JanG

Hi,

I'm trying to tell text message marketing services to restaurants via cold calling. Most of the restaurant owners I got to listen to me were interested in specific numbers like how many new customers (EDIT: or how much more business) they could get from using my service.

This is why I am asking if anybody who is also selling SMS marketing to local restaurants can share their clients' numbers with us?

1. Out of all the customers they get, how many are signing up to the list?
2. On each blast, what percentage acts on the offer?

I thought about preparing an example for the restaurant owners in case they don't want to tell me their sales figures. Does anybody know (by any chance) how many customers a diner with 20-30 tables gets, each month? What is a realistic guest check average I can assume for the example calculation?

Any help would be highly appreciated.

Many thanks,
Jan

Aaron Doud

New customers? 0 or next to zero

SMS marketing is about getting the asses in the seats more often. Finding the right deals to turn the once a month customer into a weekly customer or even better. Yes customers who show up more are likely to bring friends who will be new customers but getting new customers is not the right way to approach SMS. There are easier and better ways to get new customers. But you can incorporate SMS into those ad media as well. Instead of just putting a great coupon in the paper put a note to text blank to 12345 to get the coupon. That way you can market to them directly now.

As for how many act on an offer it will depend on the offer. You offer 50% off and I bet nearly all will show up. Free peach pie? maybe no one cause they all hate peaches.

JanG

Thanks for your response, Aaron. I am aware of the fact that SMS is not a good strategy for acquiring new customers, but rather to generate repeat business and drive sales. I edited the opening post to make this clear.

I also understand that those numbers depend on the offer, and the deal the restaurant owner is willing to give to the customers. Therefore I was just hoping someone could share their numbers from an actual campaign for me to get a feeling for what to even expect. I don't want to set false expectations, but also don't want to go too low.

anpharmd09

Be very careful with giving specific numbers to prospects. Personally, I won't do it. Even if you give a prospect real figures another similar business is getting that doesn't mean they will get anywhere close to the same response. WAY too many factors and variables involved.

If you do quote them specific numbers or figures, then that's what they have in their mind and if they get less than that for whatever reason, you're going to have a problem.

For prospects who are on the fence because they are uncertain of what type of response or numbers they will get, I like to offer either a free 30 day trial or a significant discount for the first 30 days. That way, the business owner can see for themselves what type of response/results they are getting with zero to little risk on their part.

The downside of course is it takes longer for you to get paid if you are offering a free trial.

If after this free or discounted trial they are still unsure or hung up on wanting you to give them more numbers or figures...they clearly don't see the power of sms marketing and I would just move on to another prospect.

Just my 2 cents.

sbishop

OK here are the basics

Step 1 Restaurant promotes sign up to VIP Club.
step 2 Customers start joining (you need at least 300 to see good numbers redeem coupons)
Step 3 send coupons

Selling points
92% of people have sell phones
send coupons when they are making dinner plans ( around 4pm)
4%-13% redemption rate(9% avg) depends on the offers
send coupons to focus on times your restaurant is slow (after lunch, on Tues, Ect...)

Show me the money
100 customers in the VIP club
10% redemption
$10 avg ticket

so 10 people spend $10 gets $100 extra sales
500 in the list has 50 people spend $10 for $500 extra

That is every time they send coupons(1 per week)
500 subscribers generates $2000 extra cash per month for XXX(your cost to them)

IF you charge $150 per month as has been mentioned in other post, you can ask the owner if he would give you $150 in order to get back $2k.
And u can tell him that if the program is only half as effective then he still walks away with $1k extra cash for $150.

JanG

Thank you so much. This was the kind of reply I was looking for. Did you get the numbers from your own experience or has there been a study on this?

Obviously it takes some time to get the list to a few hundred subscribers, and I have read about numerous ways to get people to sign up. However, I'm not sure what percentage of patrons is actually willing to sign up to this service. Is 30% realistic?

WillR

This is not a good idea. It's like asking a few people the conversion rate of their squeeze page and then going and telling your new client that you can get them that conversion rate on their squeeze page. You are only setting yourself up for failure doing this.

If you want to talk specifics then do not use anyone elses data because it is all totally irrelevant to you and your clients. If you want your own data them offer a few businesses a heavily reduced or free trial of the sms campaign and get your numbers that way. Then you can approach new businesses and show them exactly the kind of results you have been able to achieve for other customers.

.

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HypeText

Seriously? Do you think the Newspapers these Restaurants advertise in are guaranteeing a specific number of people reading their ad or responding to it? I don't think so!

Your best bet is to estimate based on a projected list size. If they have a list of 200 people and 15% redeem a offer they just got 30 more orders...if they send 4 offers a month is a potential for 120 additional tickets.

You can't guarantee anything...but you can estimate.

If a diner only has 30 seats then cut down on your estimate of list size accordingly. even at 100 people on their list, 4x a month, at 15%...is 60 Extra tickets.

JanG

I don't want to guarantee anything, I just want to make sure I don't rip off my clients. What's the point in them dumping $300 on a service that only makes them $500? Because I'm not really sure about that 15% redemption rate which is why I asked for numbers others have experienced themselves within this niche.

Thanks for all the answers so far, though!

HypeText

If their profit per ticket is say only $10 and they generate 120 new Tickets for a calendar month from their Mobile Campaign(s) that would be $1200.00

The above numbers reflect a list of 200 and only 4 Campaigns per month. If they did 6 campaigns then that number would increase to $1800.

Opt In rates will depend on the quality of their offers. A Good Offer will mean a higher opt in rate and conversely a bad offer will result in lower opt in rates.

A Good Mobile Campaign with generate anywhere from a 20 to 30% Redemption rate. That is why I averaged it at 15%.

Johnny Carrabas Italian Grill in Central Florida did a Campaign last year that experienced a 68% Redemption Rate.

If you would like a copy of the Article from a Mobile Marketing Daily just PM me with your email and I will be happy to send you a copy of it to show to your prospective clients as a sales tool.

Keep in mind that most people do not go out to eat by themselves. Generally they will have 1 to 3 people dining with them at full price on the same ticket which means higher profit per ticket.

If they may have 30 tables with seating with average of 4 seats per table that means they can seat 120 people at any given time.

The numbers I used in my example are conservative estimates. The profits from the Campaigns should actually be much higher but its always a good idea to under-estimate and over deliver.

amoladora

Get them to pay a setup fee ($99 or something to cover expenses) and offer their first month free. In that month educate the owner and their staff and push them to get people to sign up - after 4 weeks of building the list send out a blast on the 4th week.

If the owner isn't convinced there is no obligation to continue. If there is any sort of success you can use that as your gauge. If your list is 100 people and 15 take up the offer, use that as your pitch: "As you can see in a short period of time Mr Owner, based on a small sample size you have not only covered the costs but brought in a decent profit. Its all in the list Mr Owner, so as you keep adding people to the list, the more offers will be redeemed and the more money you will make etc etc, it is only limited by you" - If he sees even a small piece of success he will be hungry for more... That is guaranteed.

If you are confident you can deliver the results then I wouldn't worry about missing out on money by offering a free trial. What is losing 1 months fee for what could perhaps be a lifelong client? Think long term.

JanG

Doesn't really sound like a lot. Around 30% of that is food cost, so I don't know if restaurant owners will go crazy over $1000 extra each month. From that, they will also have to pay marketing material, table tents, etc.

The better the offer, the lower the profit. What would be a good offer? One free meal if they bring two more people? Free appetizers for everyone? Something along those lines?

That's pretty impressive. But also 15% seems quite high. Good for you if your clients have a conversion rate that good. You must be doing something right, then

That's what I think. This is why I want to know what's possible, and what's realistic. Because even though I will not be able to guarantee anything, clients seem to want to know what they can get out of this. At the end of the day, they're only interested how much more money they can make.

HypeText

A good Offer can work a lot of different ways.

They could run a Contest. Free Meals for a Month for the winner...

Before you have a heart attack...think about it.

1) They would bring people with them paying full price

2) They would more than likely not eat there all 30 days, maybe 15.

3) Whats cheaper for the merchant? 200 people getting 50% off? Thats like 100 Free meals vs a max of 30 free meals....which will probably be no more than 15.

Keep in mind...the offers sent after the fact are bringing people back in that would not have been there otherwise...so while the Restaurant might offer them another discount...its revenue they would not have had otherwise.

The Key to good offers is thinking outside the box....get creative and boldly go where other havent gone before...

Danielm

It depends, if you tell most people that you have a service which costs them 200 or 300 but they'll make 1000 extra every month, that isn't really a bad thing. I'd make investments like that all day long if I was sure they were going to work out. I know you wouldn't want to guarantee anything but if you'd say.. based on X number of subscribers and a small % response here is what you'd make, etc.

HypeText

Absolutely agree...Many Businesses spend advertising revenue and are thrilled to see a 30% to 40% ROI. If they are spending $300 to make $1000...thats a return of over 300%!

IngeniousBastard

A business owner asking for these kind of specifics is almost surely testing your mettle. If you give them any kind of specifics they can hold your feet to the fire. This is a "let me test the rookie" kind of question.

I would volley the ball back to their side of the court with a "that all depends on your commitment to the process". In other words, if they're willing to only offer 10% off of a small drink vs. buy one get one, then they'll reap what they sow. Please don't lose sight of the fact that any relationship is a two-way street. Don't get into business with tools.

Amber Jalink

Hey Jan - this was mentioned a bit, but here's a few news links about it: (Just google SMS case studies for others...)

New Carrabba

Also, Mobile Marketer - The news leader in mobile marketing, media and commerce has great stats and resources for you.

If the potential client is argumentative or wants' solid figures, one thing you can bring up is, do they KNOW how many people they'll get from doing things like newspaper advertising?

Do they KNOW how many people will come in from coupon mailers?

Typically no... and newpaper advertising will NEVER guarantee or even state a projected expected response rate.

SMS is much more provable, but the quality of the list varies, the quality of HIS SERVICE matters too... because you could still have a great campaign, but if the restaurant has bad reviews (i.e. on yelp etc), then it's not going to matter a whole lot what you do for him.

I would only give industry examples. If you're new to it - be up front with them, offer a trial as mentioned at a discounted price.

Or, if they keep arguing..... move on to the next client and just say thanks, I don't need to fight for your business, your competitors will be just as happy and go on to them.

Amber

Amber Jalink, Founder http://www.dime-co.com
WSO - Create Native Apps - Prelaunch Announcement

sbishop

When crafting the offer you need to talk with the owner to make sure he can handle the discount. The ideal would be that he is still making money after paying you and covering the discount cost.

You want to ask him "Would you be happy if 100 people claimed this offer?"

Groupon had almost shut down small businesses that sold hundreds of deals that they lost money on. You don't want to hurt the business.

Also, remember that we are working with current customers. We want them to return more often. Thus the discount must be profitable for the business.

If we were looking for new customers, then a loss leader would be OK. We would then get them in the customer loyalty program so they keep coming back!!

sizzlemediauk

Viral Marketing is resulting in huge ROI especially from last 2-3 years in which Social Networks have become the second market place along with connecting society. SMS marketing I think will work but it need to be that type, I don't know why but I feel the first word should be something that could make the reader scroll down. Normally when we see a text message with any greetings like Hi, Dear or something similar we just ignore and that's why I feel instead of being too professional here some actually working strategy needs to develop.

SEO Manchester | eCommerce web design | Web Design Manchester

AdwordsMogul

Amber, I have to say a big THANK YOU for this. Here is where I personally meet a lot of friction when helping people acquire clients.

A lot of people don't get that you can't just "put lipstick on a pig". A lot of posts ask about the "right technique" without first carefully considering whether a particular business is worth promoting in the first place.

Marketing has to be integrated into everything - not just in the promotional/sales materials but also how customers are serviced.

"Those who can - DO IT. Those who can't, say it's impossible."
Jean Paul a.k.a AdwordsMogul
PHPDevelopers.net - Top of the range PHP developers

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pertree

Agreed! There are, unfortunately, far too many businesses that are doing poorly because of bad quality, taste, or service issues. As marketers trying to help them increase their business, the question is: should we ignore those issues, or diplomatically bring them up?

For instance: in my small town of 15,000, there is a regional burger chain whose name I won't mention. They have the most incredibly delicious hamburger on earth, the kind where the condiments drip down your arm while your eating it. I crave these but always dread the thought of going there and experiencing the most atrocious customer service found anywhere, and then trying to find a clean table in the dining room. This is mostly the fault of the local manager for not properly training his or her staff, and inability to make them do their job properly, every time!

So, as a marketer providing an SMS service, for instance, I know that once a list is built, a good weekly offer would bring in tons of additional business---if the service was good and dining room spotless---but if it's not, the offer will not likely produce any measurable results and the business relationship will vanish.

Any thoughts on this touchy subject?

zenyatta

Hey JanG,

It all depends on the list and especially the offer. When my clients offer free and 2 for 1 deals we typicallly see 10-20% mobile coupon redemptions. If the offer is not that strong we see 5-10% redemptions. Previously someone was saying you can't get new customers with SMS and you are only trying to get existing customers in more frequently. Not only do we get existing customers in more frequently be we also attract a lot of NEW customers.

Since our SMS platform pushes out mobile image coupons to Facebook and Twitter we see the friends and family of our existing clients opt in to our SMS VIP Text Club. This viral nature of our SMS offers with social media is what our clients absolutely LOVE.

We also cross channel market for our clients so they can get new opt ins from their websites, free online advertising(Craigslist), their email lists, as well as offline marketing(flyers, business cards, direct mail,community newspapers), and of course POS. Build the lists, present good offers, and they will come!

TrumpiaTim

In the early stages of mobile marketing, these numbers are still tough to come across. What we advise at Trumpia to our clients is that redemption rate will purely be based upon what the offer is. The better the offer, the higher the redemption rate will be.

- Trumpia

jlazarus17

What a fabulous thread! Great food for thought. I'm a newbie Warrior but not new to marketing. I love seeing all these great ideas being shared ;-)

I've been doing consulting "on the side" for the last 10 years (did corporate 10 years, then 10 years "on the side" as I finished raising my kids). Now that all are off at college, I'm reinventing my "part time/just every now and then consulting" into a regular, active business. Besides offering custom facebook fan pages, websites, mobile, etc., I had built my own local coupon directory about 2 years ago (never did anything with it, but it's a really good site, lol). I thought I was so bright because I was including the ability to share coupons via Facebook, Email, and I had even built a Text Coupon Module - all built on WP and self-service - but life jumps in and I never got around to selling it.

Ok, so speed up to now, and finally approaching fulltime freelancing, and I'm so intrigued by the SMS model! I do have a question concerning some of the rates I saw thrown around in this thread: $200-$300 per client per month - I am assuming this is for a completely managed service? Or am I wrong and managed services are actually pulling in higher rates? And what type of components are being included in that? Meaning, does that include FB integration but you upsell a mobile site - or are these types of rates all inclusive? I realize this will vary by market, just trying to get an benchmark. Thanks!

MarkMichuda

Everyone! Stop talking numbers. It completely depends on the size of the venue.

I agree with my competitor Trumpia with the size of the incentive directly impacts the opt-in rate for building your list. Of course.

However, I would never approach a restaurant that way. Think about it...every other marketing tool is pretty much the same. What separates SMS marketing is that we should be able to push a button and within the hour fill up a restaurant. Thats all the owner cares about...filling up their space. Unless of course most of their business is take out. My point is...anything more than capacity the owner just doesnt care about. Let me prove my point...try to sell sms marketing to a tiny pizza shop that is always full with a two hour wait. The last thing he needs is more people coming in the door....they will laugh at you...and the laughed at me when trying to sell to them.

Approach the places that are dead. Tell them that you will build a list over time and be able to fill the place completely if they can help you with a high incentive for the audience. This is nice to work out once a week or twice a week. If you text them more than that the opt-out rate will spike.


I have been doing SMS marketing for every type of company every size for four years 24/7 since I built a company(TextHub) to do so.

I make it rain with mobile marketing. TextHub.com is the BOMB!

beeswarn

The concept of text message marketing is very simple: It gets people to read your offer now.

Simple does not mean it's easy. Building a large list is challenging, and creating compelling offers requires skill and experience. Success is entirely dependent upon the size of the list and the quality of the offers you send to it.

If you send offers to a small list, few people will read your offers. If you send offers to a large list many people will read your offers. If you send a compelling offer, more recipients will respond to it than will for a low-quality offer.

If you send a dull offer, few people will respond to it no matter how big your list is. Moreover, sending poor offers has the damnable consequence of making people opt back out of your list, causing you to have to work harder to grow your list.

A stagnant list is a dead list that will produce diminishing returns. It is critical that your list grow as you continue to send offers to it.

Marketing to repeat customers is the only way SMS marketing works well. This is why pros will tell you that restaurants, tourist attractions and retailers (of consumables) are the best prospects. Anyone who tells you SMS works well for car dealers and real estate brokers has never sold an SMS program to them and never will. (I'm not talking about people testing SMS with them or the people in this forum dreaming about it.)

Anyone who tells you that they did, or that you can, build an SMS marketing business overnight and make tons of money quickly is utterly inexperienced in the field or is lying to you outright. This is an instant litmus test that never produces false-positive indications.

None of the above means SMS marketing isn't a good business and that you shouldn't be excited about it. It is offered to explain that you will have to work hard at it to make it work and to maintain your enthusiasm through the first few months.

Presently, text message conversion rates are very high for good offers. So high, that they stun people. But we don't know if they will always be as high, so we make hay while the sun shines and we make certain we're using best practices and sound business development principles so that we can stay in the business when results begin to revert to the mean.

The best advice in this thread so far has been posted by WillR, MarkMichuda, TrumpiaTim and HypeText. Pay attention to what they're saying and follow their advice.

Vladcanada

How about handing flyers to existing customers when they ready to pay with a QR code which will take them to either mobile website or app where they can find coupons for a discount promos. Or same website or app will be as take out menu with an facebook icon for a facebook fanpage with weekly deals from restaraunt? or have a flyer on the table with message inviting them to join fan page/app/web for weekly incentives. I like this type of idea. What you guys think?