Editor's Note: We'd like to thank the the photographer for this article: Darryl Malone of Winnepeg, Manitoba.

Competing against 127 pizzerias, many with several locations, is a stifling thought. Here’s a pizzeria that has doubled its sales since June 2004 through direct mail marketing, focusing on a healthy product and implementing new concepts like frozen pizzas, take-n-bake and pizza kits.

In the Winnepeg, Manitoba market, the volume sellers go for deep discounts with two-for-one, three-for-one and even four-for-one offers. By giving pizzas away, it’s hard to be profitable in a price war. With years of working for the big chains under their belts and false hopes of promotion, Diana and Pierre Coutu decided to branch out on their own with their delivery/carryout shop, Pizza Stop.

Getting Away From the Price War

Diana and Pierre soon tired of battling the price war. “Why were we thinking that we should sell our product for the lowest price and have a viable business?” Diana says. “We became active in looking for better answers for positioning ourselves and realized that a name change to something that better reflected our product, which is sell healthy, gourmet pizzas, was best.”

They switched the name to Diana’s Gourmet Pizzeria. The next challenge was to let customers know about the name change. They announced the name change in their December 2003 newsletter, which comes out once a month. “Over the next three months, we kept updating everyone through the newsletter and we also did box toppers. Whenever anyone called to place an order and would ask if they were calling Pizza Stop we’d say, ‘Yes, we’re still the same place, same friendly faces, same great pizza, just a new name to better reflect what we do.”

Marketing Wisely and Directly

Diana and Pierre have a phone book ad and a calendar ad, but the main focus of their marketing is centered on direct mail. “What we are finding is that so many things we have implemented are coming together now,” Diana says. “We’re finding that in the last two months, our sales are growing at such a rapid pace that we’re scrambling to keep up with them. We need to move into a larger location, which is a good problem to have.”

Direct mail is something Diana has been doing for a couple of years now, but she says she’s gotten better at it since they purchased their POS system back in June (they use Speedline POS). Diana continually tracks her offers with her POS system to see which offers are doing well and which need revamping.

Some of the promotions currently in place are a welcome letter to new customers, a birthday club, a referral program and a monthly mailed newsletter. Around the holidays, Diana developed some strategies to market gift certificates and to keep sales steady in the financially lean times of January.

Gaining New Customers

In October, she started a “New Customer Acquisition” strategy. This is basically an inexpensively produced welcome letter that she prints on purple paper so that it stands out from the rest of the ad mail. “The letter introduces Diana’s Gourmet Pizzeria and an offer to try us out,” Diana says. “It educates the customer on why we’re better than the competition. We push the fact that we use olive oil in our dough instead of canola, that our sauce is hand-blended and not out of the can and that we use only the finest meats and cheeses. It also gives them a money-back guarantee.” The letter also offers a free order of Parmesan sticks and free 2-liter Pepsi for buying a large pizza.

They first tested the letter in October with a “mini-batch” of 400 letters sent out through unaddressed ad mail. They got an 8 percent return on that batch and started mailing 2,000 every two weeks after that. The weeks the letters go out, they are gaining about 100 new customers. The weeks they don’t send it out they get about 30 to 50 new customers, Diana says. “We’ll start that again in January once the holidays are over,” she says. “The lowest we’ve returned is 6 percent; the highest is 9 percent. There’s also been residual. They’ve been expired for two weeks, and we are still getting calls asking if customers can still get the offer. We still recognize the promotion.”

Following Up On The Sale

The week after the new customers come in for their “purple letter offer,” Diana sends out a thank-you letter reiterating her devotion to the best quality pizza at “just a little bit more” than the competition. In her letter she says, “I want to give you and your family the finest, healthiest and tastiest pizza, and by charging just a little bit more—I’m able to give you a lot more.” She then explains the differences in her pizza by giving them positive reinforcement. The letter gives the customer a free order of cheesy sticks with a large pizza when they order a second time to encourage repeat business. Of the new customers gained from this “new customer acquisition strategy,” about 50 percent of the people redeeming the letters become regular customers, Pierre says.

Birthday Club

They also offer a VIP birthday club, which involves Diana mailing birthday cards to customers each month. The birthday reward is a buy-one, get-one free large pizza offer. She has collected birthdays a couple of different ways. One is through the monthly newsletter. It’s just a small ad that says, “Join my Birthday Club. C’mon, I’ll send you something special.” She also collects them from comment cards handed out with deliveries. The card has a spot for the customer’s birthday. She has a monthly drawing for $50 in gift certificates advertised on this card.

Referring Friends

They knew they had loyal customers, but wanted to get to these customers’ friends and family not ordering from them on a regular basis, too. They came up with a way to gain friends and family of through recommendations made by their best customers. First, they developed a list of those ordering at least once or twice a week, which came out to 125 names and addresses. Then they mailed a card to this list offering the customer’s friend a free pizza if they redeemed the card by May 14th. Twelve percent of the friends in this referral offer became regular customers. “We had two great customers who live in a cul-de-sac,” Pierre says. “Through this offer we were able to gain the other six households on that street as regular customers.”

Holiday Marketing

The most recent direct mail effort they’ve embarked on was sending out 1,000 Christmas cards with gift certificates to regular customers. The gift certificate is for $5 off any order. The card is aimed at encouraging customers to give gift certificates as gifts to their families and friends. Inside the card, Diana has given her customers ten reasons to buy her certificates.

Another marketing strategy they’ve tied to the holidays is a “no peeking” envelope. Each order comes with one of the sealed envelopes. The gist of the deal is that the customer is supposed to bring in the unopened envelope or give it to their driver between New Year’s Day and February 5th. Inside the envelope are gift certificates for everything from $5 to $50 gift certificate, six free cookies, or a free 2-liter Pepsi.

“This promotion is meant to be fun, and encourage people to come back in January, typically when the restaurant industry slows down,” Diana says. “We are hoping that we will maintain our December sales like we did in January 2004 with this offer.”

Monthly News

Diana’s biggest direct mail project is mailing a monthly newsletter called “The Pizza Press” to her regular customers. She fills customers in on things going on at the pizzeria and monthly special along with giving customers useful advice on things such as the importance of winter tires. She also uses the newsletter to make customers aware of community happenings and consumer issues such as the rising Canadian cheese prices.

The monthly newsletter usually features three coupons: one for three dollars off an order, a free order of Parmesan bread sticks or half off a second pizza. For December, Diana sent out a different offer: $7.47 off a second pizza. The average newsletter gives customers about $10 in discounts.

“It’s 40 Percent of  Our Pizza Sales!”

Diana’s whole-wheat pizza crust makes up 40 percent of all pizza sales. At first, they were throwing whole-wheat crusts away at night, Pierre says. Now, they are selling out of them on busy nights.

The whole-wheat crust is something they started four years ago. To get customers trying the new crust, they simply asked the customer when they ordered whether they would like a white or 100 percent whole-wheat crust. “We also gave it more space on our menu and featured it in our newsletter,” Diana says.

Diana has pushed the pizzeria as a healthy alternative to other pizzerias in her marketing. She offers eight types of crusts, four sauces, four cheeses and over 50 toppings. The best-selling cheese is low-fat mozzarella.

Frozen Pizzas

Frozen pizza is a multi-million dollar market in Canada. As you may or may not know, frozen pizza makers get a 30 percent discount on cheese. Diana and Pierre wanted to get in on this market segment, so they went through the permit process to get the discounted cheese. During the day, they have a staff member come in to make and bake shells, cool them and then assemble them. The pizzas are shrink wrapped with a heat sealer and heat gun, and then placed in pan racks in a freezer so there’s good air circulation. “We decided we could make a better tasting frozen pizza than those sold at the supermarket, so we did. It’s just another way to serve our customers a great pizza.”

Take-N-Bake

Take-n-bake is a concept that is just picking up in Canada, so Diana and Pierre decided to get in on it early to work out the kinks. They only offer take-n-bake in a 12-inch size. They don’t advertise it in their mailers yet, because they don’t want to overwhelm themselves. They are letting the demand build gradually. “We don’t push it a whole lot because our store is small,” Pierre says. “The profit margin is lower.” Just like the frozen pizzas, the take-n-bake is an evolving concept. You can find recipe for take-n-bake at www.pmq.com/cgi-bin/pizzacookbook/recipe.cgi and learn more about this concept in Big Dave Ostrander’s article at www.pmq.com/mag/2001summer/big_dave_ostrander.shtml.

Build Your Own Pizza at Home

Diana and Pierre are really in tune with the busy family. They offer pizza kits, dough patties and dough recipes to help every family create their own Italian meal at home. Diana says they started selling dough here and there, to customers who wanted to make their own pizzas and breadsticks at home. They took it a step further and started offering frozen or fresh shells, sauce, cheese and toppings—all the fixings for a pizza in a kit to take home. It’s similar to take-n-bake, but the toppings are sold a la carte.

“It’s been very popular,” Pierre says, “and it helps brand our product. Sure, customers will come in and only spend a few bucks on a couple of dough patties, but they’re familiar with us. We establish that relationship, and next time they come in they're spending $40 on a couple of large pizzas.”

Through an extensive direct mail marketing plan, Diana and Pierre have doubled their sales in less than a year. They are wisely working the kinks out of their newer products before they get a surging demand. They are really determined to focus on what they can handle and grow slowly. Like Diana said, “Needing a bigger location is a good problem to have.”

– PMQ –