Visible Results News - Article

HADDAD GROUP PLEASED BY CHANGING FACE OF CARD PROGRAM - 13 January 2003 - www.nrn.com

Multiconcept operator Haddad Restaurant Group Inc., based here, never would say it wrote the book on customer-relationship management and gift-card strategies, but it rightfully can claim to be rewriting it on a regular basis thanks to emerging technology. For about 18 months Haddad Group has been using rewritable loyalty and gift-card systems from Visible Results USA at four Kansas City-area Fred P. Ott's Bar & Grill casual-dining restaurants. The systems from Kansas City-based Visible Results feature a stand-alone card reader-writer that updates and stores card users' information after each transaction and writes changes to a magnetic strip on the back of the loyalty or gift card. That function creates what amounts to a portable, self-contained transaction database. Moreover, Visible Results' thermochromic process enables the front of the cards to display the user's loyalty program point total or remaining gift balance after each transaction, along with regularly changing marketing or promotional messages created by the restaurant operator. "Our average check at Fred P. Ott's is $15, full day, but card users spend noticeably more . . . several dollars more," Haddad's director of marketing, Bruce Campbell, said. "We believe the way to go right now is to take care of customers who want to be here, to get them to come back a little more often and spend a little more while they are here." More than 1,400 customers now carry "Ott Cards" to accumulate points good for a $5 credit after each $100 in purchases, Campbell said. Card users receive promotional messages and have a shot at enjoying "Random Acts of Kindness" gifts, such as logo-festooned hats or free food. In 2003 the chain intends to give out more free samples of new menu items to generate customer feedback and increased trial. Campbell said there is a "wow" factor in terms of guest reactions to the rewritable-card technology, but he acknowledged that "it took a little time" for that "buzz" to get established, as some customers were slow to notice that messages change and point totals are updated visibly. In 2002 the messages uploaded by the card writer changed about every six weeks and alerted guests to such things as live music schedules, karaoke nights or offers of "double [loyalty] points" on slower days of the week. "We were not really strong on gift certificates" in the past, Campbell said. "Over the past year [gift card sales have] really accelerated through the use of this." Because Visible Results' technology also permits Fred P. Ott's restaurants to show the updated balance on gift cards after each purchase, the small chain no longer gives cash back when purchases are below the premiums' face value. Campbell said policy change would ensure that the chain benefits fully from gift-card sales and would not serve more as a bank than as a restaurant company. The new policy also gives gift recipients an incentive to return to a Fred P. Ott's to spend any balances remaining after their initial visits. The ability of the rewritable technology to add value to a gift card after it has been issued or its stored-dollar value is exhausted has prompted some people, such as the parents of college students, to use it as they might a debit card, Campbell said. He noted that the chain has been able to convert some gift-card users into loyalty program participants. Visible Results indicated that gift-card and loyalty-card users accounted for about 9 percent of total monthly sales at the Fred P. Ott's group by the end of last year. Haddad recently installed the gift and loyalty system in its Figlio, The Italian Restaurant and plans to do the same soon at its Ribster's barbecue concept. "This [technology] does what it says it does," Campbell said. "You [card users] are not waiting until the end of the month for a statement to see your points' total because that information is in your wallet and it's a done deal." Visible Results USA is a division of the Visible Results Group of Cos. of Auckland, New Zealand. Campbell said the vendor provides a "ton of reports" generated by its technology and had supplied very good support for employee training and the creation of effective customer-relationship-management programs. Though he declined to discuss the specific terms of his agreement with Visible Results, he said he is paying for all hardware, software and services. Brandi Dixon, vice president of Visible Results USA, said that because her company offers more than 20 different services to clients, setup fees and monthly charges can vary greatly by client. Typically, she said, setup charges run $2,000 and up, and ongoing fees run $229 or higher per site per month. Through its use of rewriteable loyalty cards, Haddad Restaurant Group can customize promotional messages by restaurant and, if necessary, alter promotions on the fly if the response rate is too low or too high and "we're getting killed," Campbell pointed out. For a relatively small restaurant group like Haddad Group, with about 40 units spread across several concepts, the stand-alone nature of the card system is not a major concern, Campbell said. "You can set it up about anywhere where you have electricity and a phone line," he added. Seattle-based dinnerhouse operator Restaurants Unlimited recently began a three-unit test of the loyalty-card technology in Hawaii, Visible Results sources said