Step 3: Attracting New Customers

Here we are at the third step. If you haven’t read the first installments, you should.
    Step 1 provided you with Taffer Dynamics’ proven steps, tactics and programs to maximize your sales potential for each guest visit. This critical first step provides your business with a powerful foundation that maximizes your sales potential per guest and by itself can increase your revenue by over 8 percent. Step 2 provided you with proven tactics and programs to maximize guest frequency. As we discussed then, increasing your guest frequency by only one visit per month can increase your revenue by 12 percent.
    Now, with both your sales potential and guest frequency maximized, it’s
time to move to Step 3: Attracting New Customers.
    If you’ve implemented any of the tactics you learned from the previous two articles, you’re starting to see how quickly they have impacted your daily revenue already. With this foundation of maximized sales per guest and greater guest frequency, the new customer traffic tactics below will yield far more immediate (higher sales per guest) and long-term (greater guest frequency) results.
    There are three major factors that should forever change the way you think about advertising for new customers. These are:

The Cost of a New Customer
    Mass media such as radio, TV, cable TV and print are expensive. When tracked and calculated, the cost in dollars for a new customer to visit your operation as a direct result of TV, radio or print advertising is well over $40 per customer — in some markets over $60! That’s a lot of money for one new customer.
    In reality, if you gave a $20 bill to each new customer who walks through your door for the first time, it would cost you far less than buying them through media. And, it’s less risky, because unlike media who are paid whether people come or not, you’d only have to give your $20 to those who actually come to your business — in essence removing the risk of advertising that does not work.
    This is a powerful premise that challenges the logic of almost any mass media advertising. Therefore, TDI and its Neighborhood Marketing Institute typically reduce or eliminate radio and other media budgets greatly in favor of less expensive, proven tactics like the ones contained below.

Finding Your Guest Mix
    Nightclubs cannot be something to everyone. Neither can restaurants. So, the most effective marketing results in attracting the “right” customers to your operation. The right customers are those who respond best to your offerings (food, beverage, music, entertainment, price points, décor, environment, etc).
    Obviously when we attract a customer who does not respond well to our concept or offerings, the expense of marketing for that guest is wasted because they typically will not come back.
    When thinking about who is the “right” customer for your business to target you should consider the following:
    Gender: The proper gender mix is critical. In all my years in this business, I’ve never seen a bar, nightclub (or restaurant for that matter) fail with a couple hundred female customers. As we all know, a bar or nightclub with a concentration of female customers always will flourish.  Conversely, without them it won’t.
    Socio Economics and Product Behavior: People stick with their own.  Affluent guests prefer being with affluent guests. Professional guests prefer being with other professional guests, just as more youthful partiers want to be with other young partiers. A powerful element (maybe the most powerful) in positioned nightclubs and some restaurants is the appeal the customers have for each other. No doubt there is a commonality of lifestyle that is critical to success in the nightclub business.
    Proximity: Certainly, new customers that are nearer to your location are more likely to come to your location than those who are farther away.
    In almost every case, mass media reaches too far geographically and is too broad demographically and socio-economically. And, we’ve all seen what happens when the targeting of a nightclub gets out of control. Women can disappear, violence can begin, undesirable guests take over, etc. 
    So, in our view, mass media advertising is too expensive, not targeted enough and rarely cost justified.

Finding Your Gold
    Your Trade Area. When you go fishing, you better know where the fish are. And, when you dig for gold, you better know where the gold is. The same is true with your market. You need to know where your customers are coming from.
    In almost all U.S. and Canadian markets, people of like lifestyles live in “clusters” or common, specific and concentrated areas or neighborhoods within your marketplace.  These clusters are your “trade areas,” or, as we say at TDI, “where the gold is.”
    The first critical step of developing an effective Neighborhood Marketing program is to understand exactly where your key trade areas are located. To accomplish this, TDI uses a very simple system with a poster-sized map, with your property in the center of a 10-12 mile radius.
    Using a friendly and approachable hostess, we conduct an intercept study asking incoming guests if they came from work (happy hours, lunch) or home. Once they answer, the hostess asks them where on the map is the location. Then, the hostess places a small (1/4-inch) file sticker in the spot identified by the guest. We use red stickers for home and green ones for work.
    Once you have completed a sample group of at least 300 guests for a smaller operation and 500 for a larger one, you will see your trade area clusters. Even in the hippest of city nightclubs, there are ways to accomplish this research effectively while keeping the club’s imaging intact. Congratulations, now you know where your gold is!
Your Traffic Generators. Once your true trade areas are identified, the next step is to identify viable “traffic generators” within your trade areas. Traffic generators are businesses, retail centers, entertainment-based entities, certain retail stores, day spas, health clubs, car dealers, apartment complexes, condo developments and other location-based entities within your trade areas that your target customers frequent.
The Neighborhood Marketing Institute achieves huge success by tapping into key traffic generators within your trade area. We often increase guest traffic by over 20 percent in under 60 days using proven tactics within or in conjunction with key traffic generators.
Once you have identified all your key trade areas, you should drive through all of the streets within them to identify and list out all the traffic generators that match the targeting of your concept.
    Mining your Gold. Once you have discovered your trade areas and traffic generators, you will be able to assess the targeting and overall traffic potential of each. Obviously day spas, women’s gyms, salons, beauty supply shops and other female-oriented accessories stores all will provide a deep base of female target customers. 
    Some traffic generators will skew younger or older, more or less upscale, or they could have higher or lower disposable income levels and other differing factors. The objective is to identify the traffic generators that provide the greatest potential in both customer quantities and targeting. Always start developing co-promotional and customer sharing tactics with those traffic generators that provide the greatest opportunity first.
    There are traffic generators that target females, males or both, and there are those that will provide a base of entertainment, sports or other lifestyle orientations. So, identify your best opportunities and then work it. Develop specific targeted tactics that you know will generate a first visit from the target customer base you have selected.
    For example, we know that thousands of 2-for-1 appetizer offers are made across the nation every day. But none of them will fill a restaurant or create a line, so I wonder why operators do it at all.
    Interestingly, the operators who base their success on 2-for-1 offers do so because they do not want to “over-spend” with their discount, yet while their strategy does not motivate anyone to come to the nightclub or restaurant, they are spending a ton on mass media.  
    Conversely, if the same operator eliminated or greatly reduced their advertising budget and instead provided offers that truly motivated a response from the traffic generators — even a totally free dinner — the cost would be far less per new customer than media would be.
    Consider that an offer for something that has a price of even $20 will motivate a response — maybe a big one — and your food or product cost is well under $8, at the most. A cost of $8 to get a targeted new customer into your business is less than 20 percent of what it would cost through media. If you follow these three simple steps you can’t miss:

Identify Your Real Trade Areas
    Identify your best traffic generators (potential and targeting)
    Work with each traffic generator to develop offers and incentives that really get a sizeable response.
    And the beauty is that you only pay for the guests that come and redeem the offer.  Unlike radio and other media, you never pay for “air,” “space” or “exposure” that in the end are of no value to your business. 

Building Your Own Success
    In the first article of this series we discussed the importance of having your four walls guest experience together and that you should never invite new customers into your business until you are sure the experience will bring new guests back.
    With your four walls together, your guest spending average maximized and your frequency greater, this simple and proven approach will change forever the performance of your business.
    As I mentioned in the second installment of this series, today’s online communities provide outstanding opportunities to build both new customers and guest frequency.  Maintaining effective pages on MySpace and FaceBook can achieve surprising results. 
Select keywords and phrases so your page continuously develops a larger network of friends within your market area. Always include your town/city name and include words to match your business, such as singles, entertainment, music, food, steak, seafood, live music, etc.
    Track your results each week to make sure your community grows. With some care and attention, you can develop a valuable group of local “friends” who will respond to your business and, best of all, you’re able to reach them anytime for free.
Remember, if you’re invisible or not noticed, you’re meaningless. Direct, targeted programs with significant, motivating offers get noticed.
    Next month is the last installment of this series. In it, I’ll focus on specific
tactics you can implement to maximize the results from your traffic generators and tricks to shift the guest mix of your operation to improve your results even more.                                   NCB

Jon Taffer is chairman of Taffer Dynamics Inc., one of the hospitality industry’s most acclaimed restaurant and bar consulting and development companies. He also is a longtime speaker at “The Show” and will be presenting his extremely popular pre-conference Marketing Summit at “The Show” in Atlantic City in this month and in Las Vegas in February 2008. For more information, visit www.tafferdynamics.com and www.nightclub.com.