8 Tips to Loyalty Success

By Lisa Terry, Contributing Editor | January 08, 2007

Afterglow. It is that warm and fuzzy feeling that guests experience after a fine evening at a great restaurant where their every need and expectation was exceeded and will hopefully be sustained long enough to get that customer to return and recommend the restaurant to others.

But with such busy lives, that feeling often fades quickly. Moreover, the ever-increasing competition for the attention of guests means foodservice operators are suddenly finding it difficult to maintain mindshare.

That is where loyalty and customer relationship management (CRM) tools come in. Technologies that aid in the subtle art of maintaining a presence and influencing behavior are assisting operators in understanding, targeting and building relationships with their most profitable customers, boosting the bottom line.

In just the past year, for example, Michael's Gourmet Group has seen average spend per customer increase 9 percent and redemption activity for its 10,270 Gulf Coast Connoisseur Club members rise about 10 percent, with half of club members making at least one purchase. By tapping a solution from Ernex Marketing Technologies (www.ernexinc.com) that has helped the group of Florida family-owned restaurants foster loyalty to the restaurants, Michael's has been able to excite guests with enticing rewards and programs, says Michael Klauber, co-proprietor.

There are, of course, many paths to retaining loyal customers. While no one solution will work for every restaurant, here are eight paths to loyalty success:

1) Have a reason to be loyal beyond coupons. Without a loyalty-fostering environment, there is no afterglow to sustain. "The key to loyalty happens at the restaurant," says Dwayne Chambers, VP marketing for Colorado-based Red Robin Gourmet Burgers. Managers and servers treat people as individuals and understand their desires as well as their needs," to make the guest experience unforgettable. Red Robin employees, for example, are rewarded for "unbridled acts," such as the team member who drove a family with a stalled car to a wedding in a nearby city--and back the next day--arranging a car repair in the interim.

With the most frequent guests already visiting three times a month, Chambers wanted to build on those guest relationships. So with the help of Fishbowl (www.fishbowl.com) the 200-unit chain began offering an electronic newsletter featuring occasional coupons and perhaps more importantly, soliciting feedback from guests. Already 2,000 to 3,000 guests per restaurant have signed up.

2) Know what you want the program to do. For Red Robin, re-search was a key goal, so the program focuses on a mechanism to make feedback and communication simple. In addition, since acknowledging loyalty and increasing frequency were goals, Red Robin offered a card-based redemption program.

Chevyis Fresh Mex, a St. Louis-based, restaurant chain, wanted to target its customer base, increase their frequency and spend money on discounts rather than media. By implementing a solution from Lochinvar  Software (www.lochinvarsoftware.com), "We are able to be specific and precise with our marketing efforts," says Esam El-Qunni, managing partner, such as pinning offers to birthdays or guests who haven't visited in a while. "Lochinvar has allowed us to learn the eating habits of our customers, the time and days that they frequent our restaurants.  We are even able to track the entrees that they order--which in return allows us to invite them with discounts on days they would not normally go out for dinner." Chevyis expects to recoup its investment within two years.

3) Don't target all guests, just the right ones. "We don't want 30,000 people to sign up for our program. We want people who find value in our program," says Andrea Kulach, director of the frequent dining program for Lettuce Entertain You Enterprises, a Chicago-based restaurant group operating 28 widely varying formats. "We don't want someone who only goes out once or twice a year." Lettuce Entertain You accomplishes this by offering a card-based loyalty program through Givex (www.givex.com) that includes an enrollment fee, which can be earned back with frequency.

Similarly, the Clubhouse wanted to target a specific demographic within a geographic radius of each of its three restaurants. Through a Clever Ideas (www.cleverideas.com) direct mail piece featuring a $20 promotional gift card, the chain attracted more than 600 new customers in six weeks.

4) Sustain the program and keep it fresh. The five Piccolo's Italian/Mexican restaurants in the Denver area earned dismal returns from mass couponing, so management launched an e-mail newsletter from Exact Target (www.exacttarget.com). General Manager Mike Erb sends one or two e-mails a month to the 10,000-name database, and has found "it takes constant attention," a message that hit home when he missed a mailing or two last summer and people noticed. "Part of the challenge is to keep it fresh," so Erb ties promotions to events, such as running a special until the Denver Broncos lose a game

5) Keep it simple. Simplicity, both for the customer and staff, increases the likelihood of use. Jamba Juice, for example, integrated its jambacard electronic gift card with its Aloha POS system (www.alohapos.com) in corporate locations and selected VeriFoneis Omni 3740 (www.verifone.com) running Atrana's (www.atrana.com) MicroPortal for franchises without Aloha, simplifying infrastructure since itis also used for debit and credit. A large ATM-style display prompts clerks through transactions, speeding the process. 

6) Back it up with technology. Fingertip access to a database enables staff to instantly recognize and acknowledge loyal guests. Michael's plans to tie its club database to an online reservations system and will ultimately use its system to record guest preferences, rendering it a full customer relationship management application.

"Without good solid technology behind the scenes it's impossible to deliver the type of service the customer expects," adds Lettuce Entertain Youis Kulach.

7) Look for a financially solid vendor. Michael's had to replace a vendor in 90 days after the previous one failed--as had its predecessor. "Do your homework on who your data management company is going to be," Klauber advises.

8) Make changes carefully and continue to add value. Build your program carefully, one step at a time, these operators advise. Even the best program can get stale, so continue to add value with innovative offers. Lettuce Entertain You's program has had to introduce a fee, up redemption levels, remove points for tax, etc., in its 14 years in existence, but has remained successful because each change is carefully considered and tested first, says Kulach, and value is always added at the same time something else is taken away. 

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