Business and Operations
The pizza chef: Getting along with Groupon
By Diana Coutu
By Diana Coutu
Chances are you’ve heard some of the hoopla about a new marketing media company called Groupon.
Chances are you’ve heard some of the hoopla about a new marketing media company called Groupon. If you haven’t, you must come out from under that rock you’ve been living under. Since Groupon’s launch, there have been several other copycat businesses trying to jump on the bandwagon. As with many new resources, some people have a love-hate relationship with it. Some restaurateurs call it a sham, while others find real value in its services. I think that many restaurateurs aren’t using the service properly and are therefore frustrated with the results.
Here’s how it works. Groupon, an online marketing media company, will offer a deep discount for your product or services that is valid for no more than 24 hours. Typically the discount is 50 per cent off your regular prices. For instance a $30 gift certificate will be sold online for $15, and the revenue will be split evenly between Groupon and your company. Customers can buy as many gift certificates as they like within the 24-hour period. The limited time offer is a key factor in the Groupon concepts’ success, since people cannot take long to decide whether or not to buy. Groupon processes the payment, issues the gift certificates and then sends you a cheque. All you have to do is honour the gift certificates when customers bring them in. Groupon will also send you the list of buyers of your gift certificates. Take note, people, because this is where the greatest value lies.
Some restaurateurs who have used Groupon’s services are upset because they’ve barely covered food costs on the transaction. In some cases, restaurateurs have even lost money. But these restaurateurs are overlooking the value of the customer list. The money is in the follow up. Of course, there will be some customers who are simply looking for the bargain basement deal. But there will also be customers who are looking for a compelling reason to sample the fare at your establishment. If you do a good job taking care of these new customers, they can become regular patrons, or even lifetime customers.
A lifetime customer has great value to a restaurant. If you have a regular customer who orders once a week at an average of $20 per order, that customer’s business is worth $1,040.00 per year. Given that restaurants have an average lifetime of five years, that customer is worth $5,200 over the life of an average restaurant. Now, consider how many regular customers you want.
These days just taking good care of new customers isn’t enough to bring them back. You need to send them an invitation to come back again and again and again. Make no mistake: savvy restaurateurs who regularly mail their customer lists will indeed reap the rewards of repeat patronage. Some studies show that people need to see your advertising seven to 10 times before they will choose to do business with you. Bringing in new business can cost a lot of dough. There are a myriad of methods to advertise and countless ways to bundle and promote, the important step always being how you turn that new customer into a lifer. A company like Groupon can help you attract those new customers at a fraction of the cost. Yes, you will lose money on the initial transaction; however, if you follow up with the list, you will quickly recoup those costs.
Diana Coutu is a two-time Canadian Pizza Magazine chef of the year champion, internationally recognized gourmet pizzaiolo, co-owner of Diana’s Gourmet Pizzeria in Winnipeg, Man. and a member of the CRFA board of directors. In addition to creating award-winning recipes, Diana is also a consultant to other pizzeria owner/operators in menu development, creating systems to run a pizzeria on autopilot, along with marketing and positioning to help operators grow their business effectively and strategically. She is available for consulting on a limited basis. For more information contact her at Diana@dianasgourmetpizzeria.ca.