Merriam-Webster defines competition in business as “the effort of two or more parties acting independently to secure the business of a third party by offering the most favorable terms.” http://www.merriam-webster.com/dictionary/competition The restaurant industry is no stranger to competition. If you have been operating long enough you have felt the pit in your stomach when you notice an ABC alcohol posting or coming soon poster in the window of a space near your business. Even more challenging is when that new business is a chain which has ample marketing and branding funds to reach your customers.
Competition isn’t always a negative and I have experienced an increase in traffic and sales when a competitor moved into my neighborhood. I became more creative and involved in our marketing spend. It is easy to continue to allocate your funds to the verticals you have established but before you send your next payment to Yelp you should run a ROI (return on investment) report. If you have no data to be able to track where you are spending your funds well then you need to start right away.
Step 1: Collect promotional performance data.
Ask your channel manager how other establishments have tracked return rate through their channel. Depending on the vertical they may have various methods such as geo-fencing, scan rate tracking, bounce rates, click rates, phone call id information and on. If you are in charge of your own campaigns then think about adding a coupon code to measure your results. Run a food special or happy hour and track the increase in sales for the time period the offer was valid. Find some way to make your efforts and dollars measurable and put a system in place to keep track of your campaign results.
Step 2: Calculate your ROI.
Once you have measurable data you will need to collect other financial information to obtain your ROI. You will want to make sure that you are using the same metrics to find your ROI for each of your campaigns to assure you are comparing apples to apples. You can use a simple equation to find the return in the example below:
Gross Profit – Marketing Investment
Or you can put more detail into tracking your results if your campaign resulted in additional expenses such as an increase in overhead or incremental costs by using the formula below:
Gross Profit – Marketing Investment-Overhead allocation-Incremental costs
Step 3: Compare results and implement necessary adjustments.
With your ROI calculations, you can focus on campaigns that deliver the highest return. If you get a 2% return from Yelp and a 34% return from a delivery menu feature then you can dedicate more funds to improve the 34% or enter into a similar vertical to replicate your success.
Your ability to market effectively takes both creativity and some detailed tracking. When you execute both of these well you turn your marketing dollars from an expense to a revenue generating tool and in our competitive industry this is a must.