How Much is Too Much? New Guest Column

Note from Peter: I’d like to welcome our newest Guest Columnist, Michael Shepherd, who you met last month when I interviewed him along with his “Perfecting Pizza” partner Siler Chapman. Together, they share their years of success in the pizza business as coaches and consultants for others who want to raise their game or even just get into the game of pizza. In this month’s column, Michael shares his insight about what it takes to keep a customer for life. As we often see here on Pizza Quest regarding the parallels between between pizza and our journeys of self-discovery, this is not only great pizza advice but, really, universal advice for the pursuit of a successful and meaningful life. I look forward to future contributions from Michael — welcome aboard! (Note: Michael can be reached at michael@perfectingpizza.com or via his website: www.perfectingpizza.com )

I don’t know why it happens, but it does. When we screw up a customer’s order, we always seem to do it to the same customer — over and over and over. Burn their pizza tonight, give them a free coupon for next time and, as fate will have it, you find yourself also burning the free pizza you gave them for torching their last one.

We pizzeria owners know that’s just the way it works. We laugh about it after the fact and swap stories with other operators, but it isn’t so funny at the time. Especially not for the customer. How can you explain this phenomenon to the average Joe who just wants his Saturday night pie, garlic knots, and 2-liter of Coke so he and his family can enjoy a movie? You can’t, and if you don’t handle it correctly, you will lose that regular customer for good.

So how do you handle this situation? First, you need to understand the value of that customer in revenue. If your average ticket is $25 and that customer orders weekly, you can expect about $1,300 in annual income from said customer. If your prime costs are 60%, you can expect a rough contribution of $520 after you pay for the food and pay the crew. $520 that could quickly disappear from the bottom line

How much should you give/invest in maintaining those annual sales of $1,300? Let’s look at it another way: how much would you be willing to spend on marketing to gain $1,300 in annual sales? Probably a lot more than you were considering investing in the retention of this one customer. I’d challenge you to consider spending much more on retention than you do on marketing. The old saying is that it costs ten times more to acquire a new customer than it costs to keep an existing customer. My experiences have proven that to be true.

So I say that the sky is the limit when saving a customer. Recovering from a mistake should always include (1) an apology, (2) making it right, and (3) making up for it. But sometimes that isn’t enough.

Let me tell you how I gained a customer for life and earned an unmeasurable amount of word of mouth:

Our community still has one of those quickly disappearing drive-in movie theaters. Food at the snack bar wasn’t the best and prices are high. It was a regular practice for customers to place a deferred pizza order on Friday and Saturday evenings around 8 pm and pick it up on the way to the movies. One Friday evening a regular customer popped in to pick up his order. As fate would have it, we didn’t make it. The order slipped through the cracks, and now I had an upset customer staring at me. One that had counted on us having his pizzas ready at 8 pm so his family could enjoy it while watching a movie. I recognized this customer and embarrassingly remembered that we routinely mess up his order. He was that guy. I apologized profusely, offering free remakes, free pizzas the next time, and a gift card. He didn’t want any of it; this was the last straw for him. He walked out, and I saw $1,300 in sales circling the drain, plus I felt terrible for ruining his night. I immediately told the crew to get the pizza in the oven anyway. I ran outside to see what he was driving, noted it, and ran back inside. I grabbed $50 in gift cards, a second, separate $20 gift card (to bribe the drive-in ticket-taker), pulled my car around front, and stood at the end of the oven with a hot bag ready and my running shoes on.

As soon as the lid shut on the pizza box, I stuffed it into the hot bag and sprinted to my car and made the six miles to the drive-in cinema in record time. As I pulled up to the ticket counter, I realized the owner of the theatre was working — bad news for me. The theatre doesn’t allow outside food. With the owner at the ticket counter, my plan to bribe the teenager collecting money with the $20 gift card was derailed. So, after several minutes of begging and pleading, I convinced the theatre owner to let me through. I tracked down the customer and surprised them with hot pizza, gift cards, and more apologies. The customer was both amazed, shocked, and a little freaked out. But I made their night, I gained their loyalty, and luckily we stopped screwing up his orders on a regular basis.

I never blinked an eye at bending over backward for a customer. It’s what separated me from my competitors. They would never consider doing this, but for me, it was just one of the many practices that took my $2,000 a week pizzeria to a $25,000 a week pizzeria with almost no advertising in a town of about 8,000.

You can reach Michael Shepherd at: michael@perfectingpizza.com