Two things are critical when you start any direct marketing campaign. Know your audience and know your numbers.
Know your audience
We’re targeting the minimal viable audience. Our shop targets freelancers and business people working remotely. Our goal is that for this audience we’re 10x better than any other coffee shop in town when they want to head somewhere to do some work, have a meeting or network. When you know who you’re selling for, you can create a product and a campaign that speaks directly to that person.
Know your numbers
You cannot run a successful direct marketing campaign if you don’t know your numbers inside out. Anyone can run a Google Ad campaign and pull in some leads or sales. But, if you want to run a long term campaign that keeps on delivering for your business, you need to know your numbers before you begin. If you don’t, you have no way of knowing whether what you’re doing was a success or how you can improve.
With the free and cheap technology available, this is easier to do than ever. Businesses are getting better at doing this with online marketing, but there are still very few that figure out there numbers for physical offline transactions.
For our coffee shop, we need to know how many customers come through the door, how much they each spend on average, whether they spend more on certain days than others. We want to break down product by product. Food and drink. We want as much information as possible. Record transactions. When you make a sale, record who it was for and when.
If you don’t have the time to do this, pay someone to do it for a month. They sit in the corner, and take a note of every person that walks in. Putting together the number with the value of the purchase. Incentivise customers to fill in their details. For that month, give them a 10% discount if they put down their name, age, occupation and reason for visit, on every visit. You’ll start to develop a pattern. You’ll find that certain customers spend more than others.
Finally, we want to record how often people visit the coffee shop. We want to know the lifetime value (LTV) of our customers. A customer isn’t worth the profit on one visit. They’re worth the profit on every visit. Some people will visit more than others and that’s fine. We want to know the average so that when we start our marketing campaign, we know what a new customer is worth to our business. Marketing is an investment. Like any investment, we need to know what the cost of the investment is and the likely return. The LTV is the return, and with that information, we know what cost we’re prepared to pay.
What all of this does is give you a benchmark. Before you start any campaign, you’ll know what a normal Monday looks like from every possible angle. Before you send out a promotion on food, you’ll know exactly how much you sell on an average day. You’ll even know how many bowls of soup you sell and when. So, when you run a campaign on soup, you know what a positive result looks like and whether to do it again.
Now that we have our audience and numbers down, we can start. Let’s start by understanding what our audience want from a coffee shop. You can ask existing customers and online groups what they want from a coffee shop. We need to make this place the absolute go to for our audience.
Plug sockets at every table, refill table service, lockers so they don’t have to bring everything back and forth when they want to come to do an hours work or take a break and come back later.
Our first campaign
Let’s create branded reusable coffee cups and take them to a local business networking event held in town. To start, we want to pick one event only. If it’s weekly, run the campaign weekly for four weeks. If it’s monthly, just do it once. Each cup comes with a token for a free coffee, plus a note that markets the fact that anybody using a branded coffee cup gets discounts on refills (when using that cup).
You hit a few points here. First you’re hitting the networkers in town, the connectors. Secondly, it rarely costs you any money to attend these events. You’re not paying for postage and packing. The cost is purely in the cup and the free coffee. Thirdly, you can do your market research whilst you’re there.
During this month and the next, record every time a token and/or reusable cup is used. How many times is a cup used without a free coffee token? During this period, a coffee purchased with a reusable cup equals a new customer. If that person is visiting the person with friends or colleagues, we could these people as new customers too.
Incentivise the customer to take a loyalty card. We want to count new customers once. Anyone with a reusable cup and a loyalty card is not counted as a new customer. We also want to know if these customers visit more often than our average visitor numbers.
Measure and tweak
Because we know our numbers before we launch this campaign, we know categorically if it’s a success. If the LTV of a customer is £50, a new customer is worth £50 to the business. We spent £300 on new cups and the first free cup off coffee. So, if we got more than 6 new customers from this event, we do the same again at the same event the next month. We keep repeating the campaign until it stops bringing in new customers.
What if we get the same people just taking free reusable cups when we hand them out at the network event? Well, we should find this out early on as we only count a new customer when they use a reusable cup without a loyalty card. If we make it clear on the voucher, and at the event, that they get a loyalty stamp even with the free coffee, we’ll soon learn when this campaign stops bringing in the minimum number of new customers. At which point, we stop it.
Then what? Then we try it at a different networking event in town. Or, maybe one in a neighbouring town to see if freelancers from a little further away will travel.
Only run one campaign at a time. If we try this campaign at multiple networking events simultaneously, we won’t know if one event works better than others, or if one brings in big numbers and the other four actually lose money.
We want to run one campaign so we can test and tweak, see what moves the needle. Build on what works, cut out what doesn’t.
We can play around with the types of event we attend. We can play around with the offer and the giveaway. With the audience and numbers nailed, you can effectively keep tweaking to get to a breakthrough campaign which keeps on delivering massive business to your coffee shop.