Sponsored by Bridg
Restaurant marketers have long worked at a disadvantage — they simply did not know their clientele. They lacked the ability to identify, understand and reach out effectively to a restaurant company's precise customer base.
This fundamental problem has led restaurant marketers to make “four fatal mistakes,” says Jayson Tipp, data and analytics expert and the former chief development officer and senior vice president of technology at Papa Murphy's International, LLC.
Tipp, who has also worked with such brands as Starbucks and Redbox, says restaurant chains historically have not had access to the same level of detailed information other companies possess. As a result, they must make changes in order to drive results.
Growing restaurant sales, Tipp observes, can be reduced to a few basic points:
• Get more customers to come in.
• Get them to come in more often.
• Get them to spend more when they do come in.
While at Redbox, Tipp was able to analyze the company's wealth of customer- behavior data and use it to focus on communications and drive sales. Although this kind of analysis is common for many industries, it's difficult for restaurants to do and is not standard practice.
Nevertheless, there are learnings foodservice operators can employ to address these problems.
Fatal Mistake #1
Treating all customers as if they were the same
Restaurateurs usually are familiar with only a small percentage of their actual customer base. Generally, it's the 10 percent or so who participate in the company's e-mail or loyalty programs, Tipp says. Consequently, marketers possess limited insight into how to most efficiently market to the remaining 90 percent.
Chains often focus their attention on mass market through television, print and radio. While that's important, it ignores a potential source of lucrative transactions, revenue and profit — existing customers who can be targeted in a less expensive way. This strategy works better than mass marketing nearly 100 percent of the time, Tipp says. Benchmarks from Bridg Inc. — a Los Angeles-based firm that combines digital marketing, CRM and predictive analytics to drive comp growth for restaurant and retail brands — indicate that among a typical restaurant chain's customer base, about two-thirds possess untapped purchase frequency. This comprises a sizable audience in terms of absolute numbers.
Take, for example, a 100-unit chain with an average frequency of 2.7 visits per year. The chain has three million customers, two-thirds of which — 1.9 million guests — have easily addressed potential to visit at least one more time annually. If just 10 percent of those guests visit one more time each year, that would result in a 2-percent increase in same-store sales.
According to Bridg, this group is evenly divided between new customers who have the potential of becoming regular visitors and lapsing customers who can still be brought back into the fold. Both groups offer an opportunity for marketing outreach that can fuel more regularly reoccurring visits.
Fatal Mistake #2
Testing digital marketing rather than embracing it with a clear strategy and budget alignment
Tipp notes that marketers often rely on traditional broadcast media to reach as large an audience as possible. That tactic, however, has been shown to be both expensive and imprecise. Today, though, with the advent of digital marketing, companies have no reason to pursue any part of a marketing mix that doesn't provide a return on investment.
Although the industry has been slow to adopt digital marketing, forward-thinking chains including Starbucks, Domino's Pizza and Panera Bread have led the way in digital space. It's no accident these brands have outperformed their industry peers, Tipp says.
Previously, these digital marketing techniques and tools had been available only to large brands with billions in sales. But that is no longer the case. Digital and database marketing are highly scalable, and an operator can begin with the right-sized budget and tactics, Tipp says. He adds, however, that the plan must be part of a brand's overall growth strategy.
Fatal Mistake #3
Spending more on consumer “look-alikes” than actual guests
Most marketing leaders have participated in research studies resulting in consumer segmentation, which usually identifies four to six descriptions of a chain's customer base commonly referred to as personas. Marketing to a broadly defined audience and expecting a campaign to perform well is unnecessarily expensive — running a restaurant an average $26 cost per acquisition (CPA), according to Bridg's 2016 benchmark data.
These days, marketers possessing the proper technology and leveraging the efficiency of digital marketing can be extremely specific as to whom they're trying to reach. These new tools are helping brands drive transactions with CPAs as low as $6, while targeting consumers they know are their best, most frequent, highest contributing customers.
Fatal Mistake #4
Assuming they don't have the data to implement targeted marketing approach
Operators often ignore the data gathered in their POS system. However, this data can provide an abundance of insights about consumer behavior that can be harnessed to drive overall business strategy and marketing.
By employing this digital and database marketing technology to link individual transactions to individual consumers, years’ worth of insights often can be revealed quickly. One factor to consider: how much historical POS data does the restaurant possess?
A restaurant's POS system stores information on nearly every one of its customers, whereas loyalty, e-mail, online ordering and other opt-in programs typically have a 10- to 20- percent membership rate. As a result, marketers can position themselves to engage millions of more highly receptive customers than ever before.