Making Direct Marketing Work in The Food Industry

Welcome to the Magnetic Marketing Podcast. Today we get to listen in to a very interesting discussion. Oftentimes everybody listens in to Dan Kennedy's training and they say, how is that supposed to work for me? And how is that supposed to work for my business? Today we get to listen to Diana Cotu, known today as Diana Kline, as she discusses how in her 14 years in the pizza industry, she stands on 3 pillars of marketing activities, how they changed their business name in order to stand out, and how they implement direct marketing, personality, and membership programs inside of her pizzeria. This is how you leverage, this is how you compete, and this is how she is doing it in one of the hardest industries. If this episode does not give you ideas on how you can grow and implement all of the strategies Dan Kennedy teaches into your business, you might have an internal blockage. So Listen in as Diana reveals her process to implementing all of these strategies inside of her pizzeria.

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The world as we know it was changed because Dan Kennedy became obsessed with marketing.

Welcome to the Magnetic Marketing Podcast with your host, Dan Kennedy. Good afternoon, everybody. I have with me, as promised, a mystery guest. Who is doing very interesting direct marketing things in a business that is generally not considered to be a direct marketing business and is in fact a commodity business. So now to our guest in our conversation, and it so happens I just updated the, the No BS Direct Marketing for Non-Direct Marketing Businesses book, and I think often the most direct, the most The most interesting direct marketers are not actually pure direct marketers, but they are ones who are making it work in businesses where you don't often see it and that perhaps fight commoditization and price suppression and perhaps would logically be affected by recession and so forth. And so a longtime member you've read about at least many times— if you haven't had a chance to meet her in person and somebody whose innovation with her business I always admire is with us, Diana Cotu. As of the last time, Diana, you sent me some information. I'm just going to cherry-pick some of it. Sales up 27% over prior year. Ticket averages nice and high. Dine-in is $42, delivery is $39, and takeout is $32. Right. You've got all sorts of stuff going on promotionally in the store— pizza-making classes, kids' pizza-making area that sounds to me kind of like Build-A-Bear.— but Build-A-Pizza, birthday parties and so forth. Right, very similar. A new Food Network show, which I definitely want to make sure we hear about. There's a great line in your note to me that there are landfills of carcasses and barely breathing bodies who all thought the pizza industry was easy and that it brings in buckets of cash. Lots of people think every business is easy until they're in it. So those are some things in your long report that caught my eye and I thought people might be interested in and impressed with. So let's back up though and let's quickly talk about sort of the birth of the business and how it really is marketing and driven differently. Than most pizza businesses?

Well, originally when my husband and I opened the business, we got into the business just like a lot of other people do and just figured that we could do it better and do it on our own, and we thought it was all about the pizza. And we picked a name, we took our university marketing textbooks and read through it again and picked a name that we thought was all about the logo and was easy to remember, and we struggled and failed miserably for a number of years. We copied every everybody else's in the industry, poor marketing, you know, glossy flyers. In Winnipeg here, we have the standard is 3 for 1. You often will find 2 for 1 prices, but more common is 3 for 1, and even there's a couple places that'll do 4 for 1.

And I just want to clarify, so that's buy 1 pizza, get 2 free?

Correct.

Yeah, yeah. So, uh, you know, we were just Following everything that was already out there, and thank goodness we came across you one day and gave our head a shake and realized that there was a lot more that we were missing, and it wasn't about, you know, everything that we'd learned in university about marketing had nothing to do with a small business like ours, an average, just mom-and-pop shop type thing. We started doing some direct response marketing. We started to gather more information about our ideal customer. Customer and what they were really looking for. And within a matter of months, we changed our entire business from, you know, mass mailing flyers and menus out to direct mail, direct response marketing, so that we were targeting our ideal customers and growing our database and just working within our database to grow our sales.

So if we had to name I don't know, 5 pillars or less of marketing activity that has fueled and does fuel the business. It's now—

how long you been in business?

14 years. So it's pretty mature at this point, although you added dine-in not all that long ago and—

Just over a year ago.

Over a year ago and doubled physical size?

Not quite. We added another 1,200 square feet.

Okay, so, you know, there's growth, but it's a fairly mature business. But so what drove it and what drives it now? What are the 3, 4, or 5 big marketing engines that you rely on on an ongoing basis?

On an ongoing basis, it's first and foremost, it's our monthly newsletter. So that goes out to between 3,000 and 3,500 of our most active and regular customers.

And that's something—

That's print offline? Print, yeah, that is print offline. It's an 8-page booklet style that's folded in half and has a little tab over it. It gets direct mailed through Canada Post to our customers addressed by personal name if we have it, if not just by address. And every month that goes out without fail. That's something that you couldn't pay me to stop doing. Definitely that's our biggest one. And then the next, the other 2 I would say we do a thank you postcard to new customers. So this is an oversized postcard, as oversized as we are allowed to within our mailing restrictions with Canada Post. But it's bright color and oversized, and it's for a bounce-back offer. Very simple wording. It says, "Thank you very much for ordering from us. I hope you enjoyed it. If you did, please tell your friends. If you didn't, please call us back and give us a chance to make it right. And here is an offer for free cheesy sticks with your next large pizza." So that goes out within a week of a new customer ordering from us. And then the other big one that we do is the lost customer campaign. So if we haven't heard from a customer in 50 days, we send them out again an oversized full-color postcard and invite them back and let them know that if something was terribly wrong with one of their orders, we'd really love to hear about it. And you know, we miss them and we'd like to see them back and here's a great offer to come back and see us.

How'd you pick the 50-day mark?

Well, we tested it. We started off with 45 and then we found that within our database there was, you know, a little bit of of flux. So some people order once a week. Some people order every 2 weeks. And then these days families are very, very busy, so it's not uncommon to have a little stretch where people are just traveling or away. And then when they get back, they are still in the loop for the newsletter, and so they are still getting the newsletter, but maybe they just didn't order for that period. So the 50 days is just the perfect cutoff where it's not too long where they have completely forgotten about us,, but it's not too short where they might have ordered from us within a 30 to 40 day mark.

Tell me about price. Why do you think you're getting away with the pricing that you are? And I would point out to people that you are not in Beverly Hills or Manhattan or any area that acts like Beverly Hills or Manhattan.

Right, yeah, we don't have our Real Housewives of Winnipeg show here. You know, there, there is affluence here, but it's not as prominent as you would think of, especially with other larger cities, US cities. But really, when my husband and I— when Pierre and I got in the business, we really just wanted to make a better pizza, an upscale gourmet pizza. And again, we tried that at first, but we were doing the same kind of marketing that all the other low-budget places were doing, and we were getting lost in the mix. We just thought that people would realize that it was a better quality pizza. But they don't because you— we put ourselves in that category. And so we changed our name from a generic, you know, logo-driven name to Diana's Gourmet Pizzeria. So that was— really one of the key parts of our transformation, that we personalized the business and tied it to me, a personality who, you know, I personally have always been particular about the food I eat and, you know, how it's prepared and is it really good quality or are you just telling me it's good quality and I can taste that it's not. But people can identify with that and from there, we just decided that we would put gourmet right in the name. I mean, this goes back now, I think it was 8 or 9 years ago we changed our name. And we were one of the first to actually put gourmet in the name of the pizzeria or in the name of the pizza. And it was that distinction that was attracting a different style of customer, a different type of customer, and someone who wasn't driven by price than one who's driven by quality and service.

Do you have a certain number of these customers in membership programs? I do. Yeah.

So tell me a little bit about that. We have a gourmet pizza of the month club. And so we have 3 levels, silver, gold, and platinum. Very basic. When I designed the program, I just try and keep in mind the keep it silly simple principle. So I wanted to add extra value for these customers who would prepay at the beginning of the month for their level of membership. And we send out either $30, $50, or $100 worth of gift certificates depending on the level that they signed up for. And then we also send them different bonuses. So they are member bonuses. One is like for a free appetizer. Another one is for a free frozen panzerotti. We do a frozen line of pizzas and panzerottis at our pizzeria. And these are perfect for, you know, take to the office for lunch or, you know, kids come home from school and nobody's home yet and they're starving, so pop a panzerotti in the microwave. And depending on the level of membership, you'll get one of each or two of each or four of each. And of course, the higher level of membership will get like a free specialty pizza every quarter. They'll get a medium pizza for their birthday and their anniversaries versus a small pizza for free. Just to make sure that they know that we know that they are our best customers and we want to reward them for that.

And so without revealing numbers, how— just in— In percentage terms, how much of your business is within the membership context and how much of it is pay-by-purchase?

Oh, I— it's been a while since I looked at those numbers, and I have to apologize. I have pregnancy brain, so numbers aren't my strong suit right now. But I would say that about 30% is from membership, And then the rest is customer, like database-driven.

That's a significant number, obviously. It is. It is nice to start the month putting money in the bank, isn't it?

It certainly is, especially when you know you got rent going through and you got a bunch of things that are just scheduled to go through the first or second of every month without fail. And you know that you've got a good chunk coming in without fail too.

So you've got, Direct marketing driven with your own media and you've got membership concept and you are personality driven. Let's talk a little bit more about the personality thing because I know you've gone out of your way to make yourself globally famous as well as you in the business locally famous. Talk about both. And you just wound up having to give up One of those opportunities, speaking of the pregnancy, you wound up not going, right?

Right, yeah. I, well, it started off with a contest that was being run in conjunction with Canadian Pizza Magazine and Pizza Today, the US pizza magazine, were holding a contest for looking for Canada's best pizza chef and also US best pizza chef to go head-to-head in a showdown in a competition in Vegas. So I entered this competition on the Canadian side and I won. I was awarded Canada's Best Pizza Chef for 2005. And I received a whole lot of free publicity, a whole lot of local, a whole lot of national exposure. And I just kind of got the bug for competing. So I entered into quite a few different competitions in Las Vegas and New York and in Italy.. And I did very well for a number of years. And, you know, that's always a great story for local and national media to pick up. And so I must have done, you know, several dozen interviews over the years just from my pizza baking skills. And in 2009, I was invited to judge in Italy at the World Pizza Games.. And it's a huge honor for a pizza chef, so I accepted. And so I don't compete anymore. I'm on the judge's side of the table. And I was— I've judged in Italy and in Vegas and for France. And most recently, I've been invited to judge at the first ever World Pizza Games at Euro Disney in France. But unfortunately, I'll be like 34 weeks pregnant, so it's right at the too large to comfortably travel in an airplane stage.

So I had to decline. And tell me about like leveraging that. What impact do you think it has with customers? How do you use it within your own media? And then I also want to ask you about this Food Network thing.

Right. Well, it's very important to leverage. I mean, I find that especially with the pizza-making classes where people are genuinely interested in making making a really great pizza at home, and it gives us the opportunity to tell the story about, you know, what— how we became famous and what it is that I'm so passionate about pizza. And it just— it's funny because people— a lot of people call me a celebrity pizza chef, and if you had told me, you know, 10 years ago that there was such a thing, I might have said, well, maybe that's Wolfgang Puck, but possibly not me. But yeah, it's, it's very interesting. People, people love to see other people that have gained notoriety, people who are good at what they're doing, and people who've been on TV. There's, there's huge admiration for celebrities. And even though I may not be as well-known as, as Angely, but it's still quite popular and it gives people things to talk about. And so they, you know, they talk about it at work, they talk about it after work, in their social circles.

And— Yes, yeah, I think that's the biggest payoff. And I think that's something a lot of people miss is giving the customer bragging rights by being your customer. Right. Stories to tell. Bragging rights status, I think that drives word-of-mouth marketing more than maybe anything else.

I agree. I agree. Because you'll have, you know, customers who'll say, well, have you been to such-and-such place? Or, you know, I only order from this place. And, you know, immediately the customer has this pride that, well, did you know that she has done this? Or she's been to Italy. And, you know, before you know it, they're telling your story for you.

And it's of interest and it just spreads.

So what's the Food Network gig? Food Network, we were contacted by a hit show. It's a pretty new show. Apparently we were on their radar for the first season, but they filled up very quickly. And so, you know, it's a Canadian Food Network show. It's called You Gotta Eat Here. And they go across Canada city to city and they find independent places that the customers rave about and they feature 3 signature dishes and then they do a day of filming in the dining room with the customers and you actually have your raving fans talk about what they love about your food, what they love about your pizza. So I wanted to be on this show. It was suggested to me from a couple of our customers that we should invite them down and so of course I sent an email and I invited them down and I didn't hear back. And then I realized, but the way that they work is they want customers to recommend a place. So in my newsletter, I actually asked my customers to email the show. I put the email address right in there and asked them to contact the show and tell them why they have to come down to Winnipeg and eat at Diana's Gourmet Pizzeria. So they contacted us and said that, you know, we had been on their radar But they got just a flood of emails and phone calls about us, and they knew that we had to be first on the list for season 2. So they asked me to put together an application package kit and submit it, and they actually came last week. We had 2 days of filming and wrapped that up, and it's supposed to air either January or February of next year.

Very cool. Yeah, very cool. Um, you— and unlike a reality show, you don't have to keep this a secret, right? That's right. So you can promote it before it airs and get some mileage out of it after it airs, right?

Yeah, we've been talking about it in the newsletter and, uh, in our— we do a weekly ezine that goes out and then also on our Facebook page, and, uh, it's, it's just been very, very positive. —do you have a big viewing party? I hope to. They're going to contact us 6 weeks ahead so that we know when it's supposed to air. And yeah, I'd like to have a screening party. And apparently all the restaurants that have been featured in season 1 just got slammed. So, well, we're looking forward to it. And they air it 2 days later, so it just perpetuates and grows on that. Well, maybe it'll lead to Food Network USA. Ideally, that would be great.

That would be good, huh? Yeah. So tell me now about competition and competitors. So how many— who's— has anybody paid attention and modified what they're doing because of you? Are you being left alone?

What does all that look like? Well, competition is always, is always different. You have Depending on the actual competition, the location, you'll have anywhere from, you know, a couple hundred of competitors to several hundred competitors. And I— when I started competing back in 2005, I was like the only one who was putting beer in my pizza dough. And this was one of the things that really made us famous and really captured people's attention.

I remember this deal. This is a co-branding deal, isn't it, with a particular beer?

It ended up being that way, but at the time it was just because the contest was, like I said, it was, you know, one side on Canadian Pizza Magazine, the other side through US, and the inspiration was Iron Chef for it. So they gave you 40 common ingredients and they told you you were allowed to choose 5 secret ingredients to complete 3 recipes from scratch. And I looked at these, you know, ingredients and they were all very generic, you know, pepperoni, peppers, ham, and I really wanted to, you know, I really thought about a long time about what makes what makes a Canadian pizza different and Canadian versus Chicago pizza or New York or Italian-style pizza. You know, each one has their own distinctive type of style for pizza. And one night it hit me that, you know, Canadians have been enjoying beer and pizza, watching games, you know, for decades. So what happened if I would put the beer in the pizza dough? A better choice than, say, moose turds. Much better choice, yes. And yeah, so the story The story goes that I took some beer out of our home fridge. It was my husband's preferred brand, and of course he was quite upset with me at the time. You don't mess with a man's beer, I can tell you from experience. He offered to buy me cases of the very, very inexpensive stuff because this is a premium beer that he enjoys. But I explained to him that I really needed to start off with the really good stuff because How would I know when I got to an end recipe that he liked if I didn't start off with a taste that he actually enjoyed and a flavor? So luckily it only took me, you know, maybe a 6-pack before I got the recipe down. And because this one ended up winning best pizza for Canada, someone at the magazine contacted the brewery and said, hey, did you know there's this pizza lady out in Winnipeg and she used your beer? In an award-winning pizza dough. And of course, you know, they were tickled and they didn't know it's a maritime brewery, so they got an agency to get in touch with me and ask me if I minded if they did a little bit of publicity and promotion around me. And of course, you know, I thought about it for half a second and said, of course. And that's how, you know, a lot of the publicity came to us. And they actually flew us out for a whole maritime media tour, and we spent, I think it was about 4 or 5 days out there in different cities and just making the pizza and talking to different media, and then a nice tour of the brewery and everything else out there. So it's what sealed the story of how we became famous and, you know, what made this Canadian pizza great.

Do you think your local competitors ignore you? Do you think they think you're nuts?

Do they— Well, we have a different definition of what our local competitors are. So I mean, personally, I don't consider the 3-for-1 and 4-for-1 my competitors just because, you know, they're using ingredients that are imitation. And, you know, every now and then we'll get somebody who says, well, you know, can't you match your competitor's price? Do like an extra large unlimited toppings for $6. And our answer is when they can match our quality, then we'll worry about matching their price because there's a whole lot of substandard toppings and imitation cheeses out there, especially here in, you know, the low-priced pizza market. But I know for a fact that a few of them, especially locally here in Winnipeg, are very resentful and jealous of me. They don't usually have nice things to say, but you know, they don't really know me as a person and they just see me as being the pizza expert. And of course they don't, they don't do what we do to make themselves more of a pizza expert and more interesting perhaps. But across Canada, I also write for Canadian Pizza Magazine, so I have exposure in the industry side of things through that. And across Canada, I find that I get a lot of A lot of admiration and a lot of appreciation that I'm helping to elevate the nature of pizza. It was never meant to be this cardboard-tasting, you know, crappy stuff that you see everywhere. It was always meant to be a really decent food, nutritious, simple ingredients, and tasty.

And you are doing some training, consulting, coaching, whatever in the industry, right?

I do, yeah, I am. I I just actually got back a couple weeks ago from consulting with some friends that own pizzerias. They own 8 pizzerias out in Anaheim and Orange County. And because of my experience with pizza making and baking, they asked me to come out and help with troubleshooting with some dough issues and some making their pizza a bit better. And my husband Pierre is really a master of operations, so they asked him to help to better systemize things that they have going and create some efficiencies. Because for them, for their operations, what they had is like a lot of people, they, you know, started growing stores before they had all their systems in place. And so it becomes a bit of a nightmare. And now we're just working back with them to tighten everything up.

So other than that mistake, what do you— you've had 14 years in this now. What do you think are— and you've been around me and GKIC for what, probably 8 of those, 9 of those?

Yeah, but I think, yeah, I think 2003 is the first year that I was introduced to you.

So what's your observation about like the biggest delusions both pizza, both pizza business owners have and small business owners in general have? They're biggest mistakes, the biggest screw-ups, maybe ones you made and fixed.

What do you think are the 2 or 3 biggies? Well, definitely in the pizza business, speaking from experience, is that people think it's all about making one great pizza or making a good pizza, and they just ignore all these other elements of the business which are key, you know, marketing, you can't get by this day and age without marketing. And then operations too, you need good systems to be able to handle the pizza business. And I'm sure that this carries over into many businesses. And so the people will overlook these important key aspects and they just kind of think that it'll work themselves out somehow. And then, you know, when you start talking to some of these other, you know, even small business owners, not just necessarily just about, just in the pizza industry, And you start talking about marketing, they— it's like they regurgitate what they hear in mainstream media. And if they've had any kind of university education, they repeat what they've heard with that is, "Oh, you gotta get, you know, get your message in front of a potential customer 7 to 8 times before they might even think of doing business with you." And that's all complete BS. And I'm so glad that I discovered that years ago. Because I mean, I wish I discovered it sooner than that because like I said, we took our university marketing textbook and we ran up quite a bit of debt trying to achieve this model that they write about. And you know, if I wrote a report about it, I would get an A in class, but you know, I get a fail in actual life and in business because it doesn't actually work. It doesn't actually return anything. You can't track it.. And, you know, people are just clueless about it, whether by choice or just by design. And, you know, with the pizza business, it is a labor-intensive business. And so, you know, people think, well, I'm just going to make pizza. Well, the pizza business isn't a business of one. And so you're going to have staff. You're going to have problems with staff. You're going to have issues. And you need really tight systems to make sure that everybody knows what the deal is and from the top down. What's expected of them, and there's very little room for people to have that subject to interpretation. Of course, you know, the nature of humanity is that there always will be that element of stupidity where you didn't realize someone might think of something that particular way, but it's really important to think of these things ahead of time That way you can prevent some major problems down the road.

So you, I know, are online savvy and are using social media and Facebook, etc., etc., and YouTube, and I would like to hear about that. And yet we established you in the mail every month with a printed newsletter. Buying stamps from Canada Post. You're in the mail, really your other two key pillars are postcard-driven direct mail. So how do you— how are you marrying online, offline, and why hasn't offline gone away for you?

Why aren't you able to rely on email, web, Facebook, Twitter? That's a great question. Well, offline, all of our direct mail and direct response strategies, they pull really well. We can track them. People enjoy getting something physical and tangible in their hands. I hear from many, many regulars that our newsletter ends up in the aka the reading room. And this is like a quiet space where they can just kind of connect with a moment of peace and just read about a funny story and, you know, what maybe what the new pizzas are at the pizzeria this month. And for online, it's an added step. You know, people— we won't ignore it because it's there. And especially for, you know, the pizza industry, we have online ordering. We streamline things so that we can make it easy for our customers to spend money with us any way they want to, by phone or through the web or through their mobile phones. But you can't exclude one for the other because online isn't strong enough to be your only presence and your only reminder. Some people may ignore your emails. They may not sign on to Facebook for a few days. And so they don't know that there's a different promotion out there. But they get something in the mail and it's sitting there either on their kitchen table or, you know, by that drawer where everything else goes. And it's just a reminder that, you know, we're here and we know that they are our customers and we'd like to see them coming back and it's a special offer just for them.

How many different promotions are you running, say, in a month in the newsletter, by birthday, by all different ways?

I tried to count actually last night and I lost track because we actually have several different— dozens of different campaigns going out at any given time. And like, for instance, right now it's October and in Canada we have our Thanksgiving Day the first weekend in October. So we have a Thanksgiving postcard that went out to 1,000 of our very top spenders. And there is very oversized, bright color, 2 offers on the back, one for dine-in, one for pickup or delivery. It's because since we added the dine-in, we find that, you know, we give people the option of how they'd like to dine with us. This promotion is pulling right now, and this is valid until the end of November. And then we also have the monthly newsletter out, which has 5 different offers in it, special coupon offers that are either add-ons or a discount. And then we also have our Gourmet Pizza of the Month Club, and we have a rewards program in place. And so anybody who has birthdays or anniversaries for the month of October, they would have been sent a birthday postcard with an offer for a free pizza. And we also— the new customers, the lost customers, and then I send out— after I read your book, No BS Grassroots Marketing, I got an idea to do special referral certificates. So those go out to surrounding businesses but are just outside our 5 5-kilometer, 5-mile range. And this is just a special offer for someone like my hairdresser, for instance. She'll hand them out to clients who have just gotten their hair done and, you know, might be in the mood for a bite to eat, might not be at that particular moment in time, but she'll tell them who we are, we're just a couple blocks away, and here's an offer because I'm a friend of Diana's. So I I'd really have to sit and look at all the different offers. But perhaps what I could say is we started off with one, and then we added another, and then we added another. And we just keep going with that. And every time I look at the different marketing that we have in place, I look at if we can add another step or add another layer. So what's coming next is the lost customer letter 2. So instead of a postcard, it's going to go out as a letter. And bright colored paper and bright envelope.

Just one more way to get that customer to come back to us. Alright, we are literally out of clock.

Diana, thank you very, very much. My pleasure. Thank you for listening to the Magnetic Marketing Podcast with Dan Kennedy. If you love hearing in on these lost Dan Kennedy talks and speeches and calls, then please let someone else know about this podcast. That's how you can help it to grow, and the more it grows, the more free Dan Kennedy we can bring to you. Also, Dan would love to give you the most incredible free gift ever designed to help you make maximum money in minimum time. This free gift comes with almost $20,000 in pure money-making information for free, just for saying maybe. You can get this gift from Dan right now at NoBSLetter.com. Not only do you get the $20,000 gift, you also get a subscription to 2 marketing newsletters that will be hand-delivered by the mailman to your mailbox each and every month. One from Dan Kennedy and one from me, Russell Brunson. To get this gift and your subscription, go to NoBSLetter.com right now.