Dignity or dinero? Building customer respect�� - avoiding deep discounts and coupons in restaurant promotions

Coupons and discounts are the most discussed issue in our work, local store marketing.

The question is, "Must we attach a discount to every offer we provide to current and prospective guests?" The answer is difficult yet simple. Behold:

Money -- dinero -- in the form of price off your product, is a necessary evil in sales promotion particularly during this recession when all your competitors are panic pricing. But what has happened to many chains is that couponing -- originally a sales promotion strategy or competitive response -- has become a base business strategy. That is, like a narcotic, as friend Ren Carlisle likes to call it, once your sales sheet becomes addicted to the "coupon fix," you must continue to provide it suffer top-lines sales "withdrawal."

Dignity, however, is what your prospective guests -- and your employees -- want much more than dinero.

Here's the bad news for instant gratification freaks: Dignity takes longer to establish. Only a little longer I might add but too long for the impatient.

But when you take the time to form a relationship with a customer, especially one who has influence over more customers, you have something that lasts. And the easiest way to form a relationship is to show them a little respect. Offer them dignity.

Money is not a sole means of respect. In fact, a recent USA Today survey surprisingly indicated that our primary measure of job satisfaction is not money, but (the aforementioned) dignity. Worse for the retailer, two things are present when the customer's primary motive to visit you is money: (1) It costs you (especially dearly I might add when the new customer's discount is tied into the current customer's escalating price). (2) This bribed guest is a moving target. That is, once your offer is matched or exceeded, he's gone.

Just in case you think all this sound esoteric, you can be sure I know the problem. I spend five of every 10 working days in a restaurant or retail store. We are in the neighborhoods, meeting unit managers, talking to customers, working over neighborhood statistics and, most important, marketing to the key players in what we call Prime Prospect clusters, the big employers and gathering places in individual store neighborhoods.

In addition, I headed marketing for Ponderosa when, early in my involvement, our couponing had become so pervasive that it represented 22 cents of every dollar of product sold. By following the lead of some very smart people like Thomas Russo and Fred Gonzales, I'm glad to say we'd cut that in half by the time I left.

OK, so let's get specific.

Are all financial incentives bad? No, if used judiciously, they can be very effective. Hardee's used beverages for seniors to build its breakfast business, and Little Caesars and Taco Bell used alarming pricing concepts to build (and rebuild) its total business.

Further, sales promotion's very definition suggests that there are appropriate times and reasons for "immediate sales building."

The problem is when there is not an apparent cause for the pricing action.

That is, if you are giving me the discount to get me to try something or because it's my birthday or because you are clearing inventory, fine. But people are not stupid. If you are giving price to everybody every day for every reason, as we've watched the furniture and electronics retailers do, then customers know that either your sales stink or you're in a competitive free for all. The big loser in this game is the whole category. For my part, I'm waiting for the "110 percent off, this month only, with a triple your money back guarantee" sale before I buy my next TV!

No more nonsense. Here's the best promotional offers your chain's individual stores have to offer, in order of priority: (1) The concept itself (2) Execution, in all elements but particularly in service. (3) Value added to the basic concept and operation (4) Financial incentives Let's take them one at a time.

Concept ... You can reasonably assume that it wouldn't be a chain if the basic concept offering is not good. Time goes by, however, and trends and people change. You should continually assess if your chain and your particular store are in the early, middle or late stages of its consumer appeal.

Execution . . . Even a good concept can be a disaster in your neighborhood if that store is poorly operated. Jerry Richardson's "best marketing strategy is a well-run restaurant" is still true.

Value added and financial incentives. In our everyday work, we help unit operators identify and meet with key people at the large employers and "people magnets" in their trading area.

An interesting conversation with a unit manager last week while we were on the way to an appointment with Prime Prospect. The nervous manager said, "They're going to need a lot of incentive to get their employees to come to our restaurant. Let's offer him a BOGO!" (Buy One, Get One Free). We said, "Hang on. Let's just listen and talk with them first and see how they feel, what they're thinking and what they want from a restaurant like ours. Then we'll give them the ideas you've got in your folder."

The first words out of the prime prospect's mouth at the meeting were, "You know, in 27 years of running this place -- a Jewish community center -- I have never had a restaurant manager come visit me." And, of course, you know the rest of the story. All he needed was for us to deliver our product on special occasions. No discounts. No "give away the store." Just a little common respect.

The manager's idea on the way to the meeting was natural. We all give in too easily when we're nervous.

But you see, we cheated. We've been to meetings like this all over America, Canada and Australia for the last four years, and we knew what was going to happen.

The people you want at your chain's store don't need only money. They want value. And value is not just a 99-cent menu. Non-price added value with a Prime Prospect can be group arrangements, delivery for sizable orders, house accounts, call ahead seating, etc.

But the greatest value you can give them is your respect. It takes a little longer, but it has to do with their dignity, which remains long after your profits have gone in search of instant corporate satisfaction.

Tim McCarthy is president of Contract Marketing, which is based in Mentor, Ohio.

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