EP 02- How To Double Your Loyal Regulars With The LRVO Formula

02- How To Double Your Loyal Regulars With The LRVO Formula

Welcome to Episode Two, how to double your loyal regulars with the LRVO Formula. What I’m going to talk about on this podcast is what I believe to be the easiest, fastest, most profitable, and least risky way to grow any bar or any restaurant in the country, and that is with Loyal Regular Value Optimization. And the whole purpose of this formula is designed to double your loyal customers.

And why do we want more loyal customers? Because these are the people who spend the most amount of money with us. These are the people who care about us the most. These are the people who get on social media and say great things about us.

These are the people who go out and bring their friends and family members to their favorite place. When we have loyal customers in our business, a steady stream of them, it makes our lives much easier, much more profitable, less stressful, and it makes our business much more enjoyable.

One thing I want to mention is that this can be used to run just about any other promotion that you have. And I’ll explain that at the end, of how you would make one little tweak with this. And if you are familiar with me, you’ve probably heard me talk about this before. It’s important to keep hearing it over and over, but if you’re brand new, I’m hoping that this is going to be a complete game-changer for you.

Now, there’s one big problem that a lot of bar or restaurant owners face. It’s the same exact one that I faced when I was trying to grow my business, and for those of you who don’t know my story, I’ll give you a really quick ten-second overview.

I bought my first bar about 8 years ago. Within the first eight months, I almost went out of business due to lack of customers, until I started reaching outside of our industry for other marketing strategies and promotions, I found a marketing coach, and said, “Here’s where I’m at. Here’s where I want to be. Tell me what I need to do. I’ll listen. I’ll follow you. Just get me there.”

And by doing that, I was able to double my business within eight months by applying this exact formula to my business.

What I was doing before I went and started reaching out to experts and marketing books was I was focusing on what we always learn, what we see the big chains and big franchises do, the guys who’ve got millions of dollars to get on TV and radio and say, “Hey, here’s our brand. Here’s how great we are. Here are our specials.” We were focusing on awareness, our image, our branding.

Being small business owners, we need to be much more strategic. We don’t have big pocketbooks to spend hundreds or even thousands of dollars to get awareness and hope people come in. The big problem that we face today compared to five, 10, or 15 years ago is that on average, we get hit with 5,000 marketing messages a day, people fighting for our attention. And we’re avoiding all of them like the plague.

What we need to do today with our marketing is stand out and grab attention, because if we don’t grab attention, our marketing dollars are going to be wasted. So let me dive into LRVO, for short, Loyal Regular Value Optimization and how it works. And also with the show notes, I’m going to give you a link to the flowchart for this and how it works, but I’m briefly going to go through it. I’m also going to give you a link to some videos that I’ve done that take you through the five steps. But again, we’re focusing on building our loyal customers.

So if we want to add 20 or 50 loyal customers to our business, what are we going do? So step one, we need to choose our target market. We need to think about who are our loyal customers now. What’s their age? Where do they live? Male or female? Who exactly is it that we want to attract into our business? And we’ve got to look at the people who are just like our loyal customer.

So once we know our prospect, the type of people we want to go after, now we need to think about step two, and that is choose a traffic source. What type of media is going to be the best type of media to reach those people and exclude marketing to anybody else?

They say people who go to bars don’t typically drive mp more than three miles. People who drive to a restaurant typically don’t drive more than five miles. So when you’re doing mass media advertising, awareness style advertising, you could be hitting hundreds of thousands, even millions of people, depending if you’re in a big city, with your messages, but they’re not typically going to drive 10, 15, or 20 miles to your bar or your restaurant.

So you’re wasting a lot of your ad dollars on that big percentage of people who are not likely to come into your business.

That’s why we need to be more strategic with targeting exactly who we want to target, and how can we eliminate the masses. And usually, the digital marketing strategies are by far the best way to go. For example, with Facebook, with YouTube, with Instagram and a lot of the other digital strategies out there, you can now target people by their age, by their gender, and a certain mile radius around your business.

With that said, instead of trying to hit 20,000 or 50,000 people with your message, now you can target in on the 3,000, 4,000, 5,000 or 6,000 people who are more than likely to show up, and you’ll get a much higher ROI on your marketing dollars.

However, you need to have a great offer in place. So what’s your message? That’s step three – is the message, your offer. And step three, I like to call the lead magnet. So what I’ve learned is that when you’re trying to acquire brand new customers in your doors, you need to have a valuable offer.

You need an offer, because number one, you need to track your marketing. And the best way to do that is if they come in with something to redeem. Also, better the offer, the better the redemption right?

The strategy behind the lead magnet is it’s a valuable offer where you pretty much break even on the front end, an offer that beats any of your competitors by value, where when somebody sees this, they’re like, “wow, I would be nuts not to take advantage of this!”

So the whole goal is to just get them in the door. But in order for them to get this offer, they have to hand over their personal contact information so that we can build a customer list and so we can re-market to these people in the future.

And here’s the number one thing I learned from one of my marketing coach years back, Dave D. He said, “Nick, we need to build the list of customer so we can get them to come back.

And the reason behind it is because the people who are willing to give you their personal contact information are telling you, “Hey, I want to do business with you,” or they wouldn’t be handing over that information to you. These are the most profitable people to market to on the planet. So the bigger the list you have and the better relationship that you have with these people, the more money you’re going to make.”

And usually, obviously, this is done with a discount. Now, I want to give you my philosophy on discounting. There are a lot of people who say, “Hey, if you discount, you’re going to hurt your brand.” I think that’s bullshit in a way.

It all depends on how you deliver your message about the discount. If you’re going on Groupon and you’ve got this really nice restaurant or bar, yes, I do believe that could hurt your brand. If you’re going in the newspaper saying, “Hey, 50 percent off your tab. Come in today,” yes, I can see that happening.

But if the message behind your steep discount offer is, “Hey, we have a goal, for example, to get 50 new customers into our doors in the next 30 to 60 days. And we’re going to give away this amazing offer just to bribe people to come in. Try us out for the first time. We want to prove ourselves, because we believe that when you come in and have the best experience that we can give you and you’re blown away, you’re going to want to come back for future visits, and that’s our goal. We want to win you over to come back at regular price and bring your friends and family, and rave about us and talk about us on social media.”

When people understand the reason why you’re making them this valuable offer, then that’s not going to hurt your brand at all. They’re going to start thinking, oh, that’s smart. Let’s go in and let’s try them out. They seem very confident that they’re going to win us over. Let’s go try them out.

So that’s step three when attracting new customers – offer a lead magnet.

Let me do a quick recap of where we are. First we’re going to choose our target market. Who are we going to target? Step two – What’s going to be the best traffic source to target our market and step three is our offer and marketing message that’s going to get these people to take action and hand over their information.

And let me take a quick step back. Usually, when we’re doing this online, we’re taking people to what’s called a lead capture page. It’s just a one-page website that states the offer. Enter in your information and we’ll send this offer / discount to you by email. You can send it by text or you can send it by email.

Now here’s the very important thing. This is number four, which I think is one of the most critical to this. Step four is the new customer to loyal customer system. And this is really what happens instantly after they hand over their information. We tell them to go check their email.

So what I want to do is I want to build instant trust, credibility, and relationship with people. Just because they signed up doesn’t mean they’re going to walk into your doors. There’s a good percentage of people who will sign up and never show up.

So what I want to do is I want to build instant trust, credibility, and relationship with them, and the way that I do that is I send out what I like to call my ‘cheers letter.’ It goes out by email, and it’s pretty much me saying, “Hey, here’s who I am, my story, what kind of experience they’re going to have when they come in, and what my goal is with them as a new customer and what my brand is about.

And I also tell them this. This is very, very important. This is the biggest, most critical piece. In this email, I use something that’s called damaging admission, and I learned this in the copy writing world. And what damaging admission is, is when you come out and say, “Hey, I’m not perfect.”

So pretty much, I tell them it’s almost impossible to run a perfect bar or restaurant business. When you’re dealing with a bunch of cooks and servers and so on, someone’s bound to have a mistake here and there. Servers may not always be up to par if someone’s having a bad day. It’s very rare that ever does happen here, but it does happen from time to time. And our goal is obviously to give you the best experience possible, but if you ever come in and have a bad experience, I want to know about it because if I don’t know about these things, I can’t fix them.

So when you let people know that ahead of time, that hey, we’re not perfect – it’s rare that that happens here. It’s not like you want to say, “Hey, we’re fucking up all the time.” No, but it’s, “Hey, it’s really rare that that happens here, but if it ever does happen, I want to know about it.”

Sometimes we’ll even throw this in for clients, “Hey, if you know someone who runs a perfect bar or restaurant business, let me know. I would love to learn from them, because I have yet to find one yet.” Because again, there are always flaws and mistakes that happen in this business. Nobody runs a perfect bar or restaurant business, or any business at all.

So when you’re up front with these people and tell them that, that builds trust with them, instead of you coming out saying, “Hey, we’re the best in town,” and this and that.

And to this day, I get one to two emails a month from both of my bars, from people saying, “Hey Nick, I came in. X, Y, Z happened, and I just wanted to let you know.” I will then either offer them a free meal, free $10 dollar gift card, or whatever it is.

Probably 90 percent of the people say, “Don’t even worry about it. I know you want to know about these things. I’m just letting you know I get it. I understand. It’s hard to run a perfect business, but I just wanted you to know.” That all stems from this very first message.

So what you want to do is you want to stand out in your prospect’s mind, this brand new person who hands over their information. You want to stand out like no other bar or restaurant owner ever has with them and build that credibility and trust with them right away, because if they ever do come in, the last thing you want is them going on social media and blasting you and saying bad things. They’ll always remember this.

And I always like to tell my clients, “Think of this as your first handshake with your customer, face to face but really it’s happening through a digital automated process.’ So that’s the new customer to loyal customer marketing system there.

And then three days later what we do is we actually send them a ‘Can I get your opinion campaign’ where we’re pretty much asking them, “Hey, we’re always trying to make people’s experience better. Would you mind telling us what food specials, drink specials, and so on that you’d like to see us do or that you see other places do that we could do? What kind of interactive promotions would you like to see?”

And this is very important. You’ve got to add this in there. Why do you choose one bar or restaurant over the other? And whatever those answers are – you’re going to see a lot of it. It’s service, atmosphere, cleanliness, and them feeling welcomed. Very few people, 10 percent, 15 percent, of the people doing this will talk about price.

But the answers that these people give to you is what you want to have in your marketing messages when it takes getting people to come into the doors, because they’re telling you right now why they go to certain bars and restaurants.

They’re telling you why, and when you know why people want to go to certain places, that’s what you use in your marketing messages to influence them, to persuade them to come in and test you out – as long as you can give them what they’re asking for. If you can give them a great atmosphere or great experience, that’s what you need to tell them, and that’s what you need to give them, because that’s why they are going out places to spend their money.

Now it comes to step five, and this is where the money is made in this formula. It’s all about using your customer list. This is where you use your email list, your text list, your direct mail list, to get people back in for other promotions.

Not long ago, over the holidays, one of our clients from Ground Round, Matt Woelfel from Waconia, Minnesota sent out an email in 15 minutes and made $5,600 dollars from that. There are plenty of clients who can make $500 dollars, $1,000 dollars, or $2,000 dollars from sending out just email promotions alone. Or send out a text message to your customers.

Again, these are people who said, “Hey, I want to do business with you.” They gave you their information to do business with you, so it’s not hard to send out a text message and see 10, 20, or 30 people walk in the door on that day, depending on what the offer is. If you’re just saying, “Hey, here are our specials,” you don’t know if people are coming in from what.

But if you’re giving them value and you have a strategy in place to recoup if you are doing a discount – and again, I’m not always about discounts. You could be doing a premium, “Hey, you’re going to pay X amount of dollars, full price, premium price,” but they’re also going to have this great experience, and it’s limited to only X amount of people to get this, too.

So number five is the most important. That’s where the money is made, and this is where a lot of bar and restaurant owners go wrong, because again, it comes down to that messaging. So many people use their lists just to say, “Hey, here are our specials. Here’s our promotions,” which relates to them of, “Hey, come in and spend your money with us.”

What I try to do within my emails and direct mail is be as personal as possible, talk about my family, something that happened over the weekend, something with a staff member. I always want to continue to try to build relationship and get these people to feel like they know me on a personal level. So that’s step five. Step five is a customer return path.

To use this formula again for any other promotion that you’re doing, again, it all comes back down to thinking about your target market. If you’re doing a football promotion versus let’s say karaoke, you’ve got two different target markets. So when you’re coming up with a brand new promotion that you’re doing, again, think about the target market and what’s going to be the best traffic source to go after those people.

And it doesn’t necessarily have to offer a lead magnet. You don’t have to necessarily get their information, but what’s going to be the offer? What’s going to be your compelling message that’s going to influence this person, persuade this person, instead of sitting at home eating a cardboard dinner out of the freezer, to come in for that juicy steak dinner? So that’s where that comes into play. So who is the target market, the traffic source, and then what’s going to be your offer to get them back in with that?

So again, in the show notes, you’re going to have access to that flowchart. Also, I’ll send you the link to the videos where I go into that more in depth and actually show you examples through those five different steps. But I can promise you this. Doing this is going to be three, four, or five times more profitable than just putting out your specials on social media than what you’re currently doing now, because this allows you to market to your most profitable prospects, your customers, instead of marketing to the masses.

The other thing I wanted to mention too, just to kind of picture this, and I used this in a presentation not too long ago. But imagine you standing in front of a room of 100 people, and the left side is people who don’t know you. The right side are people who know you, like you, and trust you.

And now you make this announcement and you tell them about your new special that you’re doing next Wednesday night, and if they come in they’re going to get some kind of offer. They’re going to have this great experience, whatever it is. It doesn’t have to be a discount. It could be to see this band, this great experience, or you’ve got this great food special going.

Which side of the room is going to have more people? The people who don’t really know you or aren’t familiar with your brand? Or the people who know you, like you, and trust you? You’re going to get three, four, five times the amount of people on the right hand side of that room coming in and taking advantage of that offer, that experience.

And that’s what this comes down to. When you market your business like this rather than just always trying to just hit the masses, you’re going to get a much higher ROI on your marketing dollars. You’re not going to have to spend that much on marketing at all. I mean, you could literally just do email and Facebook posts alone if you wanted to. And the great thing with email too, is you could target only people on Facebook who you have their email address for.

So again, I know I’m going a little bit too into depth with that, but go ahead, check out the show notes and the links in there. Also, if you want to get my new book absolutely free, click here.  Just cover shipping and handling.  And if you guys don’t mind, leave a review. If you think this is a great podcast, if you’re getting great value, make sure you subscribe on iTunes. And we will catch you guys on the next episode.