This interview is part of CMO Perspectives, presented by NRN in partnership with the National Restaurant Association’s Marketing Executives Group. The feature explores how leading executives are navigating the ever-changing restaurant marketing landscape. In this installment, Arjun Sen, marketing expert and author, discusses building customer relationships from the heart.
Arjun Sen, a marketing expert and former restaurant executive, has written a book titled “Customer Karma” about customer-centric relationship building. Sen sheds light on several insights that directly apply to restaurant operators.
Arjun, congratulations on the book. There are a lot of nuggets in it for restaurant CMOs. I particularly love the comparison of customer relationships with dating. That is a unique yet simple way to look at customer relationships. How does this concept help a restaurant CMO like me?
Over the years, I observed customers for different brands to realize that customer relationships and dating are very similar. In both cases, the first impression has a huge impact. At the end of a date, a person must put his date in one of three buckets: never will go out, really want to go out, or maybe. This decision happens right in front of the other person. The same happens for every customer before they leave your restaurant. Think: Every customer, every time, decides about his future with your brand, sitting in your restaurant. So, the question is, how can your brand influence the customer’s decision?
Like every other CMO, I want to build long-term relationships with my customers. The intent is there, but it is not easy. What am I missing?
Maybe restaurant chains are getting too obsessed with relationships.
Instead of investing in customers, restaurants are trying to buy their loyalty. Loyal long-term relationships happen if we invest in customers. The same way a doctor cannot directly reduce the temperature of a patient, but with the right medical treatment, the temperature is bound to come down, brands must develop a clear understanding of what customers want, and focus on delivering that consistently. That will result in long-term relationships, over time. Unfortunately, there are no shortcuts for this.
Every budget dollar matters. Before I commit resources to building lifetime customer relationship, how can I be sure that this will increase my revenue?
If there are two coffee shops in your neighborhood, one owned by your best friend and the other a national chain, which one will you visit more often? Of course, your best friend’s shop. That is proof that customer relationships work and result in profits.
Another way to look at this is by calculating the lifetime value of the customer. When a customer asks you for a refill, you can either look at him as a $5-spending customer and charge him $2 for the refill. Looking at the big picture, you will see that this customer spends $10 a week, $500 a year, which means a $10,000 lifetime potential. Once you see the lifetime potential, the entire outlook towards this customer will completely change. You will not be able to charge him $2 for a refill. Instead, you will ask him to have a seat, brew a fresh pot, and take the coffee with condiments to him.
Bringing the concept of karma to the customer relationships is unique. How did that come about? What is customer karma?
Growing up in India, I was very close to my grandma. At an early age, she instilled in me the concept of karma. Karma means action. She taught me, “Do good karma and good karma will come to you.” Life was very simple for her.
Over the years, I learned that this works so easily with customers. All you must do is good karma for your customers. And then good karma will come back to you, as why will a customer go anywhere else when a brand cares about him with all its heart?
Your example of the use of the dating loyalty card was funny. But so many brands do it every day. Are you recommending that we cancel our loyalty programs?
It is important to recognize customers, but does it have to be a program? Restaurants often fall into the trap where they create a loyalty program that includes building a database, tracking behavior and incenting visits. They feel incenting with rewards will make a customer buy more often and result in a loyal long-term relationship. It doesn’t happen that way. A customer may use the brand for a while because of the incentives, but the moment he finds a better offer, he is bound to leave. Instead of an automated rewards system, a restaurant can think of ways to surprise a customer.
In the dating world, the tracking behavior would be like sending a text, “I noticed that you have not gone out with me in the last four weeks. If you go out with me in the next week, I will buy dessert.” The loyalty reward is similar to if a friend started offering loyalty punch cards at dates: “After five dates, you get carnations; after 10 dates, roses; and after 15, a box of Godiva chocolates.” That will be both funny and sad. He will come across as a desperate guy trying to buy love, and that mindset may not result in any meaningful relationship.
It is a great idea to put a structure for tracking customer visits and recognizing customers, but just like in a relationship, appreciation and recognition must come from the heart.
Imagine your significant other is unhappy with you and is sharing the reason for her unhappiness. Will you simply put a $5 bill in her hand and say, “Does that make it all good?” Not really. The customer is a human, too. If they are unhappy, the least we can do is listen to them and then work on a solution that is satisfactory.
The story of “Discovering the Perfect Cheese Pull” made me think. I realized that each one of us can get outside our comfort zone and challenge ourselves. How do I discover the “Perfect Cheese Pull” for my brand?
It is very easy to settle for things that have worked in the past. But that never results in big improvements. In case of the cheese pull, it all started with one simple question: “Are all cheese pulls the same?” Once my team asked the question, the curiosity moved us forward and we had to know the answer. That resulted in discovering a cheese pull that is better than all others.
Find out what works for your restaurant category, and then ask the same question. If you are curious, you will never settle for a me-too solution. You will find your “better cheese pull.”
The big word today is disruption. Every industry is going through disruption. How can a restaurant chain disrupt their category? What should a chain with a limited budget do?
Let me illustrate an example that is easy for any restaurant to do. Most restaurants have peak hours when most guests come in at the same time. Usually, service levels drop during these hours as the restaurant is designed to serve this high demand.
What happens if the restaurant puts a sign outside when it reaches capacity, and it says “No Vacancy.” Yes, the restaurant must say no to extra revenue. But in return it gains the following:
- Team members realize that the restaurant is actually serious about service standards.
- The customers in the restaurant feel extra special.
- The customers outside want to be inside the next time, and will plan better to be there before the “No Vacancy” sign goes on.
- This could result in some big-time buzz, which could significantly increase awareness and trial.
This can jumpstart the brand’s business. The cost for this is hardly anything, as a LED “No Vacancy” sign costs less than $100.
Now that you look from the world of customer karma, has your outlook of marketing changed?
It has. Marketing is not about coupons, offers or ads that interrupts a customer. It is much simpler than that. Marketing is simply an invitation from the heart. That’s it. No games, no gimmicks, no trying to trick. If it is a true invitation, then the customer must respond.
In your last corporate job, you were vice president of marketing and operations for Papa John’s. Based on your experience, if you were back in the corporate world, what would you do differently?
If I was back in the corporate world, I would do the following five things:
- Clearly define the brand’s promise: A brand’s promise is, “What experience can we guarantee 95 percent of our customers at peak times?” That is the true reflection of the brand. The brand, just like a relationship, is defined by its lowest points. Success for a brand starts with acknowledging the lowest point and then improving on it.
- Spend more time being a customer: I learn the most when I go and sit in any restaurant and observe customers. It helps me understand how customers react to the brand.
- Challenge everything that has “worked in the past:” Unless a brand reinvents itself on an ongoing basis, it is bound to become obsolete. Challenging the status quo and what worked in the past should be in the DNA of any successful brand.
- Inspire every team member: There is a famous quote by William Arthur Ward about teachers. If I take his idea and use it for leaders, it would read as follows: “The mediocre leader orders. The good leader explains. The superior leader demonstrates. The great leader inspires.” I want to be the leader who inspires. The goal of the leadership team will be to find ways to inspire every team member to be excited at the beginning of their shift.
- Be a good neighbor: A restaurant is fixed to the ground. It is part of the neighborhood. A good neighbor is always there for everyone and is always thinking, “What can I give?” That is the spirit that builds a long-term connection in a neighborhood.