data. Your point-of-sale system likely has some kind of business intelligence reporting tool, and if you contact the companies who created or distributed the software, they can help you figure out how to pull reports. File your reports according to their appropriate themes – time of day, average cheque, postal code, age, etc. Monitor the changes in customer behaviour over time to identify trends as they develop. Learn how to coax the real story from the data you collect. If you are able to read the signs correctly, you’ll be able to fiscally knock it out of the park.
Michelle Brisebois is a marketing professional with experience in the food, pharmaceutical and financial services industries. She specializes in brand strategies.