Use This Approach To Combat Increasing Customer Acquisition & Retention Costs

Acquisition Costs Are The Silent Killer

The market is oversaturated with restaurants, there are too many choices and not enough customers to fill the seats. More and more competitors are arriving in the market, but the number of customers remains the same. This results in restaurant owners vying for the same pool of customers, they're trying to acquire the same guests because there aren't enough to go around. According to restaurant industry analysts from TDn2K,

The number of restaurant locations continues to increase faster than the population is growing

Restaurant owners are spending more time and money on acquiring new customers instead of trying to retain their existing customer base. Bain & Company found that acquiring customers is exponentially more expensive than retaining customers, it can be 6 to 7 times more costly! Retaining customers requires hard work, but it is worth it in the long run because it cultivates customer loyalty.

Customer Retention Should Be Your Focus

Retaining customers requires excellent customer service from the very moment that customers walk through the door. Every single interaction with customers needs to exceed their expectations. When you provide exceptional customer service, it helps build customer loyalty. Customer loyalty is crucial for the success of your restaurant because existing customers spend approximately 67% more than new customers.

The 80/20 rule applies to the restaurant industry because a majority of revenue will come from restaurants' current customers.

80% of your company's future revenue will come from just 20% of your existing customers

If restaurant owners want to combat increasing customer acquisition and retention costs, they should focus on providing 5-star customer service. Exceptional customer service is the reason that people return to restaurants, they enjoy going to places where they feel valued. Customer service is the key to retaining customers, it is a major factor in cultivating customer loyalty.

Don't Be Mediocre - Mediocrity Won't Get Your Far

Customers will never forget how they felt dining at a restaurant, and that is a fact. This is why it's crucial to provide 5-star customer service every time customers walk through the door. If customers don't experience exceptional customer service the first time that they go to a restaurant, it will be the first and last time that they spend money there.

"Every contact we have with a customer influences whether or not they'll come back. We have to be great every time or we'll lose them." - Kevin Stirtz

Customer retention is crucial for restaurants if they want to be successful. When customers feel valued, they're going to become loyal customers and they're also going to recommend that their friends try out the same restaurant. Restaurants will also notice an increase in revenue when they have higher customer retention. This is due to the fact that existing customers spend more money than new customers, profitability and customer retention are closely related.

Your profitability can increase anywhere from 25%-95% when you increase your customer retention by 5%

Restaurant owners want "season ticket" holders at their restaurant, these are the people who are loyal customers that will keep coming back to fill the seats up. Repeat customers are the ones who generate the most profits for restaurant owners, and they're also the ones who brag about the stellar customer service that intrigues others to try out the restaurant.

Retain Customers By Providing 5-Star Customer Service

If restaurant owners want to cultivate customer loyalty, they first need to make sure that they're setting their employees up for success. 5-star customer service can't be provided unless your employees are provided with clear expectations. Here are three ways to ensure that employees provide stellar customer service: 

  1. Provide them with expectations
  2. Provide onboarding and regular trainings for them
  3. Coach employees and give them feedback

These three tips will help restaurant owners ensure that their employees are giving customers the best experience possible. It's important to empower your employees with the skills and knowledge that is necessary to help them be successful in their jobs. When your employees provide 5-star customer service, your customers are satisfied and will spend more. You can only fill up your customers' value buckets if you also fill up your employees' value buckets as well.