Entirely Self-Serving

Posted on December 30, 2011 by JeffKontur

There is a very nice ethnic restaurant near me. I’ve eaten there several times. I know a couple of the waitresses by name. They recognize me when I come in. The food is terrific, the menu inventive, the ambiance warm and genuine. In short, it’s a terrific place.

Except for one thing…

They do almost everything right but their email marketing sucks!

Actually, let me clarify.

The emails they send out are gorgeous. I have been tempted to print and frame some of them and put them up on my wall. The one above isn’t even one of their better ones.

The problem lies with the message. I have been getting emails from them for almost three years now. I get perhaps 8-10 a year. The irregular frequency isn’t such a big concern (though they would benefit from making the schedule more regular.)

Fundamentally, the problem is that I have never even once received an email from them that wasn’t completely self-serving. The only emails they send me are ones asking me to make a reservation or to buy something.

Let’s use an analogy to put this into perspective. Let’s say that you have a friend who comes to visit your home every month or so but every single time — without exception — the sole purpose of his visit is to borrow something or to ask a favor. He doesn’t sit down for coffee or stay to chit-chat. He doesn’t care how green your lawn looks or that your daughter brought home straight As last week. He only wants that favor from you and then he’ll be gone. Until the next time he needs a favor.

Chances are, you’d start avoiding him. Or even end the friendship.

I understand that this restaurant is a business. I understand that they need to make sales and turn a profit. But email marketing is essentially free. (Actually they probably pay someone to take their beautiful photos and write their beautiful emails but not everything they send has to be so elaborately done. It’s possible to inexpensively send beautiful emails.)

It’s not inexpensive to eat there and yet I’m a repeat customer. I’m exactly the kind of person they should be going out of their way to make feel welcome.

And yet all I feel is used.

(Note that I am deliberately not revealing the name of this restaurant. The name isn’t important. Many other businesses do the very same thing with their marketing programs.)

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Don’t make your best customers feel bad about doing business with you!

Chinese-Jewish restaurant sign

Posted on December 22, 2011 by JeffKontur

The Chinese Restaurant Association of the United States would like to extend our thanks to the Jewish people. We do not completely understand your dietary customs… but we are proud and grateful that your GOD insist you eat our food on Christmas. Happy Holidays!

You’ve got to love this sign.

Yes, it’s obviously hand-made. It has some strange capitalization and punctuation in places. But overall it’s great. Very charming.

This is a good example of targeted niche marketing to a very well-defined group of prospects. It also packs in a lot of subtlety that may not be readily apparent to anyone who is not in their target demographic.

(I know because some of it was lost on me until it was explained to me by one of my dearest Jewish friends.)

For starters, Jews in the US are a bit like rubber ducks in the ocean; they are completely surrounded by non-Jews who control the culture and understand little about their heritage. Jews typically don’t celebrate Christmas in the same way that the rest of us do. Even those with kids and in mixed marriages who may “observe” Christmas, give gifts and put up decorations do so more to fit in than anything else. For reasons of culture and heritage, they try desperately to keep observance of Christmas to a minimum and focus more on Hanukkah (which I know is actually a relatively minor Jewish holiday; Christians in the US have puffed it up to be “Jewish Christmas” but it’s really not.)

On Christmas Day, Jews typically prefer to go out to eat. Being largely run by Buddhists who also don’t celebrate Christmas, Chinese restaurants are usually the only ones open. So over the years it has become a sort of de facto cultural tradition for Jews to go out to a Chinese restaurant on Christmas Day.

It’s also the one day of the year that you may find it impossible to get pork fried rice.

So that’s the first bit of brilliance of this sign: it takes that whole symbiotic cultural history of Chinese and Jews in the United States and pays homage to it in a way that is unlikely to be noticed by many outside of those two groups. This is ultra targeted marketing at its finest.

The second great thing about this sign is that it sells without selling. It’s more like a public service announcement or a heartfelt greeting card than a commercial advertisement. The makers of the sign know that Jews reading it are already predisposed to being customers. Indeed, they may already be regular customers. There is no need to push for the sale. Instead, they simply create an environment where these customers have warm feelings and are inclined to buy.

The sign also throws in a very subtle implication that patronizing their establishment is commanded by God himself. A tricky line to tread but they pulled it off nicely.

Respectful humility is also displayed here. The writers of the sign are saying, “Hey we don’t really get what you Jews believe in but we don’t disrespect you simply because we don’t understand the ways in which your beliefs differ from ours.” In fact, the sign even openly implies a sort of homage.

Will hanging a simple hand-written sign like this one in their front window increase business on Christmas Day? Honestly, I have no idea. (That’s always a key thing with marketing. Anyone who tells you they know how customers will react is probably lying.) I can tell you that I think it will probably get them an extra couple of families. If they had put a sign out on the street where passing traffic could see it, the effect might have been increased many times over.

What about a mass media advertisement such as TV, radio or the newspaper? That’s a tricky one. One the one hand, you reach a lot more people and that certainly has the potential to help a lot. On the other hand, there’s something charming and sincere about the fact that this sign is hand-written. You lose that with mass media.

The only way to know for sure would be to test it and see.

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We are grateful that your God insists you eat our food on Christmas.

Tax Time Marketing

Posted on December 16, 2011 by JeffKontur

I got a brilliant piece of marketing in the mail yesterday. I’ve actually gotten the same piece every year for the last several years. That tells me at least one very important thing: it’s working.

A company would not keep sending out the same mail piece if it wasn’t working to generate revenue.

What was this brilliant piece of “junk mail”?

A software CD.

So what is it that makes this such a brilliant marketing piece?

Let’s think about this for a moment. I’m going to have to make some very broad assumptions here but I think they’re reasonable.

Every adult in America is required to file taxes, even if they have no income.
Most of those people will file using their computer in some way, either online or by using software just like what was sent to me.
This software was probably sent to several hundred thousand households. My guess is that all of them are previous users of this very same program from prior years.
The software is neither more nor less expensive than if I went out to a store and bought a copy myself. What I save is the time, gas money and all-around hassle of doing so.
The software comes from a well-known company; one of the two or three largest in their industry.

Now let’s think about the economics of this mailing. To keep the math simple, I’m going to assume that they only sent this CD out to 100,000 households. (In reality, it was probably several times that many.)

The cost to get a CD mass-produced in those quantities amounts to only a few cents per unit. Likewise, the cost of the case and label is only a few cents per unit. Their largest cost is postage but even then they get bulk mail rates thanks to the volume and the way they sorted and prepped their mail pieces.

Total cost should be well under $1.00 per unit but, again to keep the math simple, let’s call it an even dollar.

I happen to know that typical response rates to mailed solicitations is 2%-3%. Again, this came from a very well-known company and was sent primarily to existing customers and was selling a product that those customers are essentially “required” to use so their response is likely much higher but let’s just stick with 3% for now.

So they paid $100,000 to create and send out these CDs. 3,000 people actually purchased the software at the lowest cost option of $34.95. (Some of those people certainly paid extra for an upgrade or to add on a state tax program but we’re keeping it simple here.) So that amounts to revenue of $104,850.

Meaning that even going with our ultra-conservative estimates, the company made a profit on this mailing. (Yes, my assumptions ignore things like the programming cost to develop the software and assorted operational overhead to keep the lights on at company headquarters.) This is essentially their worst-case scenario; the mailing bombs and they make only a tiny profit. (Boo-hoo.)

What’s more likely? They sent out 500,000 pieces at a cost of around $0.85 each for a total mailing outlay of $425,000.

Given the nature of the product and the list to which it was mailed, response was likely something north of 20% but let’s keep it at 15% just to be safe. So that’s 75,000 buyers. Let’s assume that 45,000 of them (60%) bought only the lowest cost program ($34.95) and nothing else. That’s a subtotal of $1,572,750.

The remaining 30,000 purchased upgrades. There are $44.95 and $64.95 options. Most people don’t need the highest priced option unless they own a small business so let’s assume that upgraders spent an average of $48. This will account for the small fraction who got the highest level upgrade available on the disk. So the subtotal for upgraders is $1,440,000.

Combining these two subtotals equals revenue of $3,012,750. Backing out the original mailing cost gives a margin of $2,587,750. Certainly plenty to pay developers and still make a handsome profit.

Plus, let’s not forget that this is a huge and very well-known company. They also sold some of those very same disks in stores. (The extra volume brought their per-disk manufacturing cost down too.) They also leveraged their software development cost by reusing the code for their online and in-office offerings.

So essentially they made a profit of at least a million dollars plus got an inventory of merchandise they could sell in stores for free. (Pure profit!) As if that weren’t enough, they also got profit-generating website development essentially for free and still get to use the software in their offices (yet another profit center).

Brilliant.