In any business, including restaurant, customer acquisition is very important. But, retaining them and reducing customer attrition is equally crucial. The more you get repeat customers, the greater are the chances of creating lifetime loyalty and value for your restaurant. Also, with customer retention, you can generate more business at a lower cost. Try these 7 golden rules of customer retention in restaurants.
According to a study, customer acquisition cost is anywhere from 5 to 25 times more than retaining an existing one. The study also states that the customer retention rate can increase profits by 25-95%. Another statistic indicates the probability of selling to an existing customer is 60-70% as compared to the probability of selling to a new prospect is 5-20%.
Causes of Customer Attrition in Restaurants
In spite of the business benefits that repeat customers bring, it is surprising that most restaurants fail to attract them and reduce customer attrition. Here are the top reasons, why your customers are not returning to your restaurant.
1. Poor Quality of Food
If you have read restaurant reviews by critics and customers, the first thing they talk about is food. When your customers don’t get what they are expecting on their plate, they don’t have a reason for a second visit. Just imagine the plight of a customer when s/he orders a cup of coffee, only to find that it is cold or too sugary. Or, she/he gets a bowl of tinned fruit salad when he was looking forward to freshly cut fruits.
Quality food is the most fundamental component of a restaurant business, it should be delivered the way it is actually meant to be – delicious, fresh, with a pleasing presentation and in the right quantity.
2. Poor Customer Service
Apart from relishing a scrumptious meal, customers want to be taken care of at your restaurant. Customer service in the restaurant business comprises of attention, communication, timely delivery of the order and staff courtesy. So, if you don’t greet and guide them to their table, they will feel lost. Similarly, if you deliver the food in 40 minutes instead of 20 minutes as mentioned on your menu card or, your staff doesn’t address them correctly or listens to them intently, they are bound to rate your restaurant poorly on customer service.
A Customer Experience Impact Report revealed 85% of people are willing to pay up to 25% more for a superior customer experience. This clearly states how important an excellent customer service is for your restaurant!
A Harvard Business School case study on Starbucks threw some interesting observations. It said that a satisfied Starbucks customer visits 4.3 times every month and stays loyal for 4.4 years. A highly satisfied customer visits 7.2 times every month and remains a visitor for 8.3 years.
In order to provide the best customer service and reduce customer attrition, make sure that:
- Your staff goes the extra mile to please customers. Small gestures like ‘Welcome, Sir’, ‘How can I Help You?’ or ‘Please visit us again’, can go a long way in developing an emotional connection with them.
- Your staff treats every customer royally and provides attention to every little detail from the time customer walks in.
- Their order is delivered on time and quickly. In case, a particular dish that the customer has ordered will take longer to cook, inform in advance.
- Your restaurant acknowledges and owns the mistake in case customer complains, and fixes it immediately.
3. Unreliable Standards and Services
Have you ever noticed how Mc Aloo, Big Mac, French fries, Mc Puff & all other food items taste same and follow a standard delivery process across all outlets of McDonald’s? That’s consistency for you. In a restaurant business, it’s not only the first but also the second, third and subsequent impressions matter as well. The key to repeat business is ensuring consistency in products (what you offer) as well as services (how you deliver it). This develops a sense of confidence in your customers and they want to come back because they know they will experience a consistent experience each and every time.
The key to addressing this problem is defining your quality standards and service guarantee. In fact, your restaurant policy and procedures should be documented in the kitchen (for employees) as well as in the dining area or waiting lounge (for customers) in the form of designated restaurant service standards. This way, your employees will know what they are expected to deliver and customers will know what they can expect to be delivered. Also, it would be a good idea to conduct random or surprise checks on your food, service, and staff to take a stock of what’s really happening on the front end.
4. Dirty Housekeeping
Your restaurant may have the most aesthetic interiors, but a speck of dirt on the dining table, a soiled napkin or an overflowing dustbin in the bathroom can take away all the joy of dining for the customers and contribute in customer attrition. A study of 373 service failures conducted by Beth Chung and K.D. Hoffman confirms that housekeeping is one of the most vital factors to keep the customers coming back to your restaurant.
So, get the basics of housekeeping right. Right from entrance and bathroom to cutlery and staff uniforms, everything should be spic and span.
5. Incompetent Pricing
Pricing also plays a vital role in your restaurant’s repeat business and reducing customer attrition. Repeat diners look for affordable prices for regular meals. Also, if your prices are much higher as compared to your competitors, you’ll probably miss out on the returning dining crowd.
Try to offer meals at different, affordable price points. You can include some lower pricing popular meals along with higher-priced exclusive menu items. For instance, Subway has introduced the low-fat Chicken Peri Peri sub and the low fat Spicy Mixed Beans sub both of which are available for Rs.139 or, when had in a combo with 350 ml of 7UP Nimbooz, for Rs.169.
6. Lack of Customer Loyalty Programs
Have you thought of giving your customers a valid or a rewarding reason to return? Once you have acquired a customer, she/he needs to be nurtured to build loyalty and show them how important they are.
There are various ways to incentivize customer loyalty and reduce customer attrition.
- Offer them discount coupons for the next visit. Like the pan-India chain of Specialty Restaurants does. Whenever you dine at any of its brands such as Mainland China, Oh! Calcutta or Sigree, you will get a cash voucher for a certain amount which can be redeemed during the later visits. Why won’t you be tempted to go again?
- Offer them a more personalized and focused attention. Birthday/anniversary gifts, an invitation to exclusive events or a free starter for second-time visitors can make them feel special and give them additional reasons to visit again.
- Offer a point-based loyalty program. Boloco, an American restaurant chain gives its customers a stylish Boloco card which tracks the amount of money the customer spend in their restaurant. With every $50 that guests spend in their restaurant using this card, they will earn points that they can redeem against food items of their choice, such as an extra small smoothie or a super jumbo burrito.
Try these tips to leverage your Loyalty Program Campaigns and reduce the customer attrition in your restaurant.
7. Inability to Adopt Technology and Social Media
Technology and social media have upped the game of restaurant business. Online ordering, facebook updates, tweeter contests, wi-fi facility, tableside POS tablet to view & order menu and mobile wallet payments are just a few things that enhance customer experience and motivate them to visit your restaurant again. They are also great tools to understand the expectations of customers, what they think and how their grievances can be handled.
So, if you have not attached the tag of ‘tech-savvy’ restaurant yet, you need to do so faster and soon.
The restaurant industry is a really competitive space. Gaining even small numbers of repeat customers may help you in a long way, and attaining the desired business growth.