 The BRIEFING Newsletter, Tips and Trends Exclusively for American Express Restaurant Merchants, recently interviewed Malcolm Fowler for a story titled "Getting To Know Loyal Customers".Most restaurateurs understand that what ultimately builds and sustains customer loyalty is a good restaurant experience - and that customer recognition is one of the most effective tools to that end. "A restaurateur who knows his or her good customers is like a walking real-time loyalty program," says Malcolm Fowler, vp and gm, Ernex . "They can provide a better table, comp an item, etc. The danger is that as the number of customers, employees, and/or locations increases, you lose the ability for this 'general store'-style intuition." Even on a small scale, training employees to reward your best customers appropriately - or even knowing who they really are - is difficult, says Malcolm. Having a formal loyalty program isn't the only way to recognize and reward customers, but it is the way to find out who your best customers really are and to influence their behavior. In addition to learning where they live and their birthdates, data gathered from loyalty programs can tell restaurants which of your customers spend the most, visit the most often or most regularly, bring in the largest number of guests, etc. This kind of information is essential if you want to encourage them to increase their spending and to visit more frequently, which has a profound effect on the bottom line. "In general, the top 10% of a restaurant's customers represents 40-50% of the total revenue; the top 30% typically represents 60-70%. The smaller the restaurant, the more concentrated this is at the high end," says Glenn Hausfater, president, Partners in Loyalty Marketing, Inc. The reality is, says Glenn, if restaurateurs don't do anything to hold on to their best customers there will be attrition - in the form of decreased spending, fewer or no visits. "For each of those customers you lose, you need about five average customers to replace them," says Glenn. Glenn advises that a loyalty program should gather and report only the data that restaurateurs will actually use to run their businesses better. "Sometimes loyalty programs generate too much transactional data and very few companies have the data mining capability to use it to an advantage," he says. "Be sure that if you gather data, you will act on it." Glenn advises that the first priority ought to be asking customers for their zip code - to use for more targeted mailing/marketing. He says the next step might be to track frequency and spending to create programs that can increase either or both. "A third level might be to collect information about what customers have been ordering to learn what you're doing well and what could improve," he says. And if you gather e-mail addresses, Glenn advises using them not only to send targeted offers to loyalty program members but to measure the results of those communications. "Whatever information you gather, demonstrate that you can use it to run a business more profitably. Then you can invest with confidence and grow the program bigger," says Glenn. BRIEFING Newsletter - July/August 2005 Related Articles and Links |  |
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