By Rich Harshaw

(part two of a trilogy)

[Did you miss Episode 1?]

A long time ago, in a galaxy far, far away . . .

DONUT WARS

It is a period of local donut warfare. Korean donut shops, striking on shoestring budgets, have won their first victory against the evil Krispy Kreme Empire. During the battle, a rebel marketing guru has managed to create a secret plan to destroy the Empire's ultimate weapon, their BRAND EQUITY, an armored-like weapon with enough power to destroy an entire industry. Oblivious to the lurking threat, the Evil Empire fails to recognize that MYM is the custodian of secret plans that can save the Koreans' shops and restore competition to the area.

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EPISODE 2: THE MARKETING WARS

Now that we've got some branding in place (in Episode 1) and are open for business, it's time to get some customers. But in building our donut business for the long term, what's even more important than getting customers is building a database of customers that we can continue to market to for years to come. This is the downfall of almost every local business on the planet -- they allow customers to haphazardly wander in and spend five or ten bucks... but never attempt to capture those customers' contact information so they can pro-actively woo them back later. They're perpetual "one shot" sellers. For our plan to defeat Krispy Kreme to have half a prayer of working, we have to immediately begin gathering names, emails, and cell phone numbers (for text messaging) of as many people as possible -- customers and prospects alike.

Gathering Customer Contact Information: The first thing should be obvious, but nobody does it. We're going to ask the walk-in customers to give us their contact information. Here's how the plan works:

First, we'll print up some professional-looking cards with a space for each customer to write his name, address, cell phone number and email address. The cards, of course, are branded with our donut shop name, colors and logo, and the top of the card should read "FREE DONUT HOLES FOR LIFE." This is a little trick that plays on human nature... which is... people love to get free stuff. So instead of just giving away the free dozen donut holes to anyone, why not NOT give them to anyone unless they fork over their contact information first? If we were going to give the darn donut holes away anyway, let's get something in return -- a veritable pot of gold in the form of a customer list. The card should also ask a few questions, such as "My home is approximately ____ miles from here," and "My work is approximately ____ miles from here."

                            

When thecustomer has placed his order, we'll have the clerk hand him one of the cards to fill out. We don't want a stack of them sitting out so it looks like any schlep can fill it out as many times as they want. The cashier should pull it out from behind the counter. The customer should be informed that they'll get free dozen donut holes today for filling out the card, and free dozen donut holes every time they place an order in the future. The clerk should also let the customer know that we'll be emailing and texting free donut offers periodically -- and the notices will only go out to people who fill out this card. We should have a cash incentive to the clerks to make sure that they are proactively helping us build the most important asset our donut shop will own -- the customer list.

The next step is hopefully obvious too... we need to put the customers into a database so we can start to systematically contact them. We use a program like SmartTracks (www.smarttracks.net) that allows us put new customers into an "email track" which means that each customer will get the same set of offers at the same intervals. For instance, we want to send them an immediate email with an offer for something like "buy one dozen get one dozen free" as long as they return to the store within 7 days. This is important, because we want to get them back into the store as soon as possible to begin to develop a buying habit. We'll give up a bit of gross profit now and again to get them into the store. We won't always offer a free dozen with purchase of one, but to get them back in quickly this is a no brainer. Then we would set out a specific chain of emails to be delivered at specific intervals to each new customer. We'll talk more about what to send the customers via text and email later.

The 5 x 5 x 50 Plan: But first, let's look at some more ways to get more new customers. One good thing about running a donut shop is that if our advertising budget is low, we can print our own currency in the form of donuts. The hard cost of creating a $5.00 dozen of donuts is about a dollar (if you don't count sunk costs like the equipment itself and only count the cost of the donut ingredients). This means that instead of spending several hundred dollars on a goofy ad in the local paper that won't bring in nearly enough customers to pay for itself, we should invest our marketing dollars into free product distribution.

This is where the 5 x 5 x 50 plan comes into place. We're going to give away two boxes of free donuts to 5 COMPANIES a day, five days a week, for fifty weeks in a year. It's a very simple plan to execute -- all it requires is a few simple tools:

• List of Companies: Easily available from any list broker. Just ask for a list of all the companies/offices within a certain radius of the store -- say 2 miles. To last a year, we'll need a list of 1,250 companies. If there aren't that many, it doesn't matter -- we'll just go back 2 or 3 or 4 times to each office during the year.
• Calendars: Get a nice looking calendar printed up on 11 x 17 paper . . . we'd want to spend a little money on graphic design to make it look nice with our company colors and logo, and we'd want the calendar to be updated each month so it started with the current month. These can be printed from a digital printer for less than a dollar each.
• Free Donut Holes For Life Cards: The same cards we already talked about previously.
• Cool Looking Van: If we have any budget, let's get one of those cool-looking vans that has all the cool graphics on it. Naturally, the graphics would have our colors and logo and such on it. This van would be perfect to park outside our shop on the main road to attract attention while we weren't out delivering donuts.
• The Donuts: This is critical -- we want to make sure we are giving our signature donuts. One of the boxes should be a plain dozen, and the other should contain 3 Texas Giants and 3 each of the Mighty Mustang and Delectable Dragon donuts.

                           

To execute the plan, we'd need to choose 25 companies a week to visit, preferably geographically close together to minimize travel time. Each morning at about 8:30 send an employee to the five designated offices with the two boxes of donuts under one arm and a few calendars under the other and use this script:

"Good morning, my name is Tom from Texas' Best Donuts . . . we're right over on Highway 26 . . .  have you seen us there before? I'm here this morning on a goodwill mission bearing donuts for your office. Who would be the appropriate person for me to give our great tasting specialty donuts to?"

Once the proper person in the office was identified, the script would continue:

"With great pride I would like to present your office with these Texas' Best Donuts. As you can see here (opening the dozen regular box) I have here a dozen of our Texas' Best Glazed. I'm sure you'll find them to not only be delicious, but far more delicious than say, Krispy Kreme. And in this box, we have a sampling of our specialty donuts. This is our Texas Giant -- no need to explain how it got its name. And here we have our Mighty Mustang and Delectable Dragon donuts -- all three are available daily in our shop on Highway 26. You will also be excited to know that we can make donuts to match any company's corporate colors -- what are your colors? (Prospect says the colors; make a note!). As I leave these donuts with you, I only ask two small favors. First, I ask that you to hang these calendars on your walls to remind you all year long of delicious Texas Best Donuts. Second, I ask that you give me your business card so we can communicate our specials to you via email and text message. Anyone who gives me a card will be eligible for free donut holes for life. If you don't have a card, you can simply fill this out."

Who's not going to want free donuts for crying out loud? We could go on to explain how we have can deliver donuts to their office by simply going to our website and filling out an online order. We're not only building up a nice corporate prospect and customer list, we're also going to reap the rewards of reciprocity -- the immutable marketing principle that says when we give something to people (like free donuts) they're going to feel obligated to do something for us.

Lock In Long Term Sales: The problem with donuts is that people only buy them when the "feel like it" which isn't often enough. Instead of waiting for somebody to get the urge, why not put them on a subscription plan? We could do this with both individual customers and corporate customers. We could deliver two dozen donuts every other Saturday to a home or three dozen to an office every Tuesday morning. We could offer a discount on the subscription plan or free delivery in our cool van. Think about it this way -- if we put effort into this program and ultimately had 500 dozen donuts sold every month before we ever started, how would that affect our planning and sales?

Joint Ventures: Here's a good idea for any local retail business -- and particularly our donut shop. Let's leverage the customers of other companies to push our donuts. For example, we could approach the local banks and offer to deliver 10 dozen donuts to them every Thursday morning so they could offer "FREE Donut Thursday" to their customers. Naturally, they'd want to promote this to their customers, which would require them to spend their time and money to promote our product. We'd want to provide some signage and maybe even some advertisements they could use -- let's make it as easy as possible. They'd pay us for the donuts and garner the goodwill of their customers -- who would in turn become familiar with our product. What a deal! In addition to banks, we could do this with the auto repair place, the car washes, oil change places, salons, retail stores of all kinds, and basically anywhere that people have to wait or anywhere that has good foot traffic.

Consignments: Notice in the above scenarios we didn't list any places that sell food -- convenience stores, grocery stores, restaurants. That's because these places wouldn't want to give out free donuts since it would take away from the stuff they're already trying to sell. With these food-related businesses, we'd want to create a consignment deal where they actually SELL our product to their customers. Naturally, we'll have to sell at wholesale so they can make a good profit on our goods, but what a great way to get our product in front of thousands of additional customers every day -- Krispy Kreme already does this -- we'd just need to go in with a better pitch about being a local company . . . and you can bet that our signature donuts would give us a leg up.

Mailings To Businesses: Get a list of certain types of people or professions. It could be accountants or lawyers or retail stores. We can rent a list of CPA's in our area for just a few cents per name. Then we'll write them a letter that goes something like this:

Dear David,

I'm writing you this letter because you're a CPA.

My name is Bob Jones, owner of Texas' Best Donuts here in Grapevine. Every day for the rest of this month, I'm going to give a dozen donuts to any CPA who brings this letter into my shop.

My reason for being nice to CPA' s is actually pretty weird; ask me about it when you come in. Make sure you bring this letter with you.

I hope to see you soon!

Sincerely, Bob Jones, Owner

It's a great letter that will get people into the shop. My reason for being so nice to CPA's could be anything. My accountant saved me a lot of money last year, my best friend from college is a CPA. It could be anything. Who cares about the reason, just get them in there! After all the CPA's have taken me up on my offer, then I'd write the same letter to lawyers or executives or sales managers or anyone I could think of that might like donuts. Then of course we get them to fill out our card so we can start to hit them with emails and text messages.

                           

Email And Text Messages: Okay, so we've been gathering up all these contacts -- now what? Get them back into the store (or to order deliver or a subscription) by continually communicating with them! We want to give them all "donut brain" where they are constantly reminded of donuts. The idea is to keep them involved and entertained. A few examples of email/text messages might include:

• Name Game: Free donuts each day of the month for people with initials that match certain days. For instance, if your last name starts with A, you get a free donut on the 1st day of the month; B on the 2nd, etc.
• Special Donuts: For holidays, seasons, events, and so forth. For instance, we could make pink and red donuts for Valentine's Day and email a picture to our database.
• Peripheral FREE: Offer a free coffee or other drink when they come in and buy a certain amount of donuts.
• Riddles & Puzzles: Create riddles and offer free donuts for anyone who can solve them. You could also offer Sudokus, crosswords, or other kinds of puzzles. This would get people engaged -- and give them a reward. You could post the riddles or puzzles on the website.
• Contests: Have people write "why I hate my boss" or "why I love my boss" or "why I love Grapevine" or anything else topical and relevant.
• I Spy: In that calendar you gave them, put a few hidden objects. Then email your database and ask them to find the object -- and they'll win a free prize.
• Celebrity Gossip: This will get the women involved big time -- have a celebrity quiz on your website that people can take to earn donut points.
• Sports IQ: The same thing for the sports fans out there. Remember, the key is to keep sending stuff to people that they'll actually take time to get involved with. Not just "hey we're the donut shop bugging you again."

Okay, so now we have a plan to get new customers and build and nurture our database. Now it's time to go for the big blow to Krispy Kreme. Continue on to read Episode 3: The Kill Shot.

                           

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