In this week’s episode, I get away from million dollar advertising agencies with slickly produced ad campaigns, and in the immortal words of the Doobie Brothers, I’m taking it to the streets.
You can either listen to this post via podcast:
Or read it as a blog post:
As an online marketer of ‘new media’ I’m always on the lookout for effective ways to use new technology, be it viral campaigns on social media sites or tapping into new platforms such as the iPhone. But sometimes the most effective marketing campaign is standing right in front of you every single day.
Let me explain.
As I approach my office in midtown Manhattan by walking up Sixth Avenue every day, just before I get to my building, there’s a man wearing a sandwich board advertising Michael’s Barbershop.
Like clockwork, morning noon and night, summer, winter, spring or fall, the gentleman sees his target, shuffles over, does a sort of half-lean, and extends a flier that tells where the barbershop is and promotes it’s $11 haircuts.
His expression rarely changes, and I’ve seen no emotion in his day-to-day existence, other than on New Years Eve when out of nowhere, he sported a pair of those oversized 2008 glasses that you get from a street vendor. That gave me a smile.
And while I never take one of the fliers, I go out of my way to smile and say ‘No thank you’ when he makes his offer.
But then, I got to thinking.
Because after all, what he’s doing is marketing.
So I started to apply the marketing metrics that I use in my day job to his situation, pointing out the flaws in his campaign and working the numbers:
1. He is violating SPAM rules.
Some days you’re just not in a good mood on the way to work. It’s a Monday, it’s too hot, the subway was packed, and you don’t want to deal with anyone. You just want to get to the office and start your day.
And here’s this guy, stepping into your path and offering you something that you really don’t want. Essentially, it’s STREET SPAM. The problem is
There’s no way to unsubscribe to the Street Spam Man!
I didn’t sign up for this! There’s no preference center for me to opt out! I didn’t even opt in in the first place! He is definitely not CAN-SPAM compliant.
2. Next, he’s not very efficient.
He’s giving the same offer to the same person every single day. It doesn’t matter if I never take the flier. He’s offering it to me anyway.
Am I insane to think he should remember me? Or do you think he just doesn’t care? Yes, I know he sees thousands of people. But if I saw the same person every single day on the street for 18 months straight, I’d like to think you’d get SOME level of recognition, no?
He’s not adapting his marketing program based on feedback.
Or does he wake up and think, oh boy, maybe today’s the day that Jim is going to take a flier.
3. He’s not very targeted.
It doesn’t matter if my hair is starting to get unruly, or if I’ve literally had my hair buzzed short 12 hours earlier. Street Spam Man thinks I need a haircut. I wonder if his take rate would go up if he really targeted people that actually needed a hair cut.
So after thinking about these things, now I was really intrigued.
I lingered outside his spot on the sidewalk during peak hours in the morning and at lunch to see what his ‘impression’ count was. To my amazement, my inexact method showed an average of 50 PEOPLE A MINUTE passing by. Since it was a barbershop catering to men, for the sake of argument lets cut it in half. That works out to 1500 people an hour, and lets assume he’s out there for 8 hours give or take, plus lunch and a few breaks. So the math comes out as follows:
Average people passing per minute: 50 people/minute
Target audience = men: 25 potential clients/minute
Size of audience per hour: 1,500 potential clients/hour
Number of hours worked: 8 hours
Size of audience per day: 12,000 potential clients/day
Minus 1 hour lunch + breaks: 10,000 POTENTIAL CLIENTS/DAY
Amazing. But I wasn’t done yet.
4. Determining Conversion Rate
I was intrigued as to whether this was a money-making marketing plan. It had to be, right? Why else would someone do this?
So last week I actually TOOK a flier from the Street Spam Man, giving him a hearty thank you. Sadly, his expression didn’t change. At lunch that day, my assistant Brandon and I made our way to the barbershop, which was not even half a block away.
I immediately saw their first challenge, the challenge of ANY business. Location. The shop was located on the second floor, dominated by a busy pizza shop at ground level. What’s more, even the tell-tale striped barbershop pole wasn’t helping, as it was located about 12 feet above ground level, and buried behind some signs.
I navigated the faceless hallway, trudged up a flight of worn stairs, hesitated, then opened the door to the shop.
I was instantly and frantically approached by an old school barber, who practically ran up to me sayingâ€¦
‘You need haircut? You’re next! Sit right down here! Sit right down!’
Even after living in New York for 7 years, I cringe at the over-aggressive hard sell.
When I told him I didn’t need a haircut, I just wanted to ask some questions, he was thoroughly, thoroughly confused. So he went back to his mantra,
‘Sit right here! We have seat for you!’
When he saw that his aggressive second effort wasn’t going to make me change my mind, namely because I was in no need of a haircut, he wandered off and steered me toward a younger, taller man who was quickly and efficiently snipping the locks from a smiling heavyset man in the chair.
I knew what I was in for, but pursued it anyway. If investigative journalism was really my calling, I’d have gone all-in and planned my interview around a haircut.
He eyed me up and down, never breaking his stride as his scissors chirped away, dangerously close to his client’s ears. The marketing guy in his crisp dress shirt, coming into his establishment but not paying for anything? His defenses were up.
Nonetheless, I pulled out the flier and engaged him in conversation. I told him how I saw his employee out there day after day, and assumed that it must be working, no? I said I was in marketing and was working on a story – he snapped back –
‘WHAT KIND OF STORY?’
I explained that I was curious how the numbers worked out, and at first he said that it didn’t really work. Ironically, he said ‘the computer’ is the best way to get people in there. That this was just a reminder to people walking by, so that “some day they need a haircut, they come in.”
Aha! So this was a branding exercise! I get it now.
But then he says, ‘that guy hands out about 1,000 a day!’ And that on average 1-2 people a day will come in with one.
I asked if the guy got paid on commission if someone brought one in, and he said something like: ‘Sure! I give him $2 bucks, then I slap him in the head and say, there’s your commission!’
The man sitting in the chair chuckled. I thanked him and left. I had my numbers.
5. Determining the Return on Investment
So lets do the math.
– Street Spam Man sees 50 people a minute, for an overall target of 10,000 men per day
– Barber guy says he hands out 1,000 a day, for a ‘physical click rate’ of 10%
– If 1-2 people come into the shop, that’s a conversion rate of .1% to .2%
So is it worth the money? At first glance, hardly. They are only charging $11 for their haircuts, and are bringing in only two additional customers per day:
Incremental revenue: $22/day
I didn’t ask what they paid the person overall, but lets assume 8 hours of work X the minimum wage of $7.15/hour in New York.
Additional payroll expenses: $64/day
However, because a haircut is a recurring expense, you have to think of the lifetime value of the customer. If those two customers come in just two more times the next time they need a haircut, now you have gross revenue of $66 and it’s paid for itself:
6. Break-even analysis
Cost of a haircut: $11
Number of haircuts to break even: 6
Their breakeven point is 3 haircuts for each of the two additional customers he brings in each day. Of course we’re simplifying by ignoring additional revenues such as tips, product purchases, and word-of-mouth advertising, and ignoring expenses such as overheard and supplies But if those customers come in once a month for a year? Now the numbers really start to add up.
7. Areas of improvement
1) Marketing materials. Michael’s Barber Shop is certainly saving costs by printing out black and white fliers. It looks like they print them on a laser printer, two fliers per 8 Â½ x 11 sheet, so it’s not costing them much. The flier is a little haphazard, and maybe a little outdated. It boldly says $11 for all cuts, but below that they charge an extra $1 for long hair. And flat tops? When was the last time you saw anyone with a flat top? And no offer for bringing in the coupon.
2) Customer service. While the attitude of the Street Spam Man and the barber probably isn’t hurting business, it’s definitely not helping. An occasional smile from the man on the street, and an engaging attitude from the owner – to someone that randomly walked into your store and said they wanted to write a story about your business no less – would go far to foster a positive experience.
#1 If something is working, competition will soon follow. Sure enough, the very next day, super assistant Brandon walked in and declared: The stakes have been raised! There was someone across the street – a semi-attractive woman without an attitude no less – that was handing out fliers for Rafael’s barbershop in the neighborhood. And their fliers were professionally produced. And in color. And had a coupon for $5 dollars off if you brought in the flier. Touche.
#2 The core marketing axioms always hold true.
* Location Location Location. There’s no substitute if you’re starting a retail business.
* No matter how good the marketing, you still need a good customer experience.
* Like the early days of the internet, go where the eyeballs are.
#3 And lastly, while I’m still going to smile and say no thank you to the Street Spam Man every day, and I have a greater appreciation and understanding of his business, I think I’m going to stick with my current hair cut location.
Parting thought:Â Fifty people pass that corner every minute, every single day. It makes ME want to grab a sandwich board and promote my podcast there.
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