Case Study: Pizza Place Favors Platforms With Low Upfront Costs

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When Lance Robinson is deciding which marketing platforms are worth trying out at Brothers’ Pies N’ Fries, the Pasadena pizza shop he opened with his two brothers last year, he considers cost before anything else. Robinson prefers pay-as-you-go platforms with low upfront pricing structures, but isn’t interested in daily deal companies that take a cut of his revenue. Instead, Robinson relies heavily on a mobile program called Punchcard to reward repeat customers and provide incentives to past guests who haven’t been in for the past 30 days.

As a new business owner, what are the biggest marketing obstacles you’ve had to overcome?
Just being able to have enough capital to spend on advertising and marketing. Everything we did for our pizza shop came out of pocket. To minimize that, we’ve really relied on word of mouth. It’s a dice game, [guessing] what’s going to work. We had articles in some publications around the area that have worked, but really, you spend money on things and you don’t know what you’re going to get back. We’ve done some mailers that really didn’t pan out, but you really don’t know what the return is going to be like until you try it. That’s difficult for a young business, because you spend the money hoping you’re going to get a return, and then it doesn’t happen.

Is that why you’ve relied mainly on platforms with low upfront costs?
Yes. We like the idea of being able to pay for our advertising as we go. We pay with the end product, and we [don’t] have to flip a lot of money upfront to say, “This might or might not work.” Punchcard has helped us so much because we have the ability through their system to market to people who purchase locally in Pasadena, and to let them know, “We’re Brothers’ Pies and you can come by and get a slice of pizza.”

How do the upfront costs with something like Punchcard compare to the costs associated with a deal company like Groupon?
With Punchcard, it’s based on loyalty. You have people who are going to come back repeatedly, and then they’re rewarded for being loyal. With Groupon or LivingSocial, we have to cut out costs in half out the door, and then we have to split the cost with Groupon or LivingSocial on the back end as well. For a young business, it doesn’t make sense. Yes, it’s great to have the advertising, but if somebody’s always looking for a discount, then it doesn’t help us. We have people through Punchcard who come in and spend their regular, average dollar. Then, they’re rewarded on the back end for being so loyal. You have to spend the regular price 10 times before you’re rewarded with something for free, whereas with LivingSocial or Groupon it’s like, “Hey, you get a pizza for half off,” and I may not come back to the place until I see another deal. That’s always been our idea.

Can you explain more about how your rewards program works?
When we first started, we let people know that this was a great loyalty program. You download it on your phone instead of having to carry around a card and worrying about whether you have it or not. It’s something that’s on your phone and very easy to use. Every time you come into the store, you take a picture of your receipt, and for every 10 purchases you make here at Brothers’ Pies N’ Fries you get a free Little Brother pizza, which is our 14-inch. That’s our way of saying, “Thank you. We appreciate your business.”

The other thing we may do is send out a notification if you haven’t been here in the past 30 days to say, “We miss you, and to show you how much we miss you, we’re going to offer you a free slice of pizza just to come back.” Or, if you’re shopping in the area and you punch your card somewhere [nearby], you can come by and get a 15% discount. It’s really nice that [Punchcard] can do a lot of the work in the background, instead of you having to keep on top of everything. It makes it easier for a business to keep on top of its guests.

What are the benefits of a digital loyalty program, when compared to a traditional paper punch card?
Well, you don’t have to keep track of a paper card. You don’t have to worry about whether it’s in your wallet or your pants pocket. And, you can use it anywhere to build up other local businesses around Pasadena. We can say, “Hey, if you walk across the alley”—we’re in an alley here in Pasadena—”and buy a beer or get something to eat from Equator or Jake’s, you can punch your card there and come over to Brothers’ Pies N’ Fries to use the same card.” It’s easy to use, and there are hundreds of options. Personally, my employees all use Punchcard and have been rewarded at gas stations, and through other local businesses and restaurants. It’s addicting, actually, because you want to punch everything because you’re actually going to be rewarded for going back to the same place.

How do the rewards work with Punchcard?
When Punchcard first started, they were doing a two-for. Every two purchases you made at Brothers’ Pies N’ Fries, you would get a check for the average sale price. We told our customers, “Every two times you come in here and you buy a Big Brother pizza for $20, you come back next week and buy another for $20, they’re going to send you a check for $20.” It was a great kickoff for getting people interested. Once it came down to the merchant level, where we had to pay for it, we cut it back to a 10-order deal. Every 10th time you purchase here, you receive some reward. Instead of a cash reward, we did a product reward, where you get a free Little Brother pizza or family fries.

Do you pay Punchcard a monthly fee to use the platform?
Yes. As a merchant, we pay a fee to use their system and that [includes] all the back office stuff. We can see who punches, who comes here most frequently, how often they spend, and how much they spend on the average. It’s a great way for us to [track which] people haven’t been here in the past 30 days. I can send them a message and say, “Where have you been? We want you to come back, and this may entice you.” At some point, we’ll be able to do it based on their interests, because Punchcard is linked to their Facebook accounts. We may be able to say, “We see that you’re a Lakers fan, and the Lakers game is on this Sunday. For all our Lakers fans, we’re doing a 15% discount.” It’s a way for us to keep interacting with our customers, as well.

Do you use the customer spending and history data that Punchcard provides?
Yes. For our customers who spend more frequently, or typically will purchase big orders, we may say, “Hey, we have a promotion on two pizzas this month. Get two pizzas, and you get half off of one,” or something like that. We can say that to customers who we know usually purchase things like that, it may entice them to come back in or come more frequently.

Stephanie Miles is an associate editor at Street Fight. This interview has been edited for length and clarity.

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Stephanie Miles is a journalist who covers personal finance, technology, and real estate. As Street Fight’s senior editor, she is particularly interested in how local merchants and national brands are utilizing hyperlocal technology to reach consumers. She has written for FHM, the Daily News, Working World, Gawker, Cityfile, and Recessionwire.