Do you know how your current customers originally heard about your restaurant? Do you know what inspired them to try out your restaurant – and then keep coming back?
One of the biggest misconceptions I hear restaurant owners talk about is where and how they attract new guests and create loyal customers.
Have you seen the movie Moneyball? So, in the movie (which is based on a true story, by the way), the Oakland A’s baseball team has to build a great team out of nothing. They’re struggling big time because they have no money and can’t compete by using the same strategy as the powerhouse teams. Finally, the Oakland A’s do a 180 on how they approach building a team and end up creating not only an incredible team, but changing the way baseball scouts evaluate players nationwide.
Why am I telling you this? Because independent restaurant owners often share flawed thinking about how to get more customers and increase revenue. They look at what the huge franchises and fast food restaurants are doing with loyalty programs and gift cards and think that it’s the only way to build their business.
Let’s set the record straight. Loyalty programs and gift cards are great tools to level-up your business but they are NOT what you need when your goal is to regularly attract new customers.
Here’s the thing – this line of thinking is not the restaurant owners’ fault. This idea has been perpetuated by the point of sale industry because it makes it easier for them to sell more products and keep restaurants on the hook for longer periods of time. Think about it this way, if your restaurant uses Company A for point of sale, online ordering, loyalty programs, gift cards, etc., it’s going to be a big headache to switch to Company B – even when you know Company B is a better fit.
When to start a restaurant loyalty program
Loyalty programs and apps are excellent for repeat customers. But when it comes to growing your business, it’s a slow growth process. You might be able to get these customers to come in more frequently and spend more money at your restaurant but the fact of the matter is that a single customer is only going to have so much money and desire to spend at your establishment.
The big names in fast food and QSR franchises rely heavily on apps and loyalty programs but that’s because they have deeper pockets to use that tool effectively and they do a better job of reminding people that they exist through other marketing and advertising channels.
For example, I own a franchise restaurant and that franchise restaurant has an app and it’s a great marketing tool. It does a tremendous job of taking customers that I already have, that are already aware of this concept and location and bringing them back in the door. But it doesn’t do a whole lot to get the attention of brand new customers.
What about restaurant gift cards?
Gift cards have a similar limit as tools to grow your business. Gift cards can bring in new customers, particularly during the holiday season but they’re also being bought typically for people that already like your concept. Most people don’t go out and buy a restaurant gift card for a friend that’s never been to that restaurant. I might do that if I want to support a business, but generally speaking, I’m not going to do that because I want to know that I’m buying them something that the other person wants.
How to get more customers into your restaurant
If your goal as a restaurant owner is to take an already existing customer base and create more loyal customers and drive up how much money they’re spending per month, then loyalty programs and gift cards can be great tools.
But I see struggling restaurants every day, every week, asking about these types of products and it’s NOT where their mindset should be.
Struggling restaurants need to think like the software industry (stay with me here…). I come from the software world and we think in terms of user acquisition and funnels. In a traditional funnel, the very top of the funnel, the widest part, represents all the people that are aware of your business. I know that a percentage is going to move to the next stage where they become more interested and the product is on their minds. In the last stage, I know that I’m going to get some people who decide to actually pay me for my product.
When it comes to restaurants, you can use the same acquisition funnel strategy to regularly attract more customers, get them in the door, and build a stronger business.
Restaurant owners who are struggling or trying a new concept or are reviving a concept need to think more in terms of new user acquisition. For example, start with a goal of getting 200 new people a week to become aware of your quick service establishment. You just want them to know that you exist in their community and that you have something they might be interested in. From there, you can assume that a percentage will eventually order from you – there’s your new customer – and a percentage of those folks will turn into people that come in again and again. This last stage is where loyalty becomes important.
But before you get to the Loyalty stage, you need to start marketing towards those brand new customers. You need new customers in order to turn them into loyal customers.
All too often restaurant owners that I talk to aren’t spending anything on marketing. They’re posting something once a month on social media and then scratching their head when their business comes in waves or not at all. On the flipside, not all marketing has to be these big grand schemes like buying a billboard or creating a tv commercial.
(Stay tuned for an article in the future all about restaurant marketing strategies.)
There’s a lot that can be done to grow your business and get new people to try your product that won’t break the bank or take up a ton of time. It’s a matter of finding what works for your restaurant that’s within your resources and keeping it consistent. Every day, every week, every month. Focus on getting those new customers in the door and creating a systematic approach to doing that – then turn your sights on loyalty programs.
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