CONCLUSION

SMOKING AT JOE’S

By Michael Masterson

 

 

 

About two blocks from our office in Delray Beach, Florida, is a cigar shop called Cigar Connoisseur. Actually, it’s much more than a cigar shop. It’s a little bit of heaven for stressed-out executives, overworked tradesmen, and underappreciated high school teachers. It has a marble-topped bar with eight stools, a seating area with seven comfortable leather chairs, two café tables, and an outside patio that people use when it gets too crowded inside.

Which it does . . . often. It’s getting busier every week.

The owner, Joe Fiori, is a big man who wears jeans, Italian shoes, and very expensive watches. He started his first cigar shop in Wellington, Florida, about an hour northwest of here. That store became successful quickly, so he let his partner run it and opened up this one.

Everybody likes Joe. And it’s not just because he makes you feel at home. Cigar Connoisseur is the ultimate cigar haven. It’s stocked with every product and amenity a cigar smoker could hope for: a cozy environment, a great selection of wine and beer, world-class espresso, and a walk-in humidor that is as good as any in South Florida.

Cigar Connoisseur is also a place where you can listen to jazz on Friday evenings or attend a cigar or wine sampling on Saturday night. There is always some interesting event taking place at this little shop, and as a valued customer you are always invited. Cigar Connoisseur provides its customers with a pleasing combination of homey comfort and casino-styled entertainment on a small scale. And, yes, you can smoke inside.

That’s what I’m doing right now. Smoking a Padron Anniversario at the bar and typing out this final section of the book, looking for a way to sum up everything we’ve been talking about. Although many of the examples we used were from the information publishing industry, the principles and practices we showed you apply to almost any business. Even to a little retail business like Joe’s.

Cigar Connoisseur’s impressive growth is directly attributable to Joe’s belief in multi-channel marketing. A short conversation with him about how he started and grew his stores makes that very clear.

Joe executes a five-channel marketing program that combines joint-venture deals, radio and television advertising, and direct print and event marketing.

He buys space ads in upscale local magazines that offer him the chance to publish advertorials alongside the ads. When he launched each one of his stores, those ads promoted the grand opening as a special event featuring professional models, hand-rolled cigars, special discounts, and bonuses to those who came early. Then he backed up those print ads with local television and radio coverage that referred prospects to a web site that gave more details about the event and provided plenty of promises and benefits for coming on down to the opening.

Joe is well aware that he can get good (i.e., much better than advertised) rates on media buys. To track the results of his advertising, he directs people who respond to his various marketing efforts to separate online homepages, and uses that feedback to determine which time slots and media (stations and channels) work best.

When new customers arrive at his shop, Joe and his staff collect names and addresses and transfer them to a database that he subsequently uses to mail out promotions about upcoming special events and offers. (What he hasn’t been doing so far is collecting their e-mail addresses. But I’ll get to that in a minute.)

As for joint ventures, he partners with cigar manufacturers to give his customers great deals on cigars. And he teams up with luxury goods producers, as well as local businesses, to cross-promote products and services.

In the South Florida area, there are hundreds of cigar shops servicing local communities. Most of them are eking out a living. Many open and close within two years—the usual longevity for start-up retail enterprises. But a few do very well. And Joe’s two shops are at the top of the list.

CUSTOMER SERVICE JOE-STYLE

One evening last year, as Joe was closing the store, a car drove up and a man jumped out.

“Is it too late to buy a cigar?” he asked.
“It’s never too late,” Joe said. He unlocked the door and let the guy in.
“What’s that you’re smoking?” the man asked.
“It’s a Perdomo Silvio maduro,” Joe said.
“Good?”
“Yes it is.”
The man bought one. It was a $25 sale. He lit it up on the spot.
“Take your time,” Joe said. “Enjoy it.”

Joe lit up another cigar and sat down with the man and talked. Turns out he was a newcomer to town. Joe gave him the lay of the land, recommended restaurants, and asked him about his interests—golf, wine, work, and cigars.

“This is a damn good cigar, Joe,” the stranger said. “Got any boxes?”

As it happened, a shipment had just been delivered. Joe had six boxes in the humidor. Joe’s new customer took all six. Total sale: more than six thousand dollars.

“He’s been a great customer ever since,” Joe says. “Imagine if I had turned him away. How dumb a move would that have been?”

Ask Joe what the secret to his success is and he’ll tell you: “Success in business is really very simple. Get new customers in by smart marketing. And keep existing customers coming back by great customer service.”

PLAN FOR THE FUTURE

Joe is semiretired. He is living the entrepreneurial dream—making a great living doing what he would be happy to do for free. He doesn’t need to open up any more cigar shops, but he probably will if he can find capable people to run them. To continue his impressive success, he needs to keep on doing exactly what he’s been doing so far—developing new customers and then optimizing them with a coordinated multi-channel marketing approach.

The first rule of successful multi-channel marketing is to continue with what is already working—and in Joe’s case, the list of what’s working is impressive:

• Joint-venture marketing

• Event marketing

• Local radio advertising

• Local television advertising

• Direct-print advertising

• Direct mail to existing customers

 

Joe is already doing a great job. His business offers a unique and attractive product. His customer service is top notch. And his growth and marketing strategies have been very successful.

If I were advising Joe (not that he needs my advice), I’d recommend that he expand on his existing channels, and then add a few new channels to his already well-developed multi-channel marketing platform. He could probably rule out two channels that don’t make sense for a local, retail business: teleconferencing and social media marketing. But he should certainly explore telemarketing, direct e-mail marketing, and search engine marketing.

JOE’S EXISTING CHANNELS

Joint-venture marketing: Joe is an expert at using joint ventures to add value to both sides of his business: marketing and customer service. He should continue to make deals with cigar companies that are offering specials that would appeal to his customers. He should also continue to cross-market luxury goods that might interest his customers. These would include fine watches, wines, and other upscale products typically featured in cigar magazines.

Joe has had success promoting local businesses that are outside the normal scope of cigar magazine advertising. These include the Delray Beach film festival, a new upscale men’s barber, and a car detailing service. One very successful event he hosted this year involved a local spa. He arranged to have massage therapists from the spa give free shoulder rubs to his customers—and the house was packed. Joe’s customers enjoyed it. Joe sold lots of products. And the spa handed out free passes to qualified potential customers.

Event marketing: Again, this is a marketing channel Joe has nearly perfected. Right now, as I sit here in Cigar Connoisseur, Joe is advertising no fewer than three upcoming cigar promotions featuring live music, food, raffles (with prizes that include free trips to the Dominican Republic—another joint-venture relationship), professional models, and “great memories.” Also on the calendar is “Hookah Night,” featuring Middle Eastern music and a belly dancer.

Local television and radio advertising: Joe should continue placing short-form ads on local television and radio. These would promote his special events and special offers. Because the commercials would be event-specific, he would know which media worked (i.e., brought in enough new customers to pay for the advertising), and which didn’t.

Joe could compare the cost of each ad to the number of customers it brought in, multiplied by the estimated lifetime value of each. If, for example, a particular commercial cost him $1,600 and brought in eight people, he would be in the money so long as the average lifetime value of a customer is worth more than $200 to him. If Joe wanted to be conservative in rolling out with television and radio, he would cut the lifetime value in half for the purposes of his calculations. So, in this case, he’d need to bring in 16 customers from a particular ad before it would make sense to place another one with the same station.

Direct-print advertising: Joe would use that same arithmetic to roll out his direct-print advertising. To polish his existing programs, I’d advise him to read Chapter 8 of this book, and then allocate a reasonable budget (a week’s worth of sales would be reasonable) toward testing a variety of offers and copy approaches.

Direct-mail marketing: Currently, Joe uses the post office to notify customers of special events. For each event, he prints postcards that he sends to the mailing list he’s been compiling when customers make their first purchase in one of his stores. He should train his assistants to be vigilant about getting those addresses. These are potentially very valuable names (as Joe well knows). He should be sure he is getting every name possible.

He should also consider expanding his direct-mail efforts to generate new customers. It would be relatively easy for him to rent zip code-specific mailing lists and target promotions to affluent neighborhoods where his ideal prospects live. I’d also advise Joe to test other formats in addition to postcards. The efficiency of a postcard may be hard to beat, but he won’t know that until he tries other options. One format that begs to be tested is a personalized invitation that offers new prospects a can’t-say-no opportunity to enjoy his store.

NEW CHANNELS FOR JOE TO EXPLORE

Although Joe has implemented multiple channels, there are other marketing avenues that he can explore to make more money with his business.

 

Telemarketing: Although I would not usually recommend telemarketing for a retail business, Joe’s success in creating a friendly, at-home atmosphere means that his customers would be very responsive to a phone call now and then. With the right easy-going, low-key pitch, Joe and his assistants could bring his best customers to special events in greater numbers than he has likely achieved by any other means.

Direct e-mail marketing: This is a big opportunity for Joe. With his base of loyal customers, and given all the events and special promotions he runs, it would be easy for him to collect hundreds, if not thousands, of e-mail addresses. He could then publish a weekly “Newsletter from Joe,” in which he might talk about cigar industry news, recount stories he’s heard from customers, and talk about specials that are coming up at Cigar Connoisseur. Joe wouldn’t need to hire anyone to write his newsletter. He’s a natural. I’d advise him to write about whatever interests him, in his own words. And I’d recommend that he write regularly about the two business subjects he believes in most: marketing and customer service.

His marketing pieces would include editorial pieces that “sell” his core franchise—the pleasure of smoking good cigars and the fun of using all the accessories that cigar smokers buy. That would mean stories about new cigars that Joe likes, old cigars he still favors, cutters, lighters, ashtrays, humidors, and more. When a new product comes in, Joe should try it out. And if it meets his high standards, he should let his customers know about it, with enthusiasm and in detail.

Joe’s customer service pieces would include announcements about new products and services (which are, after all, products and services that his customers desire), as well as announcements about upcoming events (e.g., a special cigar or wine sampling where gifts are being given away), new policies (e.g., a free sampler pack of cigars for each box of cigars bought), and special services for new or existing customers.

I might even suggest that Joe create a VIP club of some sort, and tie it into the program he now has that includes a special lockbox for customers to store their cigars, a free magazine subscription, special discounts, and advance purchase opportunities.

What could Joe expect from adding such a comprehensive direct e-mail channel to his existing marketing and customer service efforts? Plenty. Think of it this way: Currently, Joe’s customers find out about most of these great benefits (opportunities to spend) when they walk into his store and talk to him or one of his assistants. But with an e-mail marketing program, Joe would be in charge. He wouldn’t have to wait for them to walk into his store. He could talk to them as often as he liked.

Joe estimates that his average customer comes into one of his stores eight times a month. That is 96 times a year that he has the chance to stimulate additional sales from them. By adding a direct e-mail channel to his efforts, Joe could contact them every day if he wanted to. What would happen to his sales if he increased his sales presentations by 280 percent? They’d skyrocket!

My bet: Joe’s sales will increase by 50 percent to 100 percent in his first year of direct e-mail marketing—and his cost would be a few hundred dollars plus the half-hour a day he would spend writing to his customers.

Search engine marketing. Joe’s new direct e-mail channel would have a huge impact on increasing the lifetime value of every customer that came into his store. Implementing an effective search engine marketing program would dramatically increase the number of new customers that would come through that door.

Search engine marketing is a great way to get prospective customers to “land” on your web site. As MaryEllen and I pointed out in Chapter 5, it is a way of drumming up business that might otherwise never take place. Search engine marketing includes four key techniques or operations:

1. Link building

2. Tagging

3. Pay-per-click (PPC) marketing

4. RSS/Syndication

But . . . before Joe can take advantage of search engine marketing, he has to clear up a red flag on his web site (www.cigarconnoisseur.net). That red flag is Flash. It’s a multimedia program that makes great-looking web sites, but the search engines can’t read any text that is in Flash. Which means that any keywords on the Cigar Connoisseur web site will be wasted in terms of its ranking in search results.

So Joe’s site managers should go back and do a redesign with a lot less Flash. Some Flash elements can be used, but any pertinent articles, links, and so on, should be in text and html. If a redesign is not possible, a quick fix could be for Joe to add a blog to his online presence that would be regularly updated with keyword-rich content.

To get the most response from his web site, Joe must make it engaging, informative, and sales-oriented. He will do this naturally by having the e-mails that he’s writing and sending to his customers posted on the web site. In addition to that, he should hire a local search engine optimization (SEO) specialist to work with his copy through tagging and link building—something Joe’s business can benefit from without a huge expenditure of time or money. Link building could be focused by trying to acquire links from local Chambers of Commerce, local clubs, Yellow Pages sites, and Google local listings, as well as local review sites such as Yelp.com.

He should also consider RSS and pay-per-click (PPC) marketing as his business expands. He will want to restrict these efforts to his local area since he is primarily a retail operation. But if the SEO expert he hires to do the link building and tagging is on his game, Joe can expect success in those areas as well.

THE ARITHMETIC OF JOE’S LONG-TERM MULTI-CHANNEL MARKETING PLAN

Legendary marketing expert Jay Abraham is famous for pointing out that there are only three ways to increase sales:

1. Increase the number of customers.

2. Increase the frequency of purchases.

3. Increase the amount of the average sale.

 

Creating a direct e-mail channel will increase both the frequency of purchases made in Joe’s shops and his average sale. Improving the performance of his web site through search engine marketing and optimization will increase the number of new customers he gets every month.

Here’s some math for Joe to consider. Assume that he currently services, on average, 100 customers per day. (These assumptions are invented. Joe’s actual numbers are higher.) And assume, further, that each customer spends $30 per day. Joe could easily double both the number of customers he services every day and double (more likely quadruple) the amount they will spend per year.

Increasing his daily traffic by 100 customers a day means 600 more per week or 30,000 more per year. At $60 per purchase, that equals $1.8 million a year in extra sales, plus another $900,000 in added lifetime value for existing customers. That’s a total of $2.7 million in sales per store. And because so much of that is the result of back-end marketing (which has a very high margin), Joe’s yearly profits would go through the roof.

WRAPPING THINGS UP

MaryEllen began this book with a story about buying a home. I ended with a look at a retail business that sells cigars. In between, we gave you lots of examples from the information publishing industry (because that’s what we know best), but we also provided dozens of examples from other types of businesses in many different industries.

The point is that the world of marketing in the twenty-first century is significantly and profoundly different than it was in the twentieth century. The big change happened in the late 1990s, and it has accelerated at warp speed ever since.

Today’s advertising world is bigger, freer, and more fluid than it ever was. The Internet has made the entire world every marketer’s oyster. It has made it possible to communicate with prospects and customers frequently and cheaply. Very cheaply. Because of that, nothing in marketing will ever be the same.

To be competitive today, we must embrace the sea change that technology has brought. We must accept the fact that we can’t control what we once controlled, though we can reach farther and further than we ever could have in the past.

More specifically, we must implement a multi-channel approach to all of our marketing efforts, giving priority to our core selling competence but, at the same time, taking advantage of other marketing channels to expand our customer base and deepen the relationships we develop with our customers.

Computer-, satellite-, media-, and Internet-related technologies have changed the way people shop in the twenty-first century. It stands to reason that marketers have to adjust to those changes by changing the way they market. To be successful, you now have to be a smarter, stronger, and more agile marketer than your twentieth-century counterpart. Adopting a multi-channel approach to marketing today will guarantee you a successful tomorrow.