A Fresh Take
Source: Deliver, A Magazine for Marketers (v. 4, issue 1, March 2008)
Author: Christopher Caggiano
A new twist on direct mail coupons sweetens the pot for incentive programs.
After the devastation of Hurricane Katrina in 2005, many of New Orleans’ businesses struggled to get back on their feet. Bruce Frommeyer - who owns eight Subway Restaurants in the area - was able to get up and going faster than many, thanks partially to a high-tech twist on a vintage incentive: direct mail coupons.
“After we got back online, we needed something to supplement Subway’s corporate advertising,” he says. “I’ve tried fliers in marriage mail, newspaper ads and inserts, but all these things don’t let you target one store. And that’s the key to my business right now. I need to bring it down to the neighborhood level.”
Fortunately for Frommeyer, Subway Restaurants had recently teamed with Database Marketing Group (DMG) to offer a systemwide program that allows the owners to go online and customize individualized mailings that can saturate every nearby customer - whether they are at home or at work. Franchise owners can send coupon posters to local businesses, which are posted in lunchrooms for access by all employees.
“The fast food category has historically been mass-media driven, but like most other retail industries, there’s been a significant shift toward direct mail,” says Kurt Whitmer, executive vice president of DMG. “With the introduction of TIVO and DVR technology and increasingly less effective mass media, fast food restaurants are looking for cost-effective solutions that allow them to saturate their individual neighborhoods.”
Until now, the direct mail process for individual fast food outlets was widely criticized as laborious and inefficient. “You had to get all of the franchisees to submit manual orders,” recalls Whitmer. “You had to get everybody in line to print and mail together. You had to get everybody synced up. It was like herding cats.”
To achieve the economies of scale, the franchises all had to adopt the same offers, mail dates and creative. Such hurdles made some campaigns more trouble than they were worth to many franchise owners.
The DMG system provides a 24/7 online ordering function that uses variable data printing (VDP) for small quantity, weekly production dates. Storeowners can log on, customize their mailing and mail any week they choose. They can customize everything from the offer itself to the hours, map, phone number and location-specific benefits.
DMG, working with various Subway marketing departments, makes several different mailer “shells” available, but franchises can customize their offer to their needs and neighborhood.
“The ‘Southwest’ sandwich may not resonate in Manhattan, but it will work well in San Diego and Phoenix,” says Whitmer.
Franchise owners can also specify exactly which consumers they want to reach: families with children, new movers, young adults, seniors or all households within the appropriate mailing radius for each location. And when mailing to businesses, franchises can target all the way down to a specific office building, block or neighborhood.
Bruce Frommeyer says customization has been a major reason for his stores’ resurrection. “The great thing about the system is that I can actually make the mailing area as small or as large as I want,” he says. “I can select an increasingly larger or smaller radius, and the system will tell me the number that’s available to mail in that region.”
That selectivity makes this direct mail program a lot more useful than ads in local newspapers, Frommeyer says. “If I buy a newspaper ad for $1,200, it covers an area with 20 other Subways,” he reasons. “Now I can spend that same $1,200 on mail and target residential or commercial, whatever I want.”
The overall result is that, while the actual size of the mailings is smaller, the overall efficiency is significantly higher. “There’s a lot less waste and you don’t have to spend a lot of time or money to get outstanding results,” ways Whitmer. “Several of our fast food clients have documented redemptions higher than any other media they’ve tried.”
He adds that store owners, always looking for the most effective ways to get even the slightest bump up in their ROI, get a lot more information about the effectiveness of their individual campaigns. “They can calculate, ‘For every dollar I invest, I get X amount in return’,” says Whitmer. “When you run a radio or a TV spot, you usually can’t quantify the response and sales lift. But with mail, you can tell exactly which consumers came in, how much they spent and how far they traveled.”
Bruce Frommeyer, for one, is thankful for the reach and immediacy of the Subway Restaurants coupon program. “If I had had this back in the beginning,” he says, “it would have been my primary form of advertising.”
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