Twitter Proves Its Worth as a Killer App for Local Businesses

All those brands trying to figure the ROI of Twitter? They might do well to follow the lead of the local pizza joint.

Naked Pizza, a New Orleans healthful-pizza shop that's hoping to go national -- Mark Cuban is a backer -- has been marketing itself via the microblogging service. And recently it has started to track Twitter-spurred sales at the register. In a test run April 23, an exclusive-to-Twitter promotion brought in 15% of the day's business.

"Every phone call was tracked, every order was measured by where it came from, and it told us very quickly that Twitter is useful," said Jeff Leach, the restaurant's co-founder. "Sure, there's the brand marketing and getting-to-know-you stuff. ... But we wanted to know: Can it make the cash register ring?"

Mr. Leach is one of many small businesses using Twitter as a marketing tool -- and his group could turn out to be a lucrative market for the fast-growing site if other local entrepreneurs have similar experiences.

Twitter's real-time messaging service is turning out to be a boon to local establishments, who are starting to get onboard -- mostly because the message pops into users' Twitter feeds and they're close enough to act on it. For Mr. Leach, who is targeting people within a three-mile radius of his store, that's key. He's gone so far as to erect a billboard outside his store publicizing Naked Pizza's Twitter handle (which got him written up in TechCrunch). After that, Twitter contacted him; he's going to be working with the company to beta test some applications for small businesses.

Low barrier to entry
Twitter has a golden trait that appeals to small businesses: It's easy.

"It's simpler than a blog, than setting up a Facebook or MySpace page," said Greg Sterling, principal of Sterling Market Intelligence, which specializes in the local-marketing sector. "It's very much like e-mail. And e-mail, from small-business standpoint, has been one of the most effective marketing tools." The social nature of it is also appealing: Consumers are already using Twitter as a question-and-answer recommendation service and to forward ("retweet") messages they receive from brands.

Michael Farah, founder and CEO of Berry Chill, a yogurt shop with three Chicago locations, has been using Twitter to send out "Sweet Tweets" -- promos that require users to show they're Twitter followers of the store. In a month, he's logged 700 followers and, he said, "sweet tweets" haven't diminished his daily sales.

"Our last big promotion we gave away 1,100 yogurts -- $5,500 worth of product -- but sales were the same as the day before," he said. "The people who were existing customers standing in line attracted people who hadn't tried it."

Add the location-based technology nearly every mobile device will soon have, and many say it'll really earn its keep as a killer local app.

Potential
"The reality is Twitter's got all sorts of business models available to it," said Todd Chaffee, general partner at Institutional Venture Partners and a Twitter investor. "We're putting together monetization framework, things like features for commercial accounts, which could be for global companies all the way down to local companies." He said the business model will be largely driven by the creativity and needs of the businesses using it.

Naked Pizza's wish list includes analytics tools that help it understand the most effective times of the day or week to deliver promotional messages, much like an e-mail-marketing-services provider would, and other applications geared toward helping consumers find local offers. Mr. Leach, who spends up to $60,000 a year on direct mail and almost $2,500 a year on e-mail-marketing services, said he'd gladly pay a monthly fee for services like those.

In the next 90 days, he said, he's aiming to sign up 5,000 followers that have city of New Orleans as their location. As he puts it: "That's 5,000 people I don't have to mail a postcard to."

Five tips for local businesses looking to use Twitter

TRACK EVERY SALE. Sure, Twitter's relatively cheap, but you still want to know you're getting something for the human effort. Naked Pizza's point-of-sale system codes the origin of every order -- was it from a specific coupon or a box topper? -- which allowed it to calculate that a recent "Tweetie Pie" Twitter promotion, accounted for 15% of his shop's revenue on the day it ran.

TWITTER IS NOT FACEBOOK. Twitter is more immediate -- if a person doesn't check their Twitter feed for an hour she could easily miss the message. Berry Chill CEO Michael Farah uses Twitter for real-time communication ("Spotted: Justin Timberlake at Berry Chill!") and Facebook for longer-lead calls to action, like enlisting focus-group volunteers.

CREATE A CONVERSATION. Don't blast promotions incessantly. Intersperse them with other nuggets of wisdom or news related to your products and industry or neighborhood. Or, if you have a broader social mission, use Twitter to communicate that. Naked Pizza co-founder Jeff Leach suggests that if these kinds of social technologies become game changers, there may be a day when companies' initial business plans take into consideration whether they have anything worth microblogging.

SELL LAST-MINUTE INVENTORY. Twitter's immediacy is its biggest strength -- so use it to pump up business during lulls or discount last-minute unsold goods, said Zack Steven, co-founder of LocalTweeps, a local Twitter directory, who caught same-day discounted tickets at the Guthrie Theater in Minneapolis via Twitter.

ALERT FOLLOWERS WHEN YOU'RE ON THE GO. Venture capitalist Fred Wilson likes to point to KogiBBQ, a Korean taco truck that drives around Los Angeles, alerting its almost 20,000 followers to its current and future locations via a Twitter feed.