There’s a surge of pride that comes with seeing your restaurant or bar packed to the rafters during a special event.
You came up with a brilliant promotion idea and got your marketing just right. It’s easy to look around at all the happy faces and think, “I’ve made it.”
But it’s not the one-time visitors that will be your key to restaurant success.
It’s the regulars who come in every Tuesday night for trivia.
Or the couple that comes in a few times a year for special occasions.
It’s the 5 or 6 friends who come by once a month for Sunday brunch. Or the staff from the restaurant down the street that comes to you for after-shift drinks 3 nights per week.
These loyal few will still be coming to you after the promotion is over. When the fuss has died down and everyone else has gone home, they’ll still be eating your food and drinking your beer.
If you’re not thinking about customer retention, you’re missing a huge opportunity!
Not sure why?
Let’s dive into the three massive benefits of retaining your restaurant customers.
1. More Profit
It’s pretty common knowledge that it costs a lot more to get a new customer than to retain an existing one.
Exactly how much it will cost your restaurant depends on your marketing expenses and the number of new customers you’re able to bring in. But a fair estimate is that it costs 5x as much to bring in a new customer than to keep a current one.
But there are other financial factors to consider when looking at the profitability of customer retention.
“Loyal customers”, those who have visited your restaurant at least 10 times, generally account for 20% of a business’ customers. But that 20% could be bringing in 80% of your total revenue.
Over time, these loyal few will spend 10 times more than your average customer!
Your repeat customers know you, and they keep coming back because they like and trust you and your staff. This makes them more willing to try new items and new recommendations.
In other words, they’re easier to upsell.
The likelihood of selling to a new customer? 5% to 20%.
The likelihood of selling to a current customer? 60% to 70%!
Upping your customer retention by just 5% could increase your profits by 25% to a massive 95%!
There’s even a solution that does this for you. Automatically.
It’s called Zenreach Engage and it helps you retain customers and build loyalty.
If you add a loyalty program to the picture, you can improve those numbers even more.
Customers are willing to spend more money to get to that next loyalty reward — an average of 39% more. And when they redeem that reward, they spend an average of 19% more than the average customer.
You can implement a loyalty program through a custom app, third-party company, or through your existing POS system.
2. More Word-of-Mouth
There’s nothing so valuable to a brand as positive and frequent word-of-mouth recommendations.
Who else are you going to trust, if not your friends and family? 92% of consumers say they trust word-of-mouth recommendations above any other kind of advertising.
In one survey, consumers ranked the industries in which “reputation” was most important. Restaurants came in at #2.
At #1? Doctors!
Unfortunately, it’s hard to track statistics about true word-of-mouth recommendations. These interactions happen in person and have no simple metrics.
But you could leave a feedback card on the table at the end of each meal. Ask customers how they heard about you, and include an option for a recommendation from a friend or family member.
Track the responses to see if word-of-mouth is improving as you work to increase customer retention.
If a potential customer hasn’t received a direct recommendation from a friend, where are they going to look? Review sites like Yelp, Google, TripAdvisor, and Foursquare are where they go for online advice.
88% of consumers have read reviews to establish the reliability and quality of local businesses. And 88% also say they trust online reviews as much as recommendations from friends and family.
Plus, people read restaurant reviews more than any other industry.
Of course, neither word-of-mouth nor customer reviews are always going to be positive.
Unhappy customers generally tell 9 to 15 other people about their bad experience. And customers are more than 2x as likely to share a bad experience than a good one.
But all customer feedback, positive or negative, can help you.
The Benefits of Both Good and Bad Reviews
Even though the feedback won’t always be positive, more reviews can help your business in several ways.
1. The more you hear from your customers, the more easily you’ll be able to pinpoint problems.
One bad review about the host stand could be an anomaly. Ten bad reviews about the host stand reveal a problem that needs an immediate solution.
2. More online reviews improve your review ratio.
Potential customers don’t just look at your star or number rating. They also consider the total number of reviews you’ve received.
People want to see that your restaurant has received positive feedback consistently over time.
While the restaurant above has a great 4.5-star rating, they only have 18 reviews. Customers like to see a larger number of reviews before they really trust a rating.
This restaurant has half a star less than the one above, but with over 2,000 reviews, customers can count on consistency.
Review platforms like Yelp and Google generally discourage restaurants from requesting reviews from customers. But as you build loyalty, organic positive reviews will follow.
3. You actually need a few bad reviews.
Yes, this sounds crazy, but hear me out.
Everyone has heard stories of unscrupulous businesses buying reviews to manipulate their ratings. So the trustworthiness of reviews is of major concern to consumers.
If you have 100 5-star reviews, it will raise red flags.
There needs to be some negative feedback to make it clear that your reviews are genuine, not bought.
Also, they’ll give you the opportunity to show existing and potential customers that you take complaints seriously. Responding to bad reviews in a professional, apologetic manner is an opportunity to regain that customer’s trust.
Ideally, you’ll have mostly wonderful reviews. A 1-star rating increase on Yelp can result in 9% increase in revenue.
But customers who share bad experiences are inevitable.
So keeping those loyal, long-term supporters is vital. They’re much more likely to post about their positive experiences, which will help to offset some of those (rare) bad reviews.
3. More Social Media Engagement
And 60% of Facebook’s users follow at least one brand. That’s almost 1.5 billion people!
Social media is where the people are, and they want to hear from their favorite brands. But they don’t like or follow just anyone.
The #1 reason why customers follow a brand is that they’re interested in the products. And the more times they’ve been to your restaurant, the more likely they are to follow you on your social media channels.
Customers who interact with brands on social media are looking for a stronger connection.
57% of consumers have reported asking a company a question on social media. They’ll also reach out to resolve an issue or commend the company for a job well done.
So why is more social media engagement such a good thing?
Engaged customers spend and share more.
Customers who engage with brands on social media spend 30% more money than passive customers. Plus, they’re more likely to share your content with their friends, family, and followers.
Engaged brands inspire more loyalty.
62% of millennials — the generation that dines out more than any other — said they’re more likely to become loyal to a brand that engages with them on social media.
Most consumers (71%) who have had a good experience with a brand on social media say they are likely to recommend the brand to their friends and family. That’s more good word-of-mouth for you!
Engaged customers create more user-generated content.
More photos and videos from your customers on social media increase your reach. If a customer shares a photo from their time at your restaurant, it will be seen by their followers who may not have been familiar with your business.
And you can then re-post their photos to your feed.
There is a double benefit to reposting. It shows your appreciation for the customer’s post, and it saves you time on content creation.
Just make sure you’re getting permission and providing photo credit before reposting any images on your social accounts.
It’s a cycle. More brand loyalty leads to more social media engagement which leads to more brand loyalty.
But the engagement has to work both ways.
Every time you hear from a current or potential customer on social media, it’s another opportunity to impress them. And consumers are 70% more likely to make a purchase after a positive experience with a company on a social platform.
So you have to make sure you’re responding to questions and complaints quickly. If you do, you can keep your customers coming back, while impressing potential customers with your service and care.
“Everyone knows” that retaining customers is more profitable than acquiring new ones.
So why in the world are over half of marketers putting 60% or more of their efforts into acquisition rather than retention?
I don’t have an answer to that.
But you don’t have to make their mistake.
Of course, there does need to be some time and money dedicated to acquiring new customers. But retaining your existing customers is the low-hanging fruit that will provide you with more profit, more recommendations, and more social media engagement.
Don’t wait to get started. What are you going to do today to turn more of your customers into long-term brand ambassadors?