Most businesses start off building their success on one or two key products, or a signature service.
But eventually, all businesses need to expand their product line to take things to the next level.
Coca Cola needs new flavors; Apple always finds the next big thing for their die-hard fans. Even Amazon’s Jeff Bezos created his trillion-dollar empire from the belief that we need to “lean into the future” when the world changes around us.
Even though it can be hard to imagine a life with multiple product lines or services–especially if things are already going well–testing for new revenue streams is inevitable if you want your business to be profitable long-term.
And in this case study, you’ll find out how testing for new services helped Savoey, a 50-year-old restaurant chain, earn over 8,700,000 THB during the peak of Covid-19 in Thailand.
While other restaurants were in safe mode, Savoey was thriving with a new revenue stream.
And fast-forward to now, they’ve fully-booked their new service until the end of 2021, 2 months before the end of the year.
Read on to learn how they managed to find successful revenue streams during the pandemic, and how you and achieve similar results for your business too.
The short answer to why Savoey needed to expand their product line was to make more money.
Eventually you’ll need to look for new sources of income to increase your business’ revenue. Not to mention to ensure you can still make money if your key product suddenly doesn’t sell like it used to.
A great resource that helped us understand where new products/services fit in any business’ journey is Ready, Fire, Aim, a book by business consultant Michael Masterson.
The book basically outlines how to take a business from a start-up to a multi-million-dollar corporation. We often reference the learnings from the book in our strategies to grow businesses for our clients.
One of the key steps from Ready, Fire, Aim is to start testing for new products as soon as you’ve confirmed that your main product/service can generate the cash flow you need every month.
This is because you can increase your revenue streams by targeting smaller niches within your target audience. And the sooner you start, the sooner you’ll accelerate your successes and failures, finding the best products possible.
Let’s say you’re running a bubble tea business. You may start out with one really popular flavor, and a few regular toppings.
Once people start knowing you for your product, business will boom. But eventually people will get tired of one flavor, and go to other stalls instead.
Then you’ll need to start thinking of niches within your target audience of bubble tea-lovers, like people who like green tea, or people who can’t have dairy.
The result is you’ll have products for people with different tastes, meaning you’ve successfully increased your revenue streams.
Savoey’s main revenue driver for the past 5 decades has been their well-established restaurant chain.
But the founders wanted to see if they could serve the brand’s customers in other ways too, such as catering or organizing events like weddings and banquets.
They tested different event packages on their own, and had already been getting bookings here and there.
However, they eventually made the decision to start working with a marketing agency, to prove for sure whether events would be worth investing into in the long run.
Proving product/market fit can take a lot of time and investment if you want to do it on your own. It can be challenging to measure what success looks like, especially if your new products or services aren’t selling well yet.
And that means you’ll never know if it would have worked out if you tried a different approach, for example.
That’s why Savoey decided to hand the task over to a proven agency. And in the next section we’ll explain exactly how we made sure that their new services would turn into additional revenue streams.
The foundation of Savoey’s success was a marketing strategy that focused on sales revenue.
Some strategists will tell you that new products/services need awareness and engagement before you can start expecting sales.
But the truth is it’s incredibly difficult to measure return on investment if your target is just getting more awareness. You’ll likely get some sales, but you won’t know exactly what worked and what didn’t.
When we started working with Savoey, our first task was to validate whether their wedding packages or banquet catering services were better as the brand’s new revenue driver.
We immediately put everything in place to make sure we could measure results based on sales generated, not engagement or impressions. We did this in 2 steps:
By aligning revenue goals in Step 1, we made sure we were on the same page with Savoey on how much sales the new services would require for them to be successful.
Here’s an example of the KPIs and other sales-backed metrics we used to measure success:
Focusing on direct sales and looking at the results from a profitability perspective (including our management fees, etc.) was key to proving which new service really worked.
Using these KPIs, we created Facebook ads separately for Weddings and Banquet events, and basically compared the results against each other.
Here’s an example of Savoey’s wedding service ads:
And here’s one for catering services:
Each week we monitored the performance of the ads we made for each service, to see whether our strategy was generating sales.
From our experience, it generally takes 1-3 months to prove whether a new product or service will likely be successful. This includes the time to fine-tune the testing approach and apply best practices to make it work.
If you still don’t see results after 3 months, we recommend going back to the drawing board to improve your overall offer before trying again.
Keep in mind that this doesn’t mean you have to abandon the entire idea. It just means you need to take a step back to think about what your audience is getting out of your product or service.
You can do tons of things to improve product/market fit for your existing product or service. Like adjusting the pricing, or using the data you received from the tests to make your offer better for your audience.
For Savoey, the first few months of new service testing were turbulent. They barely earned anything at all until month 4, which took a toll on the trust between the founders and us too.
However, we were determined to prove that there was a demand for the new services. And by the 4th month, wedding and banquet packages started making Savoey over 1 million THB in extra sales revenue.
90% of that revenue had come from weddings bookings too, which means we had both achieved revenue goals and found a new winning revenue stream for the brand.
This is where Step 2 came in. Once we learned that weddings were a more worthwhile investment than banquets, we allocated most of the monthly budget to weddings, to drive even more sales revenue.
Things were going well with this setup. But when Covid-19 reached Thailand in early 2020, Savoey was directly affected.
And in the next section, you’ll see how Savoey’s decision to start testing for new services right before the peak of the pandemic proved to be life-saving.
The pandemic hit restaurant businesses in the worst possible way. Especially for restaurants like Savoey that heavily relied on families and friends physically meeting up at their locations to dine.
Without their main revenue driver (restaurants) being able to perform at full steam, the brand needed as many new sources of revenue as possible.
That’s where wedding services came in, as we had just proven product/market fit for the service a few months before the pandemic hit.
However, a huge challenge for Savoey’s wedding packages was that social gatherings were often prohibited at the time.
And the brand’s audience were most affected, as it didn’t make sense for them to book weddings without actually being able to set a fixed date yet.
That was the bad news. The good news was that we already had data that proved that the audience loved Savoey’s wedding packages.
And since we were working on the brand’s digital marketing campaigns during Covid, all it took to drive success were these 2 tweaks we made to the strategy:
a. Improving the wedding package to fit circumstances during Covid-19, and
b. Testing for other revenue streams during the pandemic: both to prove that weddings were still the best thing to focus on, and to keep testing for new opportunities.
Digital marketing allows you to make quick changes according to how the market behaves, without having to spend a ton of your budget. This was a huge advantage that Savoey had during the pandemic.
In their case, we instantly tweaked the main wedding promotion, by allowing the audience to book a wedding with unlimited date changes.
This was key to driving bookings during those tough months. By introducing unlimited date changes, customers could rest assured that they wouldn’t be charged for postponing their weddings if the government called for another lockdown.
Plus, they wouldn’t lose their original preferred wedding date, which is extremely important for weddings.
While we were making sure weddings could still be the main revenue driver, we also collaborated with Savoey to test new services, like vouchers and meal boxes.
And although weddings still remained the most lucrative new service, the biggest win for Savoey was that they kept making money from the new revenue streams, even during the height of Covid-19’s 3 waves in Thailand.
In total, we generated 8,700,000++ THB in sales revenue from new services alone during the pandemic.
And this real revenue all came from their initiative to start testing for new revenue streams, not knowing it would be so crucial to the business’ growth during one of the worst times to be a restaurant business.
And below, we’ll break down the real business value generated from Saveey’s journey so far, so you can get a picture of what the brand has now that they did not have before.
Of course generating 8.7+ million baht during the pandemic was great news for Savoey. But the real business value that came out of this entire experience was that the brand grew stronger coming out of the pandemic.
Fast-forward to now, Savoey’s new revenue drivers are recovering well after Covid-19’s first 3 waves in Thailand. So much so that their wedding events had been fully booked in 2021, over 2 months in advance.
You can see the bumpy revenue road during the pandemic and the results recovery in this graph:
The rocky road to recovery was not easy. Overall it took 9 strategic changes (budget allocation and strategic focuses) to ensure that Savoey would still be making money from their new revenue streams while Covid-19 was ravaging the economy.
We even advised the brand to pause our services during months where they weren’t making money from our work. But due to the trust we established between agency and client, we pulled through together.
Looking forward, Savoey has now gained a fully stress-tested revenue driver in the form of wedding packages, proving demand for it even during the height of the pandemic.
And through this experience, the brand has also gained a long-term marketing partner to help them test for newer ways to grow as a business.
They’ve proven that as a brand, they can keep finding ways to innovate beyond their reputation as a huge restaurant chain, and continue looking for new business opportunities in even the toughest of times.