Hands-On Activities to Build Customer Loyalty

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,” Ms. 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, Ms. 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, Ms. 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, Ms. 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 everyday. This is a way to acquire new customers who may not have heard about us.”

The Woodinville Whiskey Company 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,” Mr. Sorensen said.

Article source: http://www.nytimes.com/2013/11/28/business/smallbusiness/hands-on-activities-to-build-customer-loyalty.html?partner=rss&emc=rss