In the restaurant industry, the synergy between customer acquisition and retention drives sustainable growth, competitive differentiation, and long-term profitability. Balancing these elements ensures restaurants can thrive in an increasingly competitive landscape. It seems obvious, right? Getting more customers to come back more often will lead to greater revenues. However, that’s easier said than done.
Restaurant Marketing Spend Is Increasing
A March 2024 Nation’s Restaurant News (NRN) report stated that “an increase in advertising/marketing spend was one of the major themes from this latest round of earnings calls.” It’s a strategy shared by larger and smaller brands, and the increase in spend has been significant; the NRN report noted Brinker had “doubled its advertising as a percentage of sales.” It could be millions, even tens or hundreds of millions. One obvious reason for this push is that marketing grows revenue by increasing both foot and online traffic. For large or growing brands, another reason is to increase awareness and visibility when entering into new markets.
Quite frankly, when the economy is in flux and the consumer is more selective about when, where, and how often to eat out (even in a fast-casual or quick-service restaurant), it’s critical to keep the attention of your target audience and your value proposition top of mind. But is it working? Maybe not. A 2014 Thanx study found that 70% of restaurant customers never return. It’s no secret that in any industry, the cost of acquiring a customer is much higher than retaining a customer. Improving customer retention is crucial to the long-term success of any restaurant.
1. Be Methodical
Traditionally, restaurant marketing has been at a mass level—television commercials, billboards, social media ads, and even email campaigns. While you can reach a large number of people with these methods, they’re all getting the same message. You’re taking a gamble that what you’re advertising will appeal to most of the population you’re reaching, and you never really know since you can’t attribute each customer’s visit to a particular ad. Think about the impact of sending highly personalized, laser-targeted marketing messages to your customers and then carrying that personalized experience through from their arrival at your restaurant to when they leave.
It sounds like you would first have to know every customer personally and then create a special email message just for them and send it to their email. Where would you even start, and who would ever have that kind of time? With today’s marketing automation technology, it is now possible—and restaurants are taking note. NRN noted that 87% of restaurant operators will definitely or likely invest in new technology in the coming year, and 46% are making marketing and customer engagement a priority. They should be, as 70% of customers say they are more likely to visit a restaurant with personalized promotions.
2. Coordinate and Collaborate
I like to give the common “kids eat free” promotion example. What if you send that out or advertise it on a mass scale, and 50% of the audience doesn’t have young kids? You’re essentially wasting 50% of your marketing spend. You could maximize your impact and garner a larger ROI by sending the “kids eat free” promo directly to those who actually have kids and a “date night” promo with a coupon for complimentary dessert to those who don’t.
As you’re preparing to consider new technology that can help you personalize your marketing and enhance the customer experience, here are some steps to lay the groundwork. It’s easy to get excited about all of the new technologies out there. Slow down, be methodical, take account of the existing tech you have, figure out what you can keep, and then determine how you can seamlessly integrate something new. As a leader, get coordination and facilitate collaboration across departments.
3. Value the Data
There’s this intrinsic tie between marketing, technology, and operations now. Together, a smart marketer and an innovative IT person will connect to make a vision like creating the very best customer experience come alive, and operations will help you execute it. Make sure your entire staff is trained on cybersecurity and data protection. The key to successful marketing automation is using the data to learn your customers’ specific shopping behaviors and drive highly profitable, targeted advertising.
However, you have to protect that data with your life. The first time there is a breach or it falls into the wrong hands, you will compromise the trust of your customers and possibly never get them back. Technology like marketing automation is amazing, but if it doesn’t make it to the hands of the front-line workers, it’s useless. Involve your front-of-house staff in the rollout of the new technology; feature them on your social media sites, and train them on how to complete the vision of true personalization.
4. Engage from the Start
In the restaurant industry, customer acquisition and retention work together to power sustainable growth, competitive edge, and long-term profitability. It’s about getting more patrons to return frequently, leading to higher revenues. However, achieving this is easier said than done.
