Drive sales with LTOs
By Jeremy White, Editor in Chief

When you get into one of those sales funks and need to generate revenue quickly, consider marketing a "limited time offer" to your audience. Not only will you get your name out through advertising, you'll also give customers - new and old alike - a reason to visit your shop.

Limited time offers (LTOs) can be highly successful if you handle them properly. Before implementing one, however, you need to determine what you want to accomplish. You are going to spend time and money developing and marketing a new dish, so it would be foolish to rush into it without having clear objectives in mind.

Do you want the new item to provide a short, quick sales burst, or do you want it to offer a more steady, long-term benefit to your menu?

Some larger chains make their living by introducing new limited-time products every two to three months. Look at the industry's major players, for example. How many times have you seen Pizza Hut roll out an item "for a limited time only?" Often, the result is a spike in short-term sales. If the new item sells well at the cost of other menu items (known as cannibalization), the promotion is not effective. While it may have created interest or excitement, the offer failed to increase sales. When the LTO brings in new customers or encourages regular customers to order more frequently, now you have a winner on your hands.

The beauty of a LTO used in this manner is that its effectiveness is easy to measure. Either it drove sales or it did not. The books don't lie.

Others use LTOs as a way to test new items to see if they should join the menu full-time. This is perhaps more relevant to chain operations than independents due to the fact an indy can alter the menu as often as he'd like without much repercussion. Outside of menu printing costs, there are not many hassles to adding or deleting a specific item. Chains, on the other hand, have to wade through mountains of red tape and consider the effects of such a move on multiple locations in various regions before taking action. Plus, it costs a company like Domino's hundreds of thousands - sometimes millions of dollars - to develop and market new menu items. An independent, on the other hand, can formulate a new product for next to nothing.
With this in mind, let's take a brief look at implementing an LTO.

Sales Driver
There are given periods throughout the year that you know sales will be down. Maybe you're in a resort town and the crowds disappear after Labor Day. Or, perhaps your delivery business booms through the winter, but the guy up the street with great al fresco dining steals your customers every June.

How can a limited time offer help you? By creating excitement. Before you can settle on an item, though, you have to know your customers. What are their tastes? Are they adventurous? Do they order gourmet pies, or do they stick to the traditional sausage and pepperoni? Would they prefer a new pizza, or would they be more apt to spring for a new appetizer or entrée?

How do you get this information? Ask your customers. Use your servers or table surveys to find out what you need to know. Look at national and regional sales trends. Visit other restaurants in your area and see what they are doing.

Let's say you look at the national trends and notice chicken is booming in popularity. You already have a barbecue chicken pizza and its sales are fairly strong, so you're confident your customers will order chicken on pizza. Look at your other options. How about a pie with pesto sauce that features chicken and sun-dried tomatoes, or what about a Thai chicken pizza?

What's that? Your customers won't like pesto or curry on pizza? No problem. Look at your menu. What do you already have on hand that your customers like? Perhaps your fifth best-selling entrée is fettucini alfredo. You know your customers like the taste, so how about a "white pizza" with an alfredo sauce base? For toppings: chicken, broccoli, tomatoes, basil and mozzarella.

Okay, so you're thinking that sounds pretty good. Still, you aren't convinced your customers will buy it.
No problem. Introduce it as a limited time offer. If it takes off, you have a new hit. If not, you can go back to the drawing board.

After all, getting customer feedback is nice, but there's no truer test than seeing whether the consumer buys the product repeatedly. If a product sells well over a small period of time, say three months, it's then common practice to extend the offer's life another two to three months. If sales are then strong, you know the item belongs on the menu full-time.

Market It
If you are going to make use of a limited time offer, you must advertise it heavily. It does little good to add an item secretly or only support it through in-store advertising. A limited time offer is a marketing tool and must be viewed as such to be completely effective. So, assuming you've hit on the right product for your area, how do you market a LTO?

Remember, the key is to convey a sense of urgency. The offer, after all, is good "only for a limited time." The message you want to send to the customer is "Hurry in to try this before it's gone."

To accomplish this, it's usually best to flood the market with advertising for five or six weeks. Since frequency is the key to any marketing campaign, forget about expensive, full-page print ads or minute-long commercial spots. Instead, use a series of smaller ads - quarter-page ads in the local newspaper, for instance - and 15- and 30-second radio and local television spots to get your message across. And since you're offering your customers the opportunity to try a new food item, the ad should focus on the food. Sure, it's necessary to use your logo and slogan, etc., but the focus should be on the product. The ad does not have to be entertaining; it simply needs to be informative.

Let your customers know there's a new product available to them, show them what the product looks like and describe it succulently, and then let them know that they need to hurry in to your shop to try it out. The LTO likely won't take your business to a new level, but it should provide you with a short-term sales increase. If it does that and gets you through a down time, it has accomplished its mission.

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