Restaurants and hospitality are sectors that have been hit particularly hard by recent transformative world events. This includes the global Covid-19 pandemic and the ongoing economic downturn, as well as wide-scale shifts in consumer behavior like the growing number of people choosing to work from home.
In these tough times, it’s more important than ever for businesses in the sector to build strong bonds with their most engaged customers. To put it simply, loyal customers are the best customers. As well as spending more, they’re more reliable, and they provide the best marketing you’re ever likely to receive through their word-of-mouth recommendations.
We all know retaining a good customer is cheaper and more profitable than converting a new one.
So, here’s a look at some of the areas where restaurant businesses can focus their efforts if they want to reduce churn and build a strong fanbase of super-happy, super-engaged superfans!
What is a loyal customer?
For most businesses, there’s no such thing as a typical customer. Likewise, there’s no one-size-fits-all solution when it comes to capturing their attention and making sure they return again and again.
One of the most important things we can do, though, is create amazing experiences. For restaurants, this means creating unique dining experiences that stick in customers’ minds long after the final forkful of food has passed their lips. It also means offering a service that makes them feel special (not just a number) and leveraging technology solutions in order to do it all at scale.
Think back to the “good old days” – (or at least the image we have of it, whether or not it ever existed!)
You’d have “mom and pop” and their good old family-run eatery catering to the neighborhood – providing hearty home-cooked meals and, of course, the all-important “service-with-a-smile.”
Back then, everyone was a regular, loyal customer (or at least, so we’re told) because everyone lived and worked in the neighborhood, patronizing local businesses where everybody knew your name (cheers, Sam!)
Now, it’s a bit more difficult. Life is busier, more hectic, and global rather than local. Service-with-a-smile – while undoubtedly still a powerful marketing tool – just doesn’t cut it at the scale we need to operate in business today.
Instead, we have the technology. And while that might seem like a poor substitute when we’re harking back to “the good old days,” there are things we can still take along from those days, too. Most importantly, this includes the “emotional connection” customers build with businesses they like – transforming them from casual visitors into enthusiastic brand evangelists!
Are Loyalty and Repeat Customers the Same Thing?
Not really – there are some important differences. Understanding them is critical if you’re working out whether your strategic objective should simply be to get customers to return time and time again or whether you’re looking to build real, long-lasting brand loyalty.
Repeat customers are customers who come back. They may also repeatedly visit your competitors.
Say you run a taco restaurant – repeat customers might come to you because they like your restaurant or because they like tacos. This means they should be treated and marketed very differently to a customer who will drive past three other taco restaurants to get to you!
With repeat customers, the goal is to convert them to become loyal customers, which involves a change of behavior. When customers are already loyal, you’re obviously already doing something right, and you want to keep doing it so that they stay loyal. So, you can see that understanding whether your regular customers are repeated customers or loyal customers is essential to building your loyalty marketing strategy.
Creating Unique Dining Experiences
The important takeaway here is that the dining experience goes far beyond serving delicious food. Look, for example, at the Karen’s Diner concept that’s become a global phenomenon in the past couple of years. The brand’s tagline is “great burgers and very rude service,” and it offers interactive dining experiences involving rude, nagging, condescending waiting staff and a variety of silly games and activities.
Even if you’re looking to offer something much more traditional, it’s important to pay attention to every aspect of the décor, the ambiance, and the service. All of these elements need to be coordinated in a way that communicates your brand values – whether that’s rude Karens or haute cuisine fit for royalty.
There are numerous ways that technology can be applied to assist here. Interactive digital signage makes it simple for customers to browse the latest additions to the menu or even to receive personalized recommendations. Environmental control systems can be used to set background music, mood lighting, and temperature conditioning to match the time of day or type of event. Tabletop tablets give visitors a chance to interact, either placing orders or experimenting with other experiential elements of your customer offering
Taking Personalization All the Way
Restaurants can create unique experiences but should also make it a priority to make them personal. Here we can look at the benefits of using social media or personalized email marketing platforms to create personalized promotions tailored to the preferences of individual customers. Why offer the same buy-one-get-one-free offer to everyone in a given week?
Customer relationship management (CRM) solutions help staff to make personalized recommendations as well as remember details like special dietary requirements and allergies in order to make every visit feel a little more special. Online reservation and pre-ordering systems smooth the experience for groups of visitors while also allowing proprietors to gather valuable data on who will be in the house on a particular evening.
You can also take advantage of mobile apps, including push notifications, upload snaps taken at the table to remind them of the good times they’ve had with you or let them know when their favorite dish is back on the menu.
This personalized level of service shows your customers that you understand them – which is sure to keep them coming back. Once again, it’s about thinking how “mom and pop” would have done it back in the day and using technology to do it at scale.
Reaping the Rewards
Reward programs, including loyalty and VIP schemes, have become some of the best methods of fostering loyalty and repeat customs in the digital age. These offer real value by incentivizing loyalty and repeat business while also enabling you to collect insightful behavioral data.
Good reward and loyalty programs should be easy to understand – although an element of gamification can be great for helping to grow engagement. The best ones offer multiple tiers, so achieving certain levels of loyalty unlocks more exciting rewards and bonus incentives, such as birthday freebies or even invitations to special events.
Personalized reward programs are an even better way to make individuals feel special – by tapping into your CRM data, you can find gifts and rewards that you know will be appreciated and offer them in a way that fits in with their habits – are they a dine-in, take-out or delivery customer, for example?
Whatever methods you put in place to foster loyalty in your customer base, it’s critical to include methods for measuring and evaluating their effectiveness.
This means understanding the KPIs you’re trying to affect and having processes in place for capturing them. This could be:
Repeat Customer Rate – the percentage of customers who come back after their first visit.
Customer Retention Rate - the percentage of customers who return over a given period of time.
Net Promoter Score – the rate at which customers say they are likely to recommend your business to others personally.
Customer Lifetime Value – the total revenue that an individual is likely to bring to the business in the time they patronize it.
Social Media Engagement – The rate at which customers engage and interact with your social media channels.
Your CRM system, customer feedback surveys, online review aggregators, and social media analytics tools are all potential sources of the data you’ll need to understand and make decisions based on these factors.
A final note - it’s important to remember that customer loyalty is something that develops over time. Unless you’re doing something terribly wrong that’s immediately putting people off returning, it’s unlikely there’s a quick-fix solution that makes loyalty grow overnight. It’s generally a process of implementing processes in a step-by-step manner, measuring their impact, and rolling out those that work while scrapping those that don’t.
But by taking an analytical approach and staying up to date with developments in marketing technology, you’ll have happy customers who’ll keep coming back for years to come – just like mom ‘n’ pop did!
For customer loyalty management at restaurants, drop us a line at email@example.com.