While some restaurants have been successful at incorporating their brands into customers’ increasingly digital lives, most restaurants still fall behind in their ability to leverage digital to drive customer engagement and revenue growth. Advances in data and technology have made it possible to build and maintain relevant conversations with individual customers over time across marketing channels.
If you’re looking for an example, look no further than the retail industry. Retailers have been implementing successful digital marketing strategies for years. The explosion of online shopping made it necessary for retailers to be first movers in the digital space. Although the two industries are very different, the mechanics of effective marketing are the same. For restaurant marketers, the key is to increase repeat business and higher profits, while providing customers with convenience, relevance and rewards for their loyalty.
Here are five lessons restaurants can learn from retail marketers.
Effective Marketing Starts with Strong Data and Customer Identification
Retailers grew up in the age of the catalog where they did not know the face of the customer due to the direct-to-consumer catalog ordering model. As online shopping gained prominence, retailers benefited from newfound access to a massive amount of customer data and insights. This paradigm has enabled retailers to understand the frequency and monetary spend of their customers and then track, analyze and measure marketing efforts like never before. For brick-and-mortar retailers, the rise of online shopping has prompted the need to obtain important customer data at point of sale, through collecting email addresses and phone numbers in-store, leveraging free ship-to-store, and sending e-receipts.
Every business decision must be data-driven and put the customer first.
Unlike retailers, restaurants have long relied on mass advertising through promotions on a system or franchise-wide basis. With limited access to customers and until only recently, no business need to know the customer, restaurants have treated every customer the same without any individually tailored messaging. That’s changing. Restaurant marketers must invest in data and CRM technology to be one step ahead of customer needs, preferences and actions. Restaurant marketers can no longer rely only on appealing to a broad demographic, they must gain power from customer data to reach individuals.
Omnichannel is Crucial
Traditional restaurant marketing, such as TV spots and one-size-fits-all discounts, is just one component of the modern marketing mix. Today’s customers control when and how they interact with brands, so an omnichannel approach to marketing that reaches customers wherever they are online is crucial. Retailers have been leveraging omnichannel strategies for about a decade to recognize their customers and communicate with them in relevant and effective ways.
Restaurants must adopt similar omnichannel strategies as new channels emerge that create direct connections with consumers. By 2020, mobile orders will become a $38 billion industry. To take advantage of these services, customers must provide an email address or phone number. This data can help marketers reach customers in their preferred channels to drive repeat visits.
Mass marketing and advertising strategies do not put customers at the center and do not allow marketers to actually measure their efforts. Customers are motivated by different factors whether it be discounts, convenience or quality. Implementing an effective omnichannel marketing strategy is the only way restaurant marketers can learn about their customers’ preferences, deliver relevant messages that are tailored to each individual and then measure the results.
Marketing Can Help Improve Margins
Margins are a key to success for any business but especially restaurants. The typical retailer has a 40 percent margin on products but restaurants only benefit from two-to-six percent margins based on the type of food they serve and the restaurant style. Customer retention is one area restaurants should look to improve margins. According to Bain & Company, if a marketer can increase retention by just five percent. it will increase profits by 25-95 percent.
So how can a restaurant marketer increase customer retention?
Today, 6.6 percent of orders are placed online. Data shows that customers are leveraging location-based search to look up restaurants ‘near me.’ Restaurant marketers are overlooking key factors that drive customers to their restaurant and location.
Loyalty programs and mobile apps are a great way to leverage data to increase customer retention. A Deloitte study found that among fast food restaurants, order-ahead programs can increase visits by six percent and ticket size by 20 percent.
Keep an Open Mind about Marketing Technology
Marketing budget investments must be a top priority and consideration for restaurants today. Incentivizing customers to choose your restaurant over another requires an investment in marketing technology. By knowing customers’ food preferences, restaurant marketers will be able to remain competitive in the space against emerging giants like Amazon.
As of Q3 2018, 9.8 percent of retailers’ business was coming from online. As the competition for online business has grown, so has the marketing technology stack of retailers who continue to increase their spendin technology to ensure they can offer the best possible customer experience. And as marketing technology continues to evolve, the restaurant industry will follow in the retail industry’s footsteps for similar reasons.
Understand Your Customers
Focusing on the customer should be every marketers’ top priority, no matter what industry they are in. The restaurant industry has been missing a critical component by not truly understanding who their customers are. A lack of customer knowledge has a negative effect on everything—from investments to identifying new location opportunities to anticipating the needs of customers. Every business decision must be data-driven and put the customer first. Understanding who your customer is—will be the first step to gaining new ones. Perks offered to customers can now be measured on a selective basis to understand the instrumentality of the offer on a customer by customer basis, rather than offering it chain-wide or market-wide.
Restaurants will drive more business by truly understanding their customers and providing offers based on individual needs. Through doing so, order sizes will increase overtime as customer’s utilize mobile apps to their full potential.
The retail industry is arguably going through its biggest disruption ever. The same level of disruption is on the horizon for the restaurant industry. To be successful, restaurants should consider these marketing lessons from retailers and evolve their approach appropriately.