A RESTAURANT'S CUSTOMER PROFILE
Originally published in Pizza Today
A customer profile, if properly conducted, is literally a picture of your customers. The more that you know about your customers, the easier it is to pick good locations. Now you may say: "I know my customers, I don't need to do any of this." Well, let's see how much you really know.
How do you develop a customer profile? You interview a representative sample of your customers in your restaurant. Right away you are getting nervous. "Interview my customers! That is a whole lot of mickey mouse". Right? Not really! It can be very simple. First, however, let's look at the important elements and then review what to do.
What is a customer profile? Here are some items that are often included in a customer profile. They don't all have to be included; however they can be. Won't it be too long? No, not if the right physical situation exists (space at the entrance), and the interviewer knows what she is doing. Notice the SHE; that is because women usually make better interviewers than men. Simply stated, most people find women more acceptable when being interviewed.
-How often do my customers patronize my place?
-When did they make the decision?
-Who made the decision?
-Why do they come to my shop or order my Pizza?
-How many minutes did it take them to get here?
-Did the visit or the order originate at home,work, sopping or some place else?
-What are their ages?
-What are their incomes?
-Do they come or order as individuals, a group or as a family? -What pizza sizes do they usually order?
-What do they especially like about my food?
-Is there anything that they dislike?
-How can we encourage customers to come or order more often?
-Where else do my customers purchase pizza?
-How often do they eat my competitors pizza?
-Why do my customers choose my pizza over competitors? -How did the customers first become acquainted with my product or my place?
-What is my customer's occupation?
-What is the sex of my customers?
A sample questionnaire is presented in the box to the right. It is a formal approach to interviewing one's customers. Along with the questionnaire is an "age and income card". (Age is on one side of the card and income is on the other.) The card is used to encourage people to respond to questions that they might feel uncomfortable with. The card is handed to the respondent and then the person is asked to look at the card and tell the interviewer the LETTER which corresponds to their age and income. Using this approach usually will significantly improve the response rate to sensitive questions. If you can't see why age is a sensitive question, ask some older women their ages. After you overcome the lack of response, or perhaps a black eye, you will come to appreciate the benefits of the card.
There are other items that one might like to know; however, the above are the most common. By determining answers to these and other questions, an operator is armed with a bag of tools which will indicate the most significant characteristics of his or her pizza customers. However, by going one additional step, namely, determining the profile of the MOST FREQUENT CUSTOMER, the tools will be further honed to even more adequately assist in selecting primary areas for new locations.
For example, if the most frequent customers are between the ages of 20 and 35 and have incomes of between $30,000 and $40,000, then prospective areas which have similar characteristics will offer the best potential for new units. Also, these areas will usually offer better protection from new competition.
In addition to the profile of the most frequent customer, it is important to know where the customer originates his or her trip, or where the order originated from. This will establish a trading area for your unit or units. Moreover, in contrasting the area from which the most frequent customer originates vs. the trading area as a whole, you will better understand the primary trade area (area where the most frequent visitors originate) and see the differences quite clearly.
The detailed questionnaire may be more than some operators really need. However, it is usually the smallest operator who needs the most information because he or she faces the greatest RISK! A simpler approach for those with limited resources is to buy one or two spiral notebooks (spiral at the top) and write several questions on the back cover. (A sample of this is also provided in the box on the opposite page.) If adequately explained to the persons doing the interviewing, usually they will have it memorized in ten to fifteen minutes. Next the answers are simply recorded on the necessary lines; a line is skipped and the process begins again. Remember, it doesn't have to be pretty, simply accurate.
In a recent law suit in which one of my clients was involved, the Judge didn't understand the computer printouts presented by the defendants attorneys; however, he did understand very simple spiral notebooks and a large sheet with the results market out. (ie. IIII for each five responses) My client received a very large damage award because of the sales loss caused the defendants actions.
Also, for those of you whose customers call in their delivery orders, the questions can be asked over the phone.
Questions for the simple approach might include:
-How often do you come here for Pizza (or other items)?
-How many minutes did it take you to get here?
-Where did you come from? (home, work, shopping, other)
-What is you age?
-What are the closest major crossing streets to you Home or place of work?
-Would you please look at this card (hand the card to the respondent) and tell me which letter matches the total income of all working members of you family living at home?
There are different methods of interviewing one's customers. Let's look at them. Personal interviews are those which are usually undertaken in a Pizza restaurant or unit. Thus, the customers are interviewed as they leave the facility. In my opinion personal interviews are the best, since they can be better controlled. I would suggest, if possible, using professional interviews, instead of your own people. Your own people are paid by you, and therefore, will sometimes bias the survey either for you or against you, depending upon their attitudes. This isn't always the case, however it is usually wiser to use outside people who have some experience.
Most communities today have Market Research companies who do this kind of thing all the time. You can find them in the Yellow Pages under Market or Marketing Research. However, make sure to ask for and check their references. Hand-out interviews are usually handed to a customer as they enter a restaurant to eat, order or pick up on order. The host, hostess, waiter, waitress or counter person usually asks the customer if they will please fill out the questionnaire so that the restaurant can do a better job of meeting the customers needs.
Remember, that they will need a pencil or pen to complete the form. The customer should place the completed questionnaire in a "BOX" provided near the door or the cashier station upon leaving. The questionnaires should NOT be picked up by you or any employees. Thus the customer can remain anonymous and is more inclined to give honest answers to the questions.
Telephone interviews are often conducted with order customers if the facility is a pick-up unit. Additionally, if the unit is extremely busy, it may be impossible to interview the customers as they leave the facility. The questions can either be asked when the customer calls in or the customers can be called at another more convenient time. Remember, telephone interviews should usually be done at night or on weekends in order to get people at home. Also, questions regarding income are not as effective over the phone. Mail interviews are used when it is impossible or impractical to use one of the above. These are usually not as good because the return rate is often between 10 and 15 percent. Therefore, it is necessary to pass out a great deal in order to get a reasonable sample.
A sample of customers can be determined a number of ways. One can take customer counts, daily pizzas sold, sales or other measures of daily or weekly activity. From the data, a sample can be drawn which represents all of the customers. Rather than confuse you with a discussion of sampling techniques, simply take your information to a local college or university and find the Statistics or Marketing Research Professor. Explain what you are trying to do and he or she should be able to design a sample for you in an hour or two.
If that is impossible, interview as many of your customers as possible, with one or two people (depending upon you sales volume - $200,000 annually usually requires one person, while $500,000 and above usually requires two persons), over a period of one fairly typical week, (at the most two weeks in a seasonal or transient area). You will have more than enough for an adequate sample. (For you technical people, the sample will usually provide a 90 to 95 percent Confidence Level). If you are a highly seasonal shop, then it might be necessary to do it twice during the year in order to see the variations between the "locals and the visitors".
Let's examine a fairly typical PIZZA CUSTOMER PROFILE for free standing units in suburban locations.
FREQUENCY 33% Visit the unit once a week or more * 65% Visit the unit at least once a month * 10% are first time customers
AGE_ * OVERALL 65% in the 25-44 age category Average age - 34 years
MOST FREQUENT CUSTOMERS Majority in the 25-34 year old category
DRIVING TIME_* Average driving time - 11 minutes * Home - 10 minutes (50% of the customers) * Work - 9 minutes (20% of the customers) * Shopping - 13 minutes (15% of the customers)
* Most frequent customers - 8 minutes
TRADING AREA_* 70% within 3 miles * 30% beyond 3 miles * 90% within 3 miles for most frequent customers
INCOME_* Average income of all customers - $32,000 * 55% are in the $25,000 - $35,000 category * Most frequent customers average - $34,500
OCCUPATION_* Management, salesmen skilled workers and office workers *Skilled workers - Most frequent customer
REASON FOR VISIT_* Lunch - Good food and fast service * Dinner - Good Food * Late evening - Good Food primarily and atmosphere and friends *Most frequent visitor is the same
DECISION TIME_* 73% make the decision within two hours
CUSTOMER MIX_* 65% without children * 35% some children
From the above example we have the ammunition to identify areas which will have a better mix of potential customer characteristics. Moreover, we can select better locations.
If you know your customer profile, and more particularly that of your most frequent customer, then evaluating new opportunities is fairly simple. It requires that you study the characteristics of the resident population base and compare it to your frequent customer profile. Where you have a close match, you will have an area with more potential and one where additional competition will not have as great an impact.