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7/6/2010, in category "Outlaw Press"
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Kansas City, MO, United States
The Outlaw Cigar Company drives phenomenal growth with events that encourage people to live the cigar lifestyle.
Four years ago, Kendall Culbertson decided to completely overhaul the marketing tactics he used to promote his tobacco store, The Outlaw Cigar Company in Kansas City, Mo. The business up until then had employed mostly traditional marketing methods and performance was average. Culbertson thought he saw a way to increase sales by putting all of his marketing efforts into tactics that could bring new cigar smokers in the door.
Two years later, the wisdom of this decision was reinforced with sales figures that would turn any tobacco retailer's head. After he put his plan in place, he saw two straight years of 40 percent growth.
Culbertson recently opened a second store to help handle the continuing swell of new customers. The second Outlaw is a 7,200 sq ft. behemoth that features two smoking lounges, a 1,500 sq. ft. humidor and a dedicated poker room.
The secret to his marketing prowess is an intense focus on creating a positive overall experience for customers new to cigars, and a major part of that experience is created through the use of in-store events. The company throws about 30 parties for customers each year. Mind you, an Outlaw party isn't the typical store event— attendance figures at each lately have been averaging 2,000 people.
A new approach
Culbertson says he took a different angle to marketing because of his background in the computer industry; he built a technology services company that he still owns but no longer runs day-to-day. “That's one of the toughest industries to market in—the computer industry.”
In 2006, Culbertson took a step back from the technology business, bringing in another person to run the company. He decided to focus his energies on the cigar store that he had bought a few years prior. As he looked at ways to build sales, he thought he could take some of what he'd learned in building his technology services company and apply it to the retail tobacco industry. Basically, he says, the best marketing strategy comes from creating more demand for your product, not just passively serving the market that already exists. “Every industry must create demand for their product... So in this case, I want more people smoking cigars. How do I do that? The answers to that became my marketing strategy.”
Traditional advertising helps build awareness, Culbertson says, but a retailer can't create a new cigar smoker using those methods. When a non-cigar smoker sees a brand advertisement for cigars, he tunes out or flips the page because it just doesn't apply to him.
Culbertson figured that he needed to get people in the door that had never tried a cigar before. When they did try that cigar, Culbertson wanted them to have a great experience, so they would keep coming back. That's when he came up with the idea to throw the parties.
It's proven to be a more-than-successful concept, as the parties have become hugely popular. Some attendees now make it a point to fly in from other states, and cars line up to park four blocks away. “We're at capacity,” Culbertson says. “If someone said I can double your event attendance, I'd have to say 'no thanks.' I wouldn't be able to serve my customers. People are elbow-to-elbow as it is. That's part of the reason I opened the new store. My No. 1 complaint from customers is that it's too crowded.”
Culbertson figures about a quarter of the people who attend each event aren't cigar smokers. At a typical party with 2,000 people, that's 500 potential new customers. Culbertson hopes to get at least 80 of those to try a cigar for the first time, although at some parties he figures closer to 200 may try a cigar. “I want to get guys that don't smoke cigars into my store and try one. Think about it—80 new customers per month is almost 1,000 new customers per year.... In addition, they may have a circle of friends that aren't currently into cigars. We want to get them in, too.”
To make sure its tactics are working, Outlaw employs a methodical data collection system. Each party has a number of drawings or other other ways to capture information on who attends. New customers are put into the data collection system, and the stores' POS systems feed new data on purchases into the customer database. Culbertson can see when they buy their first cigar and when they buy their first humidor.
It often takes a while to create that positive experience that leads to a new customer. “The first time someone tries a cigar, the overall experience has to be great,” Culbertson says. “I've had customers that have told me they've come to 14 parties before they ever tried a cigar, and they later wondered why they waited so long.”
The Outlaw plans its event schedule almost two years in advance. For a typical party, they set up giant tents outside and bring in 12 to 15 kegs of beer and about 800 pounds of food. (A popular recurring dish a whole roasted 200-pound pig.) Every year, he puts out a calendar full of bikini-clad girls that includes the event schedule; he hosts a party where girls try out to be featured in the calendar and customers vote on their favorites. Customers find out about the events through world-of-mouth, the calendar, the Outlaw Web site and tie-in promotions with other charity events or businesses.
For entertainment, Culbertson will include just about anything that draws a crowd. Here's a partial list of things that could be found at past events: Hooters girls; the “Women of KU Calendar Girls”; the Outlaw's own calendar models; Harley Davidson motorcycles; car clubs with classic or sports cars of all types, such as Porches and Corvettes; liquor companies giving out samples; chefs doing cooking demonstrations from the area's high-end restaurants; jazz bands; artists carving sculptures with chainsaws; karate demonstrations; sword demonstrations; custom choppers; demonstrations from knife manufacturers; various displays of military equipment; cigar “long ash” contests; Apache helicopter landings; Osprey military plane flyovers; poker tournaments; and putting contests. A movie producer is even planning to premiere his latest film at a party later this year.
“Any business that has our same demographic, I want them at our events,” Culbertson says. “And with 2,000 guys coming out, who wouldn't want to be a part of it? We get their customers involved with us and ours involved with them.”
Of course, the cigars themselves are a key feature at every party with demonstrations from the stores' own full-time cigar roller and visits from some of the top names in the industry. The 2010 lineup includes: Charlie Toraño of Toraño Cigars, Tim Ozgener of CAO Cigars, Jose Oliva of Oliva Family of Cigars, Jorge Padrón of Padrón Cigars, Nestor Miranda of Miami Cigars, Jonathan Drew with Drew Estates and Rocky Patel of Rocky Patel Cigars.
Outlaw also puts a focus on participating in external events, both at other businesses and charity events. “We do a ton of charity work,” Culbertson says. “We'll donate something just about to every customer that comes in.”
For a typical charity raffle, the company may donate a humidor filled with gift cards. (Culbertson notes that this provides yet another opportunity for a new customer to come into the stores.) He'll make sure the store is featured on signage at the event.
The company's cigar roller will attend an average of two external events per week. “I look for events with the same demographics,” Culbertson says. “A Harley-Davidson dealership, for example. I'll try to provide value at their events. They come to mine, and I go to theirs. I want to connect with the appropriate demographic as much as I can.”
One of the best ways to build demand in the tobacco retail business is become involved in the community and help others succeed, Culbertson says. He may offer a business owner a free room to host a private event for his customers, or he may donate to a firefighter's charity. Eventually, customers start to view the store as their own place. “What needs do they have in the community that we can help them with? You find that out and you start to understand that person much better. There's no better way to build customer loyalty.... Help people overcome their obstacles and they'll see you as a hero.”
Involvement in the community also keeps the momentum for the parties building.“The best opportunities, things you would never think of, will come to you,” Culbertson says. “You couldn't dream of these things. Because things are getting so big, and you are involving so many people in the community, opportunities you had never thought of will walk right through your door, and that only causes things to keep getting bigger.”
Last year, the organizers of a huge charity motorcycle ride approached Outlaw to ask if they could host a party at the end of the ride. TV stations and newspapers from all over the state attended. “Now you are getting press you could never buy,” Culbertson says.
A total experience
Despite the focus on events, Culbertson hasn't neglected other aspects of creating a complete customer experience. The company uses the “Outlaw” theme in all of its marketing because it appeals to the target male demographic. “The outlaw concept is one that we can do a lot with,” Culbertson says. “It's a rebel kind of thing. All guys have it. It's why a lawyer rides a Harley on the weekends. ”
The theme extends to look and feel of the stores. Both feature large walk-in humidors, customer lounges with an array of big screen plasma TVs and personal cigar lockers for regular customers. Avoiding the look of a typical retail space, the stores are set up more like a restaurant. They have a greeting area and are decked out with bar areas, fireplaces, poker tables, televisions and high-end leather lounge furniture. Culbertson, although he doesn't charge membership fees, wants his customers to feel like they are part of a family or an exclusive club at a resort hotel. At the newest store, a full-time female model even gives guided tours to new customers.
“The lounges are what the store is all about,” Culbertson says. “Customers can come in and buy a cigar and leave, but we are really catering to the customer that wants to come in and hang out.”
On a typical weekday, even in the early afternoon, the lounge may have 100 customers relaxing with a cigar. “We don't sell cigars. We sell the lounge and the events,” Culbertson says. “Cigars are what I make my money on, but we market the lounge and the events, and the cigars take care of themselves.”
Culbertson's passion for cigars and the industry is evident as he speaks. “I've been telling the industry for a long time, it's not the growers, it's not the rollers, it's not the manufacturers, it's the brick and mortar stores that have to create demand. Who is responsible for growing this industry? … Mail order doesn't grow the business. Manufacturers can advertise their brands, and that helps, but when it comes right down to it, it's the brick and mortars that are responsible.”
Culbertson sees few other retailers who attempt his strategy of converting non-cigar smokers. “Many successful retailers are good at throwing events, they have top-notch customer service and they create a passion for cigars with their current customers, but I don't ever hear of anyone saying that they have 3,000 cigar smokers and they need 4,500. Where are they going to get them? The competitor? The Internet? No. Cast a net that is large enough to catch a new cigar smoker.”
Culbertson says the focus on attracting new customers also effectively satisfies current customers and builds loyalty, so you don't have to worry as much about that aspect of marketing. “If you have a big military helicopter landing at an event, for example, it's going to thrill your current customer base and non-smokers alike. It's a way of swimming upstream.”
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