Advertiser ■ Old Chicago
Industry ■ Restaurant
Media used ■ Direct mail
Target group ■ N/A
Date ■ 2013
In order to identify target audience better, a US-based pizza chain Old Chicago conducted guest surveys and research. The data suggested that it was overlooking specific market, specifically guests who live in ZIP Codes where the average annual income ranged from $80,000 to $100,000.
Direct mail advertising with coupons was targeted at this specific group, but, surprisingly, it brought Old Chicago a drop in business despite a 10-12% redemption rate. The conclusion – the pizza chain was alienating its core customers - guests who live in ZIP Codes where the average annual income ranges from $60,000 to $90,000. Keeping these two demographic groups in mind, Old Chicago decided to run a test – they sent the same postcards with coupons (same creative, different redemption codes values) to both groups during the same period.
Based on the test's initial results, the food chain decided to primarily target the lower income guests from May until the end of the year. It refrained from including any other channels in the campaign. The campaign has resulted in an 8.5 to 10.9% redemption rate, and the company's direct mail efforts produced a 286% return on investment—surpassing its previous digital marketing and email initiatives.
Direct mail was used in this campaign for two reasons:
- Women have a greater probability to respond to direct mail, and they often make most of the decisions around dining,
- Old Chicago managed to stretch its marketing dollars for a longer period of time.
The case study also touches upon the choice of contact list for mail advertising. Whether to buy or grow a list organically depends on the type of audience a company is trying to reach. Whatever the marketing strategy, however, it’s always good to pursue both list expansion options if resources allow.