The Power of All-You-Can-Eat Marketing
Sunday brunch at The Silo, a fine-dining restaurant in Greene, N.Y., is a belly-buster. For $17.95 per person, The Silo offers an all-you-can-eat spectacular, starting with Bloody Marys and champagne, then moving on to unlimited portions of eggs, bagels and lox, blintzes, seafood Newburg, corned beef hash, and a chef-carved meat station with roast beef, turkey and ham.
Did you make sure to leave some room for croissants, pastries, cakes, pies and fresh fruit?
The Silo is a great place for an old-fashioned hang-the-calories bender, but that form of marketing has taken root far beyond the buffet line in recent years. Our Achiever of the Year, Reed Hastings, is a testament to its power. Through Netflix and other streaming services, entire seasons of a TV series are uploaded on a single day, so viewers can soak up the storyline all at once (or at whatever pace they choose). Some end up like Carrie and Fred of the binge-worthy IFC comedy Portlandia—they lost their jobs and had their electricity turned off while addicted to a Battlestar Galactica box set. Now that’s meta.
As spending power grows among the millennial generation—so used to getting what they want, when they want it—sales models of this shape are expanding. Consumers can now join clubs that give them access (with some restrictions) to fleets of supercars and boats. They can pay for the right to hit as many golf balls as they want each month instead of buying by the bucket at the driving range. They can surf and stream endlessly with unlimited cellular data plans.
Would offering customers an all-you-can-eat experience work for your small business? Even if one is in place, maybe it can be tweaked to maximize revenue. Settle in for some perspectives on the binge marketing movement, along with the important lessons learned by a number of businesses that have already taken this approach.
The Weigh of the Future?
Even before Netflix became ubiquitous, TiVo and DVR services made bingeing a hugely popular avenue for consuming media. According to Nielsen, the TV ratings authority, 88 percent of Netflix subscribers (and 70 percent on Hulu Plus) say they stream three or more episodes of a TV show in one sitting. A recent Harris Poll shows that 82 percent of Americans binge-watch, with Dallas and San Francisco ranking as the “bingey-est” cities, where 88 percent admit to the habit.
There are pluses and minuses to this development for the media companies. Releasing a series all at once does create a lot of buzz but can backfire—big time. The best advice gleaned from the success of a show such as Amazon Prime’s critically acclaimed Transparent (or the failure of one, such as Netflix’s little-watched vampire diary, Hemlock Grove)is to consider all possible angles and unexpected costs.
That didn’t happen back in 2003, when Red Lobster President Edna Morris designed a promotion offering “all the hot, steaming snow crab legs you can eat.” It turned out that Florida State Seminoles quarterbacks aren’t the only Americans who crave these tasty crustaceans in volume. Some people requested more food as much as 30 times, and a rise in the price of the seafood compounded the disaster. “It wasn’t the second helping—it was the third one that hurt,” company Chairman Joe R. Lee said at the time. Red Lobster’s profits sank, and Morris was forced to walk the plank.
When you’ve stuffed yourself with 30 plates of crab legs, it may be a while before you’re in a claw-cracking mood again. Bill Carter, the former New York Times TV critic, is skeptical that binge marketing will work for the small screen for a similar reason—bingeing could lead to burnout. “When the seasons come out, they get a big burst of publicity, but it can’t be sustained. With regularly scheduled programs, there’s buzz every week as the shows are talked about, shared and become part of the national conversation.”
But Lorrie Thomas Ross, CEO of Web Marketing Therapy and author of The 36-Hour Course to Online Marketing, says that binge marketing makes sense because it reflects the impatient, want-it-now tenor of the times. “It gives the people who ooze love for you all they want,” she says. “Letting them consume and share on their own terms turns them into raging evangelists. People want to take it all in on their own terms, and the more brands that cater to that, the better.”
Freedom (Within Reason)
In some businesses, it’s important to set limits to the binge offerings. Sia Bani is president of Club Sportiva, founded in 2003, which gives members and renters kid-in-a-candy-store access to its fleet of 20 exotic cars—from a McLaren MP4-12C to an Aston Martin V-8 Vantage convertible—at four clubhouse locations in California. Car aficionados can get behind the wheel “without the hassles of ownership.”
But you can’t just join and rampage through the fleet at will. “We couldn’t take an all-you-can-eat approach unless we charged members $50,000 a month,” Bani says. “The miles would accumulate on the cars, they’d depreciate and break down—it would be a disaster.”
Instead, in an approach that has evolved over time, Club Sportiva members pay a one-time initiation fee of $1,500 and then monthly dues that start at $150 a month and rise much higher. Members buy points for $2,500, $5,000, $10,000 or $20,000—the more points you buy, the more you can use the supercars each month. Most joyrides are one-day affairs of 100 miles or less. It’s not as democratic as the buffet table, but it’s much more profitable.
Encouraging Big Appetites
Traditional loyalty programs share some similarities with binge marketing. Both are examples of up-selling. Customers are asked to buy more than they might otherwise want in order to get a good deal.
Many fast-food restaurants offer some form of “get one free” card, but at cosmetic giants Ulta and Kiehl’s, the sales staffs are even more engaged—shoppers are told they’re only one purchase away from a free sample package. At competitor Sephora, the staff actively promotes the “Beauty Insider Program,” which uses an exclusive card and points system to persuade customers to buy more than they planned.
The lesson here is that it’s not enough to simply offer a rewards program. Everybody does that. This kind of promotion works when the sales staff is committed to pushing it and only when it comes with incentives that people actually want.
For small businesses, all-you-can-eat strategies have to be approached carefully. They can become expensive. At The Silo, for instance, owner and chef Gary Kurz says his Sunday brunch isn’t attracting the crowds it once did, with 300 regulars in the late 1980s dropping to 100 to 125 today. That hurts because binge marketing is all about making profit through sheer customer volume in what can be a low-margin business. “It’s getting iffy,” says Kurz, who added that modern health consciousness may be taking the bloom off a more-is-more sales strategy. “There are days when it’s so slow we take a beating because of all the food we have to make,” he says.
Ever-fickle human nature is at play. “When the food is unlimited, people decide they’re going to eat all they can because that’s what they’re paying for,” Kurz says. “But then they say, ‘Oh, I don’t want to get the buffet because I can’t eat all that food.’ I try to convince them they don’t have to eat it all, just enough to get their money’s worth.”
Kurz could learn a lesson from IHOP, which has occasionally brought back its all-you-can-eat pancake deals in limited-time promotions. Customers tend to appreciate special deals more than they do longstanding regular offers.
Food for Thought
Taking the all-you-can-eat strategy to new heights in 2014 was the Olive Garden chain (a sister restaurant of Red Lobster, incidentally), which in the fall offered 1,000 Never-Ending Pasta Passes that, for $100, allowed customers to feast on all the pasta, salad, breadsticks and Coca-Cola products they wanted for seven weeks. The promotion sold out in just two hours, but the company made more passes available through social media.
One holder of a Golden Ticket worked out that the Olive Garden menu provided 180 “pastabilities,” and said he intended to eat all of them over the 49 days. Another carbivore was eating only takeout. Those stories fuel buzz, says Gail Oliver, a small-business marketing consultant. To her, the promotion was an example of a savvy company generating media interest and extra attention in the social sphere. “The Pasta Pass is quirky,” she says. “They created an exclusive club of 1,000 lucky pass holders. That plays well on Twitter, Tumblr and Facebook. Plus [the restaurant] is promoting its other pasta deals.”
What is binge marketing except permission for customers to consume your products or services at their leisure? With that idea in mind, try thinking outside the box to identify a sales proposition that would appeal to devil-may-care shoppers and clients.
Unique marketing approaches might include a year’s worth of unlimited (within reason) goods and services for a set fee. That’s how the hot trend of community-supported agriculture works. At Sport Hill Farm in Easton, Conn., members prepay for 20 weeks of farmer Patti Popp’s harvest. If regular pickups are a problem, Popp’s Cash-Crop Program allows people to pay an upfront bill and then shop whenever it is convenient until the payment is expended. To keep the public interested, she also runs a summer camp program, “meet the chickens” sessions, and a family-friendly “summer on the farm.”
Small businesses that might fit the binge marketing model include consulting firms or business coaches who can offer a year’s worth of unlimited advice for a set fee, rental companies that provide long-term (but not permanent) access to tools and other equipment, and yoga studios with a payment level that includes unlimited classes. Again, it’s important to consider all the angles, including contingencies for unexpected cost increases and economic downturns.
If you plan to offer something in unlimited (or only slightly limited) quantities, make sure it’s still profitable with a price increase. A good rule of thumb is to imagine the highest possible costs you might incur and then add 10 to 20 percent of profit margin.
Whether it’s a favorite TV show, a brunch buffet or whatever you might be selling, we know that Americans love to binge, and businesses large and small can take advantage of it.
Feel free to help yourself.
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No. 1: Resourcefulness.