The soul of any business is its customers. Without customers, your restaurant business is as good as tea without tea leaves! And every business needs a bunch of loyal customers to grow continually. Customer retention needs to be the top priority for a restaurant to succeed in the game.
What is Customer Retention?
Customer retention means a restaurant’s ability to retain its customers. A higher customer retention rate translates into substantially increased revenue for a restaurant over time (read more to know how!). Basically, the happier your customers are, the more likely they are to visit your outlet.
And to turn your customers loyal to your restaurant, they need to be carefully nurtured with loyalty programs, rewards, and love.
Why exactly is customer retention necessary, you ask? Here’s why!
Importance of Customer Retention for Your Restaurant
Customer retention offers multiple benefits to your restaurant business. Here are some of them for you!
1. Loyal Customers Bring Regular Revenue
Simple formula: the larger the pool of your loyal customers, the more constant your sales forecast is.
- According to a study from BIA/Kelsey, an existing customer spends up to 67% more than a new customer.
- Loyal customers provide regular revenue to your restaurant that you can comfortably rely upon. As per an HBR study, a 5% increase in customer retention can raise profit by 25 to 95%.
- As you have built a certain level of trust with them, they are also more likely to be the first to try new items on your menu (and also more likely to offer honest feedback about it).
2. Reduces Cost Of Winning New Customers
Getting new customers is more expensive than retaining your existing loyal customers!
- Marketing costs in the case of regular customers go significantly down. Your regular customers are familiar with your place, menu and taste. You don’t need to advertise your business to them or introduce your existing menu.
- Customer acquisition costs five times more than retaining an existing customer.
- Your loyal customers already value your brand, saving you the time and effort to build trust from scratch.
3. Provides Word-of-Mouth Marketing
Not only do your loyal customers reduce your cost burden, but they also help spread the word about your restaurant!
- In the restaurant business, word-of-mouth marketing is the best way to get people to try your product. People trust other people’s words more than advertising, making word-of-mouth marketing highly effective and inexpensive.
- And that’s where customer retention and loyal customers play a crucial role. They become your free brand ambassadors.
- Customer retention proves to be a huge asset in your marketing efforts and driving revenue growth.
Did you know that 92% of people trust recommendations from friends and family over any other type of marketing?
4. Useful Feedback
Your regular customers know your restaurant the best and, thus, can give you the most valuable feedback.
- Gathering customer feedback is critical to know how your restaurant is performing, recognise your improvement area and better driving your marketing strategies.
- Your regular customers tend to know valuable insights about your business; thus, they can give you honest, helpful feedback.
- Create a customer feedback form to receive continuous customer feedback.
Tip: if you want to take quick feedback, you can create & share your own feedback form link on your customers’ mobile phones! Click here to know how!
5. Solid Relationship
As a business owner, you realize the importance of building valuable and lasting relationships with your clients/customers.
- Customer retention helps you build solid relationships with your customers.
- Good relationships with customers help you offer better customer service, and personalized experience, turning into their long-term association with you.
- All the above leads to long-term business success for your restaurant!
A fine POS system supporting your CRM tool has multiple advantages for your business. It helps restaurants organize customer data, track customer preferences, build personal relationships, and identify recent trends.
Customer retention holds multiple advantages for a restaurant. From inexpensive marketing to increased revenue, it can be just the thing to keep your restaurant bubbling and thriving. As a restaurant owner, you must focus on your customer retention strategy.
If you already have a loyal customer base but notice them thinning, check out our article here to know the causes of poor customer retention in your restaurant and click here to know strategies to retain more customers!
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