For a restaurant chain, what can maximize profits better than one new customer? The answer might be “a loyal customer.”
It often makes more sense for restaurants to target the customer satisfaction they have, rather than close in on projects that aim to expand. When restaurants increasingly worry about rising labor costs and restaurant food waste, loyalty programs may hold the key to advancement.
Enterprise restaurants often leverage loyalty programs through their omnichannel order management system. Revolution Ordering, for example, makes it easy to integrate and analyze customer data by plugging directly into your existing restaurant POS and CRM systems.
Key Takeaway: Restaurants increase customer retention through a balanced focus on efficient operations and excellent customer experiences. CRM and loyalty program integrations enhance these perks.
What is Customer Retention?
Customer retention measures customer loyalty. Retention calculates your restaurant’s ability to keep customers coming back, ordering more, and engaging often. Beyond finding your rate, you can also use retention to predict customer satisfaction and brand impressions.
When you look at retention rates for restaurants, you measure customer relationships from the first purchase to all following transactions. With a clear idea of customer retention, restaurant owners can use restaurant marketing strategies to overcome gaps in performance.
Customer retention remains critical because the cost of new customers is almost always greater than the cost to retain. Among restaurant KPIs, customer retention indicates the strength of customer relationships, word-of-mouth marketing, and brand sentiment.
Why Customer Retention Counts for Restaurants
Let’s imagine a restaurant focuses solely on expanding new business. That restaurant may risk losing its repeat customers in the process. When they remember to track and analyze customer retention, restaurant managers show their commitment to brand growth.
According to new reporting and analytics, much more than half (around 65%) of any company’s business comes from repeat, loyal buying. At the same time, the effort management and operations put into increased retention stays minimal and sustainable.
With more focus on retaining customers, brands stand to increase restaurant sales as much as 25% to 95%. More loyal customers are willing to support a business longer, try their latest offerings, and bring in friends or family.
3 Strategies for Higher Customer Retention and Loyalty
Review these three essential steps to customer retention strategies that continue to work for enterprise restaurants. Note how monitoring, ordering, and rewards form the three characteristics of the loyalty programs to increase retention.
1. Assess Your Performance
Customer retention really needs to be measured and monitored constantly. Otherwise, the lack of consumer data challenges managers to see dips and trends in customer loyalty through other indications or restaurant KPIs.
To measure your performance as a restaurant, define a specific period of time you want to explore. This could be one month. This could be one year. This could be five or 10 years. It all depends on how deep your brand wants to go to determine its success at keeping customers.
You will need a few more pieces of information to track your retention rate, and those represent your customers to start, to end, and over time. To calculate a restaurant’s retention rate, subtract new customers from the starting customer count and divide that by your total customer count at the end of the period.
You can look at each variable for your restaurant in this way:
- Starting Customers = Your customer count at the start of the period
- New Customers = The total number of new customers added
- Total Customers = Your customer count at the end of the period
Your formula and operation should generally look like this:
- Starting Customers - New Customers / Total Customers = Retention Rate
- S-N/T = R
Consider this. Your restaurant served 5,000 people at the start of the month, and, by the end, it had a count of 5,800 customers. If 800 customers were new, you would subtract 800 from 5,000, arriving at 4,200. When you divide that remainder by the total customer count (5,800), you get 72.4% as a retention rate.
2. Offer Omnichannel Ordering
An omnichannel presence remains critical for businesses competing in the online space. When customers can interact with your business through their preferred mode, they stay more likely to engage and spend.
Make yourself available through digital menu ordering on your website, over the phone, by your text-to-order number, or in third-party app integrations. By commanding multiple ways to boost customer acquisition, you’ll also improve the customer experience of service. This will increase your customer retention rates as well.
As restaurants turn to offering support and orders through multiple platforms, new customers discover their brand and convert into restaurant loyalty programs.
3. Incentivize Trust and Loyalty
People respond to rewards. So, entice your customer with rewards for their loyalty. By using a proprietary rewards system through Revolution Ordering, you can show customers how you appreciate their business.
Offer them one more reason to come back for more great dining experiences, online orders, and your hospitality. Some of the rewards you can offer customers with your brand of contactless hospitality include:
- Points for every dollar
- Discount codes or coupons
- Special, limited-time offers
- Access to private VIP events
- Early invitation to new programs
Some customer rewards programs operate with points, some with tiers, others with streaks. These programs help improve customer loyalty by gaming the process of spending and visiting. You can even gamify customer surveys and structure customer survey questions to learn more about your customer's inner lives. The reward is a more personal experience with your restaurant.
Frequently Asked Questions About Customer Retention
Most restaurant owners and operators concern themselves with loyalty. They consider their customer retention rates to improve and build upon past success in their industry.
See what customer retention rates are, why they matter, and get the real key to loyalty in restaurants. Knowing this metric for your business will help you calculate and quantify your team’s success.
What is a customer retention rate?
Customer retention is simply the rate customers stay with your business for a certain length of time. Some businesses refer to this statistic as a churn rate. They use it to determine how effective, practical, and helpful their business is at solving customer needs and providing a positive experience in the process.
Why is customer retention important?
Customer retention matters because it indicates how likely all customers are to repeat purchases with your restaurant. By knowing your customer retention rate, you're closer to making accurate and educated changes to your brand for future growth.
When restaurants emphasize customer retention, they also improve other areas of business as a result, including operations, preparation, delivery, and service overall. Partly, this is because rewards like restaurant gift cards can be highly motivating.
What is the key to customer retention?
Improving customer retention means increasing customer satisfaction. When customers are satisfied and delighted by service, they are active at engaging with the business.
These most loyal customers are also more effective brand ambassadors, convincing others through reviews and feedback to choose your establishment. Through restaurant software, managers bring up retention rates through streamlined operational efficiency and better restaurant management technology.