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Social Media Case Study: Houlihan's Restaurants

  |  June 4, 2010   |  Comments

How a casual dining chain feeds a hearty appetite for social media on a lean budget.

Natalie Bass has a big appetite for social media, though she's got a lean budget. Still, she's proving how a laser-sharp focus on customers at Houlihan's, a casual restaurant chain, can pay dividends.

"We're pretty small and nimble. Up until [four] weeks ago, I was a one-man show for our digital marketing efforts," said Bass, the restaurant chain's digital marketing manager. Last month, it brought in a contract worker to assist.

With 100 restaurants, Houlihan's competes with the likes of Applebee's, which has more than 2,000 restaurants, and T.G.I. Friday's, which has more than 900 restaurants - and presumably bigger marketing budgets.

Developing a digital marketing strategy at Houlihan's has meant making tough choices. Houlihan's did not plunge into developing a branded Facebook page or Twitter account - it just launched @houlihans and plans to roll out a national Houlihan's page on Facebook in the coming week. The company's initial social efforts centered on an invite-only online community, called HQ, established in January 2008. And a year later, Houlihan's expanded into mobile promotions with its Foody Call Club. Here's how Houlihan's approached each initiative:

HQ: Building Connections

Houlihan's decided to first establish a private social network, instead of an open one. That way it could offer exclusive invitations to tasting events and other member-only opportunities, rewarding loyal customers and conferring them with insider status.

Prospects for HQ membership are culled from Houlihan's traditional e-mail list, which is 200,000-people strong. By surveying members of its Email Club, Houlihan's identifies brand enthusiasts, loyal customers, and "social influencers" and invites them to join HQ.


click to enlarge

In all, 10,000 people are members of HQ, which runs on the Ning social network software platform. Of that number, about 200 to 250 are associated with 50 participating restaurants. By Bass's estimates, about 15 to 20 percent are considered active members. "We gauge that by hits to the HQ site (when an e-mail is sent asking for feedback, to do a survey, etc)," she said in a follow up e-mail to me. About 2,000 people typically respond to an e-mail requesting an action. Here are some objectives of HQ:

Reward brand advocates: HQ members are invited to special events, such as tasting new menu items, and other exclusive invitations. Events are typically planned for slower evenings like Tuesday, while HQ members are offered a discount of up to 50 percent off their meal. "We want to make our best customers feel special - so they feel empowered, so they hear about things first, tasting menu items or drinks before they go onto our menu," Bass said.

Generate buzz: As part of its recent "Sex in the City 2" promotion, HQ members were asked to spread the word about two initiatives: new drinks and Houlihan's Secret Gift Envelope program for customers that includes prizes that can be redeemed, from a free mini-dessert to a new shoe wardrobe. HQ members who spread the word got a chance to participate in a sweepstakes for a free trip to Las Vegas for the "Sex in the City 2" premiere. A total of 1,500 people responded to the call, according to Bass. "We estimate that...7,000 to 13,000 people heard about our newest promotion BECAUSE of an HQ member," she said in a follow-up e-mail.

Get business insights: "We have a ready-made focus group," Bass said. "That's something companies pay hundreds of thousands of dollars for." Houlihan's, for instance, posted a question on HQ, asking members what they thought about the kid's menu. Five hundred people responded within 48 hours. "The majority of people said, 'We want healthier options.' They may not order it, but they wanted options such as green beans instead of fries," Bass said. In response, Houlihan's is updating its menu so that kids meals do not automatically come with fries. Kids - or their parents - can choose green beans, mashed potatoes, or other options besides fries.

Build community: One HQ member, Arthur Misero, a.k.a. Art601, from Philadelphia, is so invested in the HQ community that he greets newcomers and sends birthday wishes to others in the community. Misero said in a telephone interview that he had been dining at Houlihan's as frequently as once a week up until the economic downturn. Now he visits once a month and takes advantage of the specials offered to HQ members.

HQ is also a place where foodies chime in on potential new offerings such as gourmet burgers, pictured below.

Target Millennials: Up to 25 percent of HQ invitations went to people ages 21 to 31 and are part of the so-called Millenials Generation. In contrast, Millenials account for a smaller portion of Houlihan's 200,000-member Email Club.

Foody Call: Timely, Location-Based Offers

Houlihan's mobile marketing efforts are built around quick hits: offers valid for a limited time. "It's a way to help drive business for slow periods. Maybe the weather's bad," Bass said, citing a reason for some promotions. By enabling each store general manager to send out the text, local offers can be made based on local considerations.

One day earlier this year, 11 of the Houlihan's stores had a surplus of lobster tails. Out went a text message alerting members of the Foody Call Club to get a free lobster tail with the purchase of an entree. Within a couple of hours, nearly all of the participating restaurants sold out of lobster tails.

To participate in Houlihan's Foody Call Club, customers must designate which one of the 45 participating restaurants they'd like to hear from via text message. Since its launch in May 2009, Foody Call has enrolled 30,000 people.

Takeaways for Marketers:

Don't overlook your e-mail marketing efforts. Houlihan's e-mail database of 200,000 people proved to be invaluable for the survey identifying loyal customers and social influencers invited to its HQ social community. What's more, Houlihan's continues to make building its e-mail list a priority. "Wanna freebie?" reads a message next to the Houlihan's comments form. A visitor who clicks that message is led to a sign-up form for Houlihan's e-mail club. In exchange for joining the e-mail club, participants are promised a free birthday entree and "swag."

Don't blast out the same message across e-mail and other channels. Houlihan's tries to take a fresh approach - and specialized messaging - for each channel or network.

Don't spread yourself too thin. "We have to pick and choose what we devote time and energy to," Bass said. For instance, Houlihan's ruled out building a presence on YouTube. "Video - it's a very time intensive investment," she said.

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ABOUT THE AUTHOR

Anna Maria Virzi

Anna Maria Virzi, ClickZ's executive editor from 2007 until 2012, covered Internet business and technology since 1996. She was on the launch team for Ziff Davis Media's Baseline and also worked at Forbes.com, Web Week, Internet World, and the Connecticut Post.

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