Leakage – In chemistry its definition according to Wikipedia is a process in which material is gradually lost, intentionally or accidentally through the holes or defects of their containers.
For businesses leakage is simply letting customers or prospective customers walk out your door or click through your web site and not capturing their contact information or engaging them further and moving them along the sales cycle.
It is amazing the number of businesses that are loosing out on future sales revenues, simply because they do not have a system in place to capture information and then automate the marketing process. These businesses loose out on thousands, tens of thousands or for some larger businesses hundreds of thousands of dollars in future sales, simply because they have not implemented a process that minimizes leakage.
As a Certified Inbound Marketer through Hubsoot Academy who helps clients implement inbound marketing strategies using closed loop marketing and a four step process for growing sales, I am always on the watch to see how companies are marketing. Of interest to me is what is their unique selling points, what are their offers, how do they capture information, and what marketing actions do they take after they have a visitors contact information to further engage them and nurture them in the sales cycle.
A great example of leakage was the other week. while at the Carolina Place mall in Pineville, NC, I stopped at Harper’s Restaurant As a sidebar and for the sake of full disclosure I always enjoy Harper’s restaurant. It is a mid-price casual restaurant where you can kick back and relax. I have always had a positive experience at Harper’s both with the food and the employees that work there. If around one of thier locations I recomend a visit.
This post is not a review or to slam the restaurant, just an opportunity to share my observations as a marketer: How they can do better. Hopefully other companies can learn from what they are not doing effectively.
In addition to this location the Harper’s Restaurant Group owns and operates three other Harper locations and two other themed restaurants. In total, six restaurants and a catering group.
In a previous post about Cheeseboy I highlighted how I observed, each employee asking every customer if he or she had a rewards card. If the customer did not have a loyalty rewards card the employee explained the benefits of signing up for the card. As a result they now have all my contact information and can market to me until I opt out.
So back to Harper’s Restaurant group and a contrasting experience. During our visit the wait staff did not promote an email list or rewards program. I did find a little, nondescript white printed card tucked inside the billfold. I would not have even noticed if I was not looking for a promotion. There was no signage on the table or anywhere on display in the restaurant nor was it promoted by the wait staff.
There are so many opportunities for a restaurant to promote an offer in exchange for a customers contact information: When you first walk in and sit down you could give a free drink or free appetizer for their contact information, at the end of the meal a free desert if they opt in, or a dscount when they receive their check.
If you have a good offer, a good loyalty program and a trained staff that knows how to present the offer, your customer database will grow drastically. Once you have the contact information and grow your database, you can automate and control the marketing message.
Coincidentally as I was writing this post, I received a $10 postcard coupon from the same restaurant. They are spending marketing dollars on a direct mail campaign to attract and bring me back through their doors again. I fully expect next time I visit will not be presented with an offer. As a consumer, I’ll either not think about going there unless I’m in the mall or wat to receive another $10 coupon. Even then, I’m not sure that would prompt me to travel 10 miles out of my way to eat there. There are a number of good restuarnats I enjoy closer to our houes.
I also find it odd that they are willing to spend the money on a mailer and provide a $10 coupon, but on their web site the offer is for a $5 coupon for the opt-in. In fact it is barely visible and only says “Join Our Email List.” I circled the opt-in email message in the picture to the right. Heck I’m just going to use the $10 coupon I received in the mail and not bother to get pinged with email notices. There is nothing on the web site that really excited me or made me want to opt-in.
Increased opt-ins will lead to increased sales
Think about the leakage they have across all their locations. Assume they have 100 potential new contacts per day for each location and achieve an opt-in of only 20% – that is 20 new contacts per day per location. Across 6 locations that is 120 new contacts per day, and over a week, assuming a 6 day week, it is 720 new contacts. Over the course of a year that would be over 6,000 new contacts in their database. Let’s extrapolate and convert what that might be into sales:
If only 33% of those customers come back for one extra visit during the course of the year from this list of 6,000 new contacts and they spend on average only $50, the increased revenue is over $100,000.
I believe these are conservative numbers and would actually be much higher if implemented correctly. The larger point is that this restaurant group is simply loosing revenue by not having an effective system in place to capture contact information and promote its restaurants using an automated marketing system. This resturant group is no different than most other businesses. It is not an uncommon occurence – businesses not capitalizing on the opportunities presented to them.
- Take advantage of every opportunity to capture your customers’ or prospective customers’ contact information.
- Make sure you have a great program and great offer in place so your visitors will want to sign up for your offer.
- Train employees in explaining the benefits to customer and teach them how to promote the offer.
- Make it as simple as possible for the customer to sign-up. The more hurdles and more difficult you make it for them the fewer will opt-in
- Consider a rewards program or bonus for employees who sign up so many customers per shift.
- Make sure their is real value to your customers for signing up. A $5.00 coupon is probably not going to do much for me knowing I’ll be getting pinged with emails.
Implementing these steps will minimize your leakage and help you increase your sales.