Loyalty and Retention

How to Increase Customer Retention in the Restaurant Industry Through 6 Main Strategies

August 6, 2023
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Most often, Restaurant owners tend to focus all their strategies into acquiring customers and fall short on the rather more important aspect: customer retention. Customer retention not only brings back loyal customers, but it also brings new customers in the process, which not only increases sales, but also tends to knock down two goals with one stone. Repeat customers achieve these goals for your restaurant through spreading good reviews about it and driving word of mouth; which at the end of the day, plays a major role in acquiring new customers. 

That being said, it is essential to dive deeper into what fosters customer retention; in other words, what would encourage your customers to keep coming back to you?

Customer Retention – Key Differentiators - Vasutti

Customer retention is driven by several main aspects: convenience; service, taste, and ambiance; and feeling special.

To achieve these aspects and drive customer retention, the below strategies have proven successful:

Customer Retention Strategies

1.Understanding Customers Through Leveraging Data

The transition to the digital world has made information extremely and readily accessible. With this shift, data analytics have provided restaurants with a gift: the ability to know your customers through insights into customer behavior.

Customer retention is the topic of interest; meaning that customers are the main focus in driving customer retention. That being said, it is essential to be fully aware of the customer's personas and have as much information as possible about them. This is because the more you know your customers, the easier it becomes to accommodate their personas and find customizable ways to spark their interest and drive customer retention.

As an example, the pandemic has normalized the idea of online shopping and digitized most of the transactions, which as a result, helps restaurants adopt new ways to provide a customized experience to customers and increase customer retention.

Dickey’s Barbeque, a US based restaurant, employed the idea of leveraging data to increase profits. In doing so, a drinking menu that would go with the most ordered foods, was designed to provide the customers with an option of combo offers. This helped boost their sales as well as enhance customers experience, which in turn, increased customer retention.

Free Person ordering fast food in drive thru Stock Photo

2.Technology & Accessibility in Driving Customer Retention

Technology plays a crucial role in customer retention. As mentioned earlier, understanding customers' needs and wants helps boost customer retention and loyalty, and with technology providing a means of convenience to customers, it is essential to employ it in the most effective way to increase customer retention. Restaurants that do so take advantage of technology and use it as a bridge to get to their customers and satisfy their needs. For instance, the digitized world makes it more convenient for customers to order through a number of channels; that being said, restaurants can improve their customer retention by providing their customers with the accessibility of having several channels.

In efforts to better customer experience, Dunkin made use of technology through establishing an application which offers features at most of their locations. Not only does it exploit technology in the most effective way, but it also allows for the activation of loyalty programs regardless of the medium and payment method.

Dunkin Donuts App Case Study by Yudiz Solutions Ltd on Dribbble

On the same note, Starbucks has made delivery and mobile ordering more common through establishing a new model which makes it more convenient and accessible to customers. To further enhance customer satisfaction and increase customer retention, scooters riders were brought to deliver the orders faster.

Free Man in Yellow Clothes Riding Motorcycle Stock Photo

​​Panera bread has also made it convenient for a unique segment of customers to use their services. They satisfied customers through providing them an option of ordering digitally at the two US airports, making customers feel heard and seen. This service aimed at enhancing customer experience for customers on the go at airports; positioning the brand as an accessible and convenient brand. This automatically makes customers feel understood and increases the chances of customers going back to the brand; thus, increasing customer retention.

With the continuous, never ending adjustments that come with the benefits of technology, voice - based orders have been witnessing a peak for customers who prefer this medium of ordering. With this trend, Domino’s has been investing in voice over solutions to better accommodate this segment of customers and maintain customer satisfaction while improving customer retention in the process.

3. Loyalty Programs to Increase Retention and Engagement

In understanding customer retention, it is especially crucial to be aware that the key to customers' hearts and the secret to making them come back to you is loyalty programs. If we take a closer look at the most famous restaurant chains, we will come to the realization that they all win their customers and maintain them through providing unique loyalty programs. Loyalty programs act as a heartwarming means of communication between the customer and the brand; they make customers feel heard, welcomed, and seen; thus, strengthening customer loyalty and retention.

On an additional note, studies have proven the effectiveness of loyalty programs through these three significant findings:

-   The frequency of purchases is 20% higher in loyalty program members

-   Customers who are labeled as loyal customers spend 60% more than other customers

-   A percentage of 73% of loyalty program customers recommend brands with unique loyalty programs encourage word of mouth

The great benefits of unique loyalty programs can be seen in 2 of the world’s most famous food chains: Domino’s and Starbucks.

Domino's Cheesy Reward Loyalty Program | Free Pizza @ 600 Cheesy Points |

4. Customer Feedback as an Engine to CRM & Customer Retention

Customer feedback acts as one of the most important pillars to maintaining customers and understanding them. Responding to customers' needs greatly boosts customer satisfaction, which in turn, increases customer retention. This is because being with customers on the same page and working continuously to listen to their feedback and respond to it, encourages them to come back to you and keeps them engaged.

That being said, one way to handle customer feedback is to thoroughly monitor reviews through google and other platforms to be aware of customers negative comments and respond to them appropriately.

The Importance of Customer Feedback | Google Reviews

Not only does having an insight on customer feedback lead to effective practical results, but it also makes customers feel special and respected. On a side note, google reviews tend to act as one of the main sources customers resort to when wanting to assess the services of a brand; where one study proved that a one star increase in reviews could result in an increase in revenue by 5 - 9%.

5.Maintaining Personal Relationships with your Customers

In any relationship, effort is the most important thing. The same concept applies for you and your customer’s relationship. You have to make them notice the effort that you are making, that way, the customer ends up feeling special.

For example on their birthdays, show them that you remember them by offering them discounts or giveaways. This way you build a personal relationship with them that will keep them coming back to you.

Starbucks Malaysia - The Starbucks Card 5th Anniversary celebration  continues! Next week, on Monday, Wednesday and Friday, enjoy 20% off on  your food and beverage when you purchase with your Starbucks Malaysia

Before your customers anniversaries or special occasions, call them offer them free Champaigns and make them want to spend their special day at your restaurant. The more personalized the marketing is, the more likely it is for the customer to fall in love with your restaurant.

6. Customer Engagement through Social Media

The biggest secret to making your customer always coming back to you is to constantly stay on their mind. They will all be looking for reasons to make them want to come back, thats why you should always keep them engaged.

How are different Restaurants leveraging social media to keep their customers engaged?

Wave Asian Bistro & Sushi – Behind the scene videos

BTS Videos are a great way to catch a foodies eye. Wave Asin Bistro & Sushi creates mouth watering food videos for their customers, giving them a higher incentive to want to come try their food.

WAVE Asian Bistro & Sushi - Mount Dora Florida Restaurant - HappyCow
A mouth-watering plate at Wave Asian Bistro & Sushi

Condado Tacos – User Generated Content

Who doesn’t love to share their delicious tacos on Instagram? Condado Tacos use a smart and less time consuming way, by always sharing their customers taco images on their social media. That way, they make the customer feel more included and they guarantee always having content to use.

Condado Tacos Announces Growth Plan, Expects to Open up to 100 Restaurants  by 2026
Customer Pictures of Tacos at Condado Tacos

Capriotti’s Sandwich Shop – Hosting Social Media Contests

Riddles, Photos, QnA’s, there are many ways that you can run to keep your customers engaged and entertained. Having a reward system is a great way to motivate your customers to keep coming back. Winning rewards, free dining, and coupons gives you a higher rate of engagement from your customers.

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