Enhancing Customer Loyalty Through Online Channels: Restaurant Idea Roundup

hands joined in friendship

In a day of mass coupons, national chains, and $1 menus, enticing a customer to come back to your restaurant is not getting any easier. However, because of the value of customer loyalty it is well worth your time to invest money (and especially time) not only in attracting new customers, but also in attracting repeat customers. In fact, if you have to choose, I would argue that you should spend more time on customer loyalty then you should spend on attracting new customers. Here's why (thanks to Omega Management for helping me think through these):

  • Loyal customers are more likely to return apart from specific advertising/marketing ventures. If they like the food, they're back. Simple as that. No money spent advertising to reach them.
  • As people begin to trust you, they will begin to trust you with more. The first time they come to your restaurant, they may just try the burger and fries. The second time, they're trying the chicken marsala. The third time, they're dropping $45 on the lobster tail and ribeye. Repeat customers often spend more in return trips than they did the first time.
  • Loyal Customers are your best advertisements. Word of mouth is the sure-fire way to get people into your store. It's a lot easier to ignore a 30 second TV ad then it is to ignore your best friend who tells you that "you just have to hit up that new Greek cafe because the gyros are to die for..."
  • Loyal Customers will more readily forgive a poor experience. We all have those off days, that chef we should have let go 2 weeks ago, that waiter who needs to smile more, the quesadilla that should have been a burrito. Whatever it may be, customers will at times have poor experiences and a person who has a good history with you is much less likely to hop online and rail on you publicly.

Loyal customers are important, and my goal in this post is to give you some different online ideas about what you can do to attract customers, and then keep them coming back for more.

Here are 4 1/2 Steps to Customer Loyalty through Online Channels. If you follow these, you are well on your way to establishing a customer base that will not be easily shaken... even in economic downturns or grumpy-waitress times.

curling team playing on the ice

Step 0.5) Producing a Quality Product

This may go without saying, but it needs to be said. If your food tastes like you just took it out of the grease trap, then you can do all the customer interaction you want and it won't do a thing. The assumption I am going by in the remainder of this article is that you have a love for food, make good food, and love to serve that to others. If not, you may want to consider another career... like professional curling.

cash register

Step 1) Attracting New Customers

Before you can get loyal customers, you need to get customers. Therefore, I wanted to throw this in as the first step. There are hundreds and probably thousands of unique ways to attract customers. Since this post is predominately about return customers, I will address only two fairly new advertising possibilities for you to consider.

Online Coupon Systems

With the introduction of Groupon in 2008, mass internet coupons have literally exploded in popularity. The idea is fairly simple and worth a try by any restaurant out there. Depending upon the specific coupon provider, details will vary, but the general idea is that you specify a certain amount of coupon purchases you want to obtain before a deal can take place (if not enough people buy into the deal before the time is up, the money is refunded and nothing happens). You offer a (fairly significant) discount as the deal, and then the coupon provider takes a certain amount from the remaining revenue as their pay.

Allow me to illustrate: Groupon takes 50% of the cut. Most people do at least a 50% discount on a meal or item. This means that as a company, you are actually only receiving 25% of the money for that purchase. For example, I recently purchased a $50 deal for Vincenzo's Italian Restaurant here in Louisville, but I only paid $25 for it. The provider took probably around 50% of my $25, so when I find a babysitter, and then take my wife to Vincenzo's for an evening of dinner and music, Vincenzo's only gets $12.50 for my $50 meal. Obviously, this only works with products/services dealing with obscene profit margins. Here's the benefit though, Vincenzo's had 1,470 people buy the deal! I (and possibly a good portion of those 1,470 people) had never been to, and never planned on going to Vincenzo's before this time. Now we will check it out, and if we like it... bam, they've just made loyal customers out of us. These coupons are a great way of rapidly expanding your customer base!

Before diving in head first, though, be warned. You need to know that not everyone is infatuated with groupon-style deals. For some small businesses it just may not be worth the loss. Read these blog posts for a good balancing voice from the other side of the fence: "Why Groupon Sucks For Small Businesses" and "Groupon Was 'The Single Worst Decision I Have Ever Made As a Business Owner'". Don't forget though, that you control what you offer, the customer cap, and how many people you're willing to get before the deal is on to ensure that you make X amount. So, as the first article ends by saying, just make sure you count the cost before diving in. Make sure that you have done a lot of number crunching as to what works for your business. If you feel it will work for you, awesome... do more research. If not, don't do it!

If you are interested in researching these coupon options, check out these links below for various internet group coupon deals that are out there.

Google Adwords & Microsoft AdCenter.

Myriads have tried and failed in the online advertising region. More times than not it is because of unrealistic expectations and/or poor budget management. The beauty of using Adwords & AdCenter for you restauranteers is that you can get extremely geo-specific in your targeting. If you only want to advertise in the Bronx, then choose that geographical location and your ads will only display for people who type your specified search query while in the Bronx. I can already sense that this is going to be much too large of a topic for this post and I might have to write a blog post specifically revolving around online advertising for restaurants. Stay tuned for that to come.

Editor's Note: I recently published the blog post: An Adwords Tutorial for Restaurant Owners. It gives helpful tips as to how you can save money and send quality visits through online advertising. Check it out if you have been burned in the past by online ads, or if you are thinking about getting into the online advertising world (which I highly suggest you do in this Google/Bing age!).

falafel and other mediterranean food

Step 2) Building Online Relationships With Your Customers

Imagine how crazy it would be for the owner of a bar to be invited to a royal wedding. Well, in the case of John Haley, that's exactly what happened with the recent wedding of Prince William & Kate. It's difficult to think of a better illustration for the value of a solid relationship between a patron and business owner. Think that Haley's pub had more business after that invite? Relationships are what draw people together and instill loyalty. A large amount of people now spend a large amount of time online, so consider expanding your relationship with your customers to online social platforms. For instance, if you do not have a facebook and twitter account, the first thing you need to do after reading this is to form a business page on facebook, and a twitter account. Seriously, go do it.

After you do that, consider running a facebook-only deal or twitter-only deal where people can get 10% off their next meal with you if they like your facebook page or follow you on twitter. Or give away a month's worth of meals to someone if you reach 500 fans in a month... or whatever, the sky's the limit with ideas! Time has shown, however that running deals is a fantastic way to get people to follow you on facebook or twitter.

Then, after people are following you... INTERACT with them. I don't mean just writing spammy marketing headlines ("Come try our falafel and see why it's the best in the world."), but truly interactive content ("@burgerlover429 sorry the cheese was burnt, next time you come in let me know and it's on us") Shout out to Chipotle here. For a national chain, they interact extremely well with their customers online (though, I still have yet to forgive them for denying my often requests to build one in Louisville... I will never give up).

Step 3) Handling & Managing Online Interaction

Next, make yourself available online for reviews and responses to the experience your customers have had with you. Open a Google Places Account and begin collecting reviews. Get reviews easier (some sites may require it) by actually submitting your business information to these sites:

More and more, online reviews are having a significant impact on search engine algorithms and user decision. If I am looking for a local burger restaurant in St. Louis and see a list of restaurants on Google Places, and then see that one restaurant has been reviewed 500 times and the reviews are almost entirely positive, I will choose that every time over another restaurant with no, or very little, reviews.

coffee open sign

Step 4) Keeping Your Ear To The Ground

The last step we'll consider today regarding customer loyalty is one of information gathering. The internet is a vast place and it can be difficult to stay on top of all the times your business is mentioned or researched. There are two specific (and FREE) things you can do regarding data gathering for your online presence.

Google Analytics

If you don't already use Analytics to track your website traffic... do it... right now. You can gain valuable insight from understanding where customers are coming from, what keywords they used in search to find you, how long they stayed on your site, how many pages they used, etc, etc, etc.

For example, if you discover that 80% of the people who visit your site go right to your menu page, maybe it would be worth your time to make that a highly interactive and educational page. If you see that 70% of your customers are searching from a nearby town, maybe it would be worth starting a second store there, or moving your restaurant there? The possibilities for data analyzing are endless.

If you are already using Google Analytics and would like to dive deeper into its waters of reports and conversion funnels, then I would suggest you subscribe to the blog: Occam's Razor, by Google Employee Avinash Kaushik. He has been writing for a couple of years and his past blog posts are a source of great information about gaining insight from Analytics.

Google Alerts

Another way you can keep an eye on what your customers are saying is by using Google Alerts. Google Alerts is a program that sends you emails regarding specific keywords you want to follow online. Allow me to illustrate.

You own Karack's Koffee Kanteen in St. Paul, MN. You decide to make an alert for "Karack Koffee Kanteen" to see who is talking about you out there. You realize that a number of bloggers comment daily on their love for your iced mocha's (because who doesn't love a good iced mocha?!) but they are frustrated because they live in Minneapolis. You keep an eye on this trend and over a few months see the amount of people talking about your company growing. By this time you have begun to comment on their blogs and thank them for their support even if they have to drive over to St. Paul.

As you develop a relationship with them through their visits to your shop, blog comments, facebook, and twitter, they tell more and more of their friends about you and soon many faithful customers are making the trip to St. Paul from Minneapolis daily to get your iced mochas. Based upon this, you decide that it would be in your best interest to open another location in Minneapolis, and lo and behold, you already have a loyal customer base because of your relationship through the blogs and your business thrives. How did that all start? Because you got a Google Alert telling you that this lone blogger was talking about how much he loved your iced mochas. If it hadn't been for alerts, you never would have seen that.

So, what about you? What have you found to be a helpful online way to attract and encourage customer loyalty?

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If you are looking for a "groupon alternative" option, there are apparently some springing up all around: http://www.allbusiness.com/all....  Personally, I think Groupon has plenty of time to "recover" as long as they accurately identify the focal point of nearly every complaint against them - their extreme cost.  While people are willing to pay 50% of their revenue on an innovative and interesting new experience like Groupon used to be, it is becoming well known enough where I cannot imagine Groupon continuing to thrive if they do not lower their rates.  I think there would be a lot less complaint from small businesses if Groupon took 20-30% of the cut as opposed to 50%.

Interesting update to the Groupon pricing issue that most restaurants face... groupon has apparently been listening to the complaints of many (and seeing their competitors gaining strength) and has reduced its fees for restaurants (at least, according to this report).  See here for more information: http://restaurant-hospitality.....  

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Comments

Here's a study done last week about a Rice University survey and Groupon/LivingSocial's impact on small businesses: http://www.clickz.com/clickz/news/2078935/-daily-deals-users-purchases

Interesting Infographic related to Online Group Coupons: What's The Deal With Daily Deals?

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