HANDS-ON ACTIVITIES TO BUILD CUSTOMER LOYALTY
c.2013 New York Times News Service
Back in 2008, still early in the economic crisis, Butter Lane Cupcakes opened its doors in the East Village of Manhattan. With business slow, the co-founders, Pam Nelson, Maria Baugh and Linda Lea, decided they needed to try something different to get people into the shop, and they hit on the idea of offering classes in cupcake making.
At first, the classes attracted about four attendees, who paid $20 apiece to learn how to make a basic batter and frosting. “Through word-of-mouth, the classes started filling up and we were getting 10 people a night,” Nelson said. The owners expanded to the space next door and then decided to try a Groupon promotion offering half-price classes in the hopes of selling a few hundred coupons. They sold 9,000.
Even with the Groupon discount, Nelson said, the shop managed to make money on the classes. “That first seat is expensive,” she said, “because you are paying for the instructor, the room, the oven and utilities, but every seat after that, the marginal costs are lower, so you’re highly motivated to fill the room.”
Even without the discounts, she said, the room kept filling. “We held two or three classes a day and were sold out for five months, so we decided to make the classes into a whole other part of the business,” she said. The company’s overall revenue increased — it was about $1 million last year — and there is now a shop in Brooklyn, too. This year about 40 percent of Butter Lane’s revenue will come from classes.
Although it may seem counterintuitive for a cupcake seller to teach customers to make their own, Nelson said the classes actually increased sales of the store’s baked goods. “We’ve created experts who bring their friends in and explain how we use, for instance, real vanilla beans,” she said. Plus, she added, they have proprietary flavors that they do not teach in the classes. “What’s really wonderful is that once these people take a class, they feel they are a part of the brand,” she said. “They become our ambassadors.”
Small businesses are always looking for ways to get customers into their stores and onto their websites, but especially since the recession, many have started offering classes or holding events to lure in the curious, convert them to customers and build relationships. Steve Butcher, chief executive of Brown Paper Tickets, a company based in Seattle that provides online event registration and ticketing, said that since 2009 the company’s work with small businesses had grown 350 percent. “When we started in 2000, 3 to 5 percent of our clients were small businesses,” he said. “But in 2008, when the economy tanked, small businesses began to get much more creative.”
Now, as many as 30 percent of Brown Paper’s 15,000 monthly events — including guided river walks and hog-butchering classes — are sponsored by small businesses. The recession forced many of them to find new ways to make their brand resonate, said Jeffrey A. Carr, a professor of marketing and entrepreneurship at the Stern School of Business at New York University. “You can connect a brand to a product,” he said, “but branding today is a lot more about emotional attachment.”
In the last three years, Creative Kidstuff, a small chain of children’s toy stores in Minneapolis, has been using downtime in its party rooms to offer free prenatal and birthing classes as well as children’s music classes. The stores also hold events for families, like the Decorate Your Bike workshop on the Fourth of July and Fingerprint Memories, where children create a holiday-themed tile using their fingerprints. Two years ago, when the company began sponsoring a summer concert series, about 25 people attended the first, said Roberta Bonoff, the company’s chief executive: “This summer, we had 500 people.”
Although stores see a bump in traffic and sales during events, Bonoff said that was not the main benefit. In fact, she said her in-store sales had been flat the last few years (although online sales have been up 30 percent a year during that same period). “We really believe the benefit of these events is brand loyalty and exposure,” she said. “Babies are born every day. This is a way to acquire new customers who may not have heard about us.”
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The Woodinville Whiskey Co. in Woodinville, Wash., holds bottling parties, where customers bottle, label, cork and case whiskey. Their efforts are rewarded with a “bottling crew” T-shirt, a discount on anything they buy that night and dinner. Woodinville is a small-batch, handcrafted microdistillery founded by Orlin Sorensen and Brett Carlile. With 100 cases a night to bottle, the owners decided about two years ago to involve customers in their nightly ritual. Now they post the dates of parties on the company’s Facebook page weeks in advance; about 16 people can participate in each one. “Those spots fill up within six to eight minutes of the posting,” Sorensen said.
The parties build brand awareness and loyalty, he continued, which has helped increase off-site sales in retail and liquor stores as well as in restaurants. “Customers come for the experience and we get to meet them and learn about them,” he said. “And they have ownership over the brand, their hands are on it and in it. They see a bottle on a store shelf and think: Is that the bottle I bottled? That’s about as grass-roots as it gets.”
The company estimates 2013 sales will be $1.8 million. “It would be less expensive and easier to get a bottling line and hire people to do it,” Sorensen said. “But we would lose touch with our customers.”
Since 2008, Ben Cooley, owner of Bicycle Sport, in Charlotte, N.C., has had annual sales growth of 5 to 8 percent, but he noticed that sales of children’s bikes were falling. So he started holding events to teach children how to ride. He partnered with two nonprofits, Charlotte Area Bicycle Alliance and Trips for Kids Charlotte, and held the first training session in May and a second in June. Nearly 100 children and parents showed up in June. “We’ve had a good 20 or 30 people come into the store saying they attended the event and now junior needs a bike — and they need one, too,” Cooley said.
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Even when sales are good, classes and events can be helpful. Three years ago, John McDougall, owner of McDougall Interactive, a digital marketing firm in Danvers, Mass., with more than $2.5 million a year in revenue, began offering an annual, full-day seminar in Internet marketing. The seminars are an effort to establish the firm as a “thought leader” and to bring in potential clients.
“We share what we know and attract clients, because they learn what’s going on in the space and want to hire us,” McDougall said. The firm’s most recent seminar was held Nov. 6 at a local hotel and attracted 50 people who paid $100 to $200 each to attend. McDougall said he got half a dozen leads from it. Two of the firm’s biggest clients — a medical supply company and a bank — have attended the seminars.
At the heart of the classes and events is one common thread: human contact. “I think sometimes we forget how important it is to meet each other face-to-face,” Pam Nelson, a Butter Lane co-founder, said. “You can do a lot of marketing online, but this is a little like elections and politicians. When you shake a politician’s hand, it makes such an impact that you never forget it. And then you tell all your friends about it.”