Every week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. The show takes place every Wednesday on Twitter from 8-9 pm ET. This is excerpted from my recent interview with Misty Young, the @Restaurant_Lady. Misty Young is the owner of Squeeze In, a privately owned Lake Tahoe, California-based restaurant chain known for its breakfasts and lunches. Misty’s business acumen has taken Squeeze In from one location to multiple locations, seeing a sales growth of $548,000 to $4.2 million per year. Misty is also the author of the Advantage Best Seller, From Rags to Restaurants.
SmallBizLady: Why did you decide to build a loyalty program for your business?
Misty Young: We really wanted to grow fast. We knew by collecting information about our guests that we could build a relationship with them. Initially, we did it the old-school way by collecting data and entering it into our own “birthday club.” It grew quickly. I would personally print send-out birthday cards by the dozens. It was so popular it got out of hand fast! So, I said, “If it’s not on a list, it doesn’t exist,” and that included our relationship with our guests
SmallBizLady: So, you started with a hand-built system? Is that what you recommend?
Misty Young: It was what we had to do to understand the value of it. We moved to a professional system after several months. If you have to start that way, do it. Do whatever it takes to get a system in place and use it EVERY DAY! Your associates won’t integrate the loyalty system if YOU don’t believe in it, so get started ASAP.
I don’t recommend going it alone. There are many providers who can help you build professionally and fast.
SmallBizLady: How did you know the loyalty program was being successful?
Misty Young: We started our loyalty program in 2006. We had been thinking of opening a second location about 60 miles away. The hand-built loyalty database we made blew us away because we found out that 65 percent of our guests were coming from a market closer than we originally thought. We were shocked because we never imagined the vast majority of our guests were coming from so near. We opened a second location in the closer market on Feb 1, 2008 – the same day we kicked off our new professional loyalty system.
SmallBizLady: What direct results have you seen from the loyalty program? How do you know it works?
Misty Young: We did ZERO traditional advertising to open our second location. We ONLY reached out to our members. The place was packed from Day One and we’ve since opened three additional locations the same way. We had 750 members from the hand-built list whereas now we’ve got 107,179 members in 44,658 households.
We ONLY market to people we know, like and trust that happen to be the same people that know, like and trust us: our loyal guests.
SmallBizLady: You have a big loyalty database, but does it convert into actual money in the bank? How can you tell?
Misty Young: We professionalized our system years ago so everything is 100 percent trackable. As of yesterday, we’ve tracked $7,854,309.87 in sales directly attributed to database guest spending. We know how often they visit, what days they visit, exactly how much they spend and more. We strategically segment our database by spending and frequency so our offers will differ based on the data.
SmallBizLady: Well, you’re a restaurant company. Do you think a loyalty program will work for other kinds of businesses?
Misty Young: I don’t care if you’re a hospital – loyalty programs work. Why? Because people want to be treated in a special way. My orthodontist has a loyalty program. Businesses must connect with their customers. Loyalty programs do that for you.
How can you have relationships with people if you’re not collecting information?
What’s one of the very first things people do to get to know one another? They exchange names. It’s all about getting to know people and then serving them. Just like in social media, it can’t be all about selling.
SmallBizLady: How do you avoid coupon clippers?
Misty Young: First of all, we only give offers to people in our database and each offer has clearly defined terms and conditions. Our goal is for guests to automatically think “Squeeze In” when they think breakfast or lunch. We give motivating, high-value offers, but remember: we don’t print those in newspapers. To get Squeeze In offers, promotions, invitations, specials and more, you’ve got to opt-in to our loyalty program.
SmallBizLady: Logistically speaking, is it going to take all my time to run the loyalty program?
Misty Young: The real question should be, “Do you want to make money?” If you do, get a loyalty program. The single highest value activity you, as the owner of your business, can do is marketing. With loyalty, the most important thing you can do is believe in your program so your associates believe in it too. Assign an appropriate person on your team to manage, report, promote and grow your program.
SmallBizLady: How is loyalty marketing different from other direct mail or marketing strategies?
Misty Young: Loyalty becomes a one-on-one, relationship-building opportunity with the people who pay you. Current customers spend 67 percent more than new customers. Build up loyalty! It costs up to 10 times more money to acquire a new customer than it does to sell to an existing one! You end up becoming a welcome guest in your customer’s inbox – not an annoying pest – when people voluntarily OPT IN to receive your marketing.
SmallBizLady: What do you actually do with your loyalty program? How does it work on a day-to-day basis?
Misty Young: We track sales and visit frequency and then assign point values for purchases to award/reward guests. We build our database constantly and daily. Without one, we’re just a restaurant, but with one, we’re a marketing machine.
We recognize guest birthdays, anniversaries, six-month membership anniversaries and purchases.
SmallBizLady: What are some other ways you’ve leveraged your database?
Misty Young: Most notably, we’ve used it to raise money. Through special sales to our best members, we’ve raised over $150k towards new restaurants. We also host quarterly special VIP parties where everything is free. The food, wine, beer, gifts, swag and raffles – all free! We also send totally personal, hand written “thank you” cards and appreciation letters to our loyal customers. When opening a new location, we feed our database through geo-mapping software to build where we already have a guest base.
SmallBizLady: What do I do next if I want to have a loyalty program?
Misty Young: START IMMEDIATELY. Quit wasting time. Start collecting information from those that pay you. You don’t have to know every detail to get started, just take a step right away by making a data collection form. Visit www.mistyyoung.com to get a FREE $5,000 marketing jumpstart loyalty program – the same one we use at Squeeze In locations. Make the program about your guest / client / patient / patron. Love your loyalty program and believe in your program. Perception is reality. If you think it’s terrible, it’s terrible. Belief comes from YOU!
If you found this interview helpful, join us on Wednesdays 8-9 pm ET; follow @SmallBizChat on Twitter. Here’s how to participate in #SmallBizChat: http://bit.ly/S797e. For more tips on how start or grow your small business subscribe to Melinda Emerson’s blog http://www.succeedasyourownboss.com.