Today, I want to tell you how we got two people to pay us $5,000 at our restaurant from just one email.
We did that using something called the Pareto Principle for restaurants. You might have heard of this, also known as the 80-20 rule. It states that 80% of the consequences or results come from 20% of the causes or efforts.
You’ve probably heard that 80% of your sales or profits come from 20% of your customers. Those regulars who come in every day or once a week drive your business. That’s why it’s critical to continuously find more regular customers, which is what we do at Restaurant Results Partners.
Consider your staff: 80% of the work is done by a handful of people, the 20% of your crew that’s really doing what they’re supposed to do. You can apply the 80-20 principle to anything. If you want to dive deeper on this subject, I recommend checking out the book “80-20 Sales and Marketing” by Perry Marshall. He provides specific examples of how you can apply this to your business.
What’s cool is that the 80-20 principle works on the next level up. You could also say that 64% of your sales or profits come from the top 4% of your customers. It’s crazy to think about, but it’s true. Even the next layer up, half of your sales or profits come from the top 1% of your customers.
How to use Pareto Principle For Restaurants
Knowing this, what offer can you develop for those most loyal, die-hard fans? It took me a while to come up with something. I heard a buddy of mine at his gym was selling lifetime gym equipment. They didn’t have a hard cost, unlike a restaurant where we actually have to provide food. I was pumped to try it because what’s the worst that could happen? We get zero sales from it.
We developed an offer called BBQ4Life. We had a little over 5,000 people on our list at that time. We got about 2,000 opens and 123 clicks. We sent people to a landing page to make it fair and timestamped. We couldn’t sell too many of these because that would eat into our food costs, so we said we’d only do it for four people. They could get one meal a day, they can’t transfer it to anybody, they have to come themselves to redeem it, and it’s not valid for large quantities or catering, just a regular meal off our normal menu.
My buddy with the gym also included 12 months of personal training, so it was a built-in discount. I wanted to create a built-in offer to make it seem like a really good deal. At the last minute, I included a $1,000 catering credit. So they pay us $5,000, they can use $1,000 of that for catering of their choice, and the rest they can use to come into the restaurant and eat whenever.
I figured worst case scenario, even if they come in every day, it’s going to take them three years to eat away at the cost of the money they gave us. Now we’ve got $5,000 from this person that we can use for advertising and try to get more customers to recover the cost we’re giving this person.
Plus, these are going to be our biggest fans. Anyone who buys this is going to tell everyone, “Let’s go to David’s because I get free food there for life.”
We sent the email and had no idea what was going to happen. We got 47 people filling out the form. It was pretty clear that most people didn’t realize it was a paid thing. The first four people thought it was a contest. However, two people paid us $5,000, and I was stoked. We didn’t sell all four, but that was alright. Now we had $10,000 to run ads, bring in new customers, and these two customers do come in four or five times a week.
Hopefully, this inspires you to think about some kind of offer you can create for the top 1% of your customers that can drive a ton of value to your sales and profits. It doesn’t have to be BBQ for life, but you should have some high-ticket item. If you have loyal customers that come in every day, they might buy it from you.
That’s it for now. We’ll see you on the next one.
Leave a Reply