THERE is a very wise saying about advertising: half of it is wasted, but it's impossible to know which half.
Behind that axiom lies the importance of accurate and cost-effective targeting of marketing effort. Getting it right means not only do you win business, but financial waste is dramatically cut.
The more traditional route of advertising in newspapers seems to be losing popularity with hotels and restaurants as circulation continues to drop. Such advertising, while regional, is still a poorly targeted scatter-gun technique, whereby you pay to reach people with little or no interest in your product as well as those who are.
Hardly surprising, then, that the rising star of marketing in the hotel and restaurant business is the direct mailshot, which targets past or potential customers gleaned from your own database. Costs are comparable with local newspaper advertising, but response is far superior in both quality and quantity.
Direct marketing works particularly well for small businesses with very tight marketing budgets, but it is equally popular with the largest and grandest. Forte has its newsletters, as does the Savoy Group. The production may be much more lavish than the country restaurant, but the aim is the same - to communicate with its customers.
Spindlewood Country House hotel and restaurant at Wadhurst, East Sussex, is privately owned by the Fitzsimmons family. Robert Fitzsimmons is quite clear on why the hotel has an active direct mail scheme and has all but dropped newspaper advertising: "That's throwing money at an undefinable market and you usually miss what you are aiming at," he says.
The Spindlewood has a very low-cost production, but mails out at least eight times a year, "more if things go quiet and we want to boost business".
The mailing is put together as a personalised letter on the hotel's word processor, then photocopied on to hotel notepaper and individually signed. "We do it as a chat with a friend rather than a hard sell; the hard sell can be dumped without being read. Our letters are kept by customers; they will ask us about things years later."
Fitzsimmons often puts the letter in a plain envelope rather than hotel stationery to prevent it being thrown away unopened, dismissed as just another circular. "They might still throw it away, but at least they have opened it."
Appleby Manor, at Appleby-in-Westmorland, Cumbria, always includes a special offer incentive in its newsletters. Its current winter newsletter offers a 10% discount off the bill on production of a voucher sent with the newsletter and the chance to win bottles of whisky through an easy postal competition.
Managing partner Nick Swinscoe says he only sends out one newsletter a year, in December. "It saves us having to send out a Christmas card and it comes at a time of year when people are thinking about holidays." A discount offer last year of £9 per night per room drew a 60% take-up.
The Swan Diplomat at Streatley-on-Thames, Berkshire, has an eight-page glossy newsletter with a 10,000 print run, designed to reach every area of the hotel's business. It is hugely expensive, with a print cost alone of £7,000, but sales and marketing manager Janie Coppen-Gardner explains that many of the hotel's customers receive so many newsletters that quality is important.
The newsletter is also used as a means of fine-tuning the hotel database. A reader response card stapled into the newsletter invites readers to send for details of specific events or areas of business they are interested in, such as weekend breaks or conferences.
Respondents go into a prize draw for a free weekend for two, but everyone who replies has their preferences noted on the database so they can be separately mailed at any time with additional information. Coppen-Gardner says the response is impressive: "From each newsletter we're getting more than 2,000 replies. There's obviously an element of responding just to be put into the draw, but we do know our database is giving us more accurate information."
Francis Young, proprietor of the Pear Tree at Purton, near Swindon, switched to publishing his latest hotel newsletter in the form of a quiz with unlimited numbers of prizes for correct entries. "When we talked to customers about the newsletter it turned out that they weren't reading beyond the first couple of lines. We wanted a way to persuade them to read it all."
There are 18 positive statements about the hotel and its restaurant, but three of them are false. Customers can put up to three ticks against statements they think are false. One correct tick earns a bottle of wine on the next visit, two correct ticks gets a Pear Tree sweatshirt and anyone spotting all three false statements wins a complete dinner and overnight package for two.
The print run was just 200, but it went to key business customers in the Swindon area. "We picked out people we knew would bring us business. We got 150 replies and paid out 30 prizes. I think that was a phenomenal response," says Young.
Headlines is the annual newsletter from the Headlands hotel, Newquay, which draws most of its business from tourism. A two-colour single sheet of A4 printed on both sides, it is mailed out to 6,000 past customers. In the current copy, proprietor Carolyn Armstrong asked for comments on whether to impose a strict dress policy in the dining room after complaints about scruffy diners.
She was amazed at the level of response: "We must have had 300 letters from past customers giving their views. The majority said we should have a dress standard and enforce it, so we will. There'll be no jeans, trainers and shell-suits at dinner this year."
The importance of the newsletter in marketing is now being upgraded, at the same time as the Headlands hotel is making a significant reduction in Sunday newspaper advertising upon which it has relied heavily in the past.
Plymouth Moat House in Devonproduces a four-page, full-colour, A4 newsletter specifically for the conference and convention market. General manager Andrew Huckerby is a firm believer in tightly focused marketing, and the newsletter is both written and sent specifically to those in the conference booking market. Leisure and local businesses get quite separate newsletters.
Huckerby says this segmentation makes sense in a hotel which has a wide business mix. He also believes it enhances the response. "We send out about 1,000 to named conference buyers and the response rate for firm enquiries is probably around 15%. We had visits from more than 50 significant conference buyers last year as a result of the newsletter. It is an important part of our marketing package for conference and convention business."
The cost of postage is the bugbear of direct marketing, but it isn't necessary if your customer base is local. Tim Smith, manager of the Old Crown pub in Gloucester, has a four-page, black and white, A4 newsletter called the Tipsy Tiara which is displayed for pick-up in local offices, hairdressing salons, dentists' and doctors' surgeries, as well as in the pub itself.
A substantial number of the 1,600 printed are also inserted in Sunday newspapers by a friendly local newsagent who makes no charge. Print costs are a remarkably low £40, done by two enthusiastic regulars at the pub who also happen to be in the printing business.
Smith has no doubt that the newsletter concept has a good potential for pubs: "This business is tough and anything you can do to help business has got to be good." o