For small quick-serve chains like Cinnabon with mall-, airport- and travel plaza-based locations, the recession has been especially tough with mall traffic and travel down.
Reaching its customers to try to bring them back into the mall also poses a challenge because Cinnabon has not only a limited advertising budget but also little success with traditional media.
"One, we're not big enough (with only 460 stores), and we're not regional either," said Cinnabon outgoing president Geoff Hill.
With only three to eight units per market, local radio and TV advertising is not cost effective like it is for fellow FOCUS Brands chain Moe's Southwest Grill, which may have 50 locations in a market, Hill said. And Cinnabon's products are typically an impulse buy, posing another challenge,
"People are not waking up in the morning and saying I'm going to the mall specifically to buy Cinnabon," Hill said.
Cinnabon had tried other approaches, including a few direct mail marketing campaigns. But Hill wasn't pleased with the coupon packet approach, in which a number of coupons from various retailers and restaurants are mailed to households in a particular zip code. He also wasn't thrilled with the typical 1 percent redemption rate.
But the company wanted a way to target small businesses and their employees near its mall locations. So Cinnabon presented its case to Money Mailer Direct Marketing to test a targeted direct mailing campaign. Money Mailer is owned by private equity firm Roark Capital Group, owner of FOCUS Brands.
Money Mailer developed a campaign similar to ones it had used for other restaurant clients, targeting small businesses within a two-mile radius of specific Cinnabon mall-based locations. The mailer was an 11-by-15-inch glossy postcard with 20 perforated coupons that could be posted in a central location at those businesses.
Cinnabon selected a cross section of 98 mall-based locations across the country based on a variety of demographics to test the campaign.
The coupon was mailed during the Christmas holiday shopping season, what Cinnabon traditionally refers to as its Jollybon season, and offered deals for its Cinnapacks.
Hill said Cinnabon liked the plan because the chain was the only brand featured and especially because it could spark action in potential customers.
"This was targeted to businesses that we wanted to reach right around the mall," he said.
"That was what was most appealing to us."
"That was what was most appealing to us."
Steve Gray, chief operating officer for Money Mailer, said his company felt confident that the campaign would have a successful redemption rate. Similar campaigns had proven that since the postcard has the potential to reach several people at once.
"We were trying to get out of the clutter during the timeframe and also trying to leverage any type of viral aspect that we could," Gray said. "Based on experience that we've had, we know that if we can target small businesses that there's some water cooler talk."
Gray said the targeted campaign had a 4.6 percent redemption rate, much higher than the 1 percent Hill was familiar with — and offered a 54 percent return on investment.
"Basically it was able to be used by many customers, and it was that enablement of having these 20 offers and targeted to these employees of these small businesses that enabled us to get a very large return on their investment," Gray said.
Cinnabon was so pleased with the results it is planning expanded targeted direct mail campaign, most likely after the first of the year to launch a new product that is now under development. The next campaign will be similar to the first, again focusing on small businesses around mall locations.
"It definitely worked," Hill said. "We didn't have a lot of money, we're not a huge footprint, so we can't really buy locally. And this was an opportunity to get to the audience that we wanted to get to and target them with just our message specifically to what we wanted to sell, which is why I think it was so effective for us."
