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The Importance of Guest Retention

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How Restaurants Can Convert New Customers to Loyal Guests

Though the Pandemic accelerated digital growth within the Food Services industry, it also weakened brand loyalty for many restaurants. As online orders increased, the majority came from guests who had never previously dined with a given brand (whether that was online or dine-in). 

According to a recent report published by Paytronix, 65% of all online orders by early May 2020 were from new customers. With this influx, it’s essential for food services marketers to capitalize on the opportunity to convert first-time guests into repeat diners and eventually loyal customers.

Personalizing Guest Communications

Personalization is now the key to strong communication with customers, and restaurants should thoughtfully tailor their offers around what they already know about their guests to effectively drive repeat dining. Research conducted by Modern Restaurant Management showed that 29% of consumers say personalized deals and offers inspired repeat business with QSR brands. Successful personalization establishes an emotional connection between the restaurant’s customers and the brand. Brands can create these personalized feelings by: 

  • Leveraging a customer’s favorite orders or menu items.

  • Offering rewards for special events, such as customer birthdays or anniversaries.

  • Promoting local events and deals specific to the customer’s location or thier favorite franchisee 

  • Showcasing their loyalty status and rewards available

These are just some examples of 1:1 communication strategies for effective customer retention. By investing in personalized marketing strategies, restaurants can increase check size while fostering their guests’ long-term loyalty.

Understand what is important to your customers and invest accordingly

Focus on the things that matter most to your guests and be thoughtful about which customers you target, as well as the experiences you deliver to them. Paytronix found that brand value outweighs food quality when it comes to returning guests. People that rate food quality poorly (1 star) are 27% likely to return, while those that give brand value a poor score were only 20% likely to return.

Guests that received a coupon after rating their experience at 4 stars or lower were about 10% more likely to revisit the brand than those who left a similar rating but didn’t receive a coupon. On the other hand, people that rated their experience at 5 stars were likely to visit again whether they received a coupon or not. Reviews can be one key data point that helps you determine which customers need the extra investment so they may return. Repeat dining and guest retention rates can increase further when the offers delivered to customers include various forms of personalization.

Loyalty Programs Create Repeat Guests and Provide Valuable Data

Loyalty programs can super-charge retention, personalization, data collection, and customer lifetime value. Not only are loyalty programs a major opportunity for marketers, they are now table stakes for the industry and customers are asking for more. According to Modern Restaurant Management, 52 percent of adults between the ages of 25 to 40 changed where they order food because another restaurant had a better loyalty program and a whopping 79% of consumers would rather have brands invest in loyalty programs than social media advertising. 

Of course, social media is still a great channel for marketers. But high-quality loyalty programs paired with strong mobile app experiences and communications create stickier customer connections while enabling brands to collect rich first and zero-party data. Paytronix noted that members of loyalty programs spent more than twice as much on takeout as customers that were not loyalty program members. As QSR customers continue to gravitate toward takeout dining, even post-pandemic, loyalty members will become even more valuable. 

Loyalty also lays the foundation for rich personalization that not only benefits the customer but also allows brands to shift customer behavior to build incremental sales. Most marketers think of personalization as a way to connect with their customers on a deeper level by providing relevant content and deals. However, brands like Starbucks have figured out how to use personalization in a way that not only connects with their customers but drives them beyond typical retention behavior. 

The primary vehicle for unique guest behavior is through the use of challenge offers. These offers typically require a customer to perform an action in order to earn bonus points or additional benefits. Actions can range from filling out information on their loyalty profile, purchasing a specific menu item, or making a purchase in a certain timeframe. By matching the right challenge offers with the right customer segments, brands can develop incremental sales and maximize ROI. 

Let’s say you have a customer segment that has a high average check size, but low dining frequency. Send this group a challenge promotion that requires customers to dine a certain amount of times in a specific time frame to earn additional bonus points. Or if you have a segment that rarely dines with you earlier in the week (Monday through Wednesday), send them a time-sensitive offer that is only valid during that time frame. Offers that attempt to influence consumer behavior not only resonate with customers from a value standpoint, but they lead to incremental sales and increased lifetime value for brands.

Customers now have sky-high expectations when it comes to value and convenience. They are now accustomed to near-instant gratification and stick with brands that understand their needs and can create unique experiences. Brands that adopt innovative retention strategies and constantly evaluate the best ways to communicate with customers will be set up for long-term success as they convert new customers acquired during the pandemic to post-pandemic loyal guests.

For more information on how marketing teams of any size can create meaningful 1:1 experiences, download Movable Ink’s eBook Best-in-Class Personalization Across Email and Mobile.

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