Restaurants, like any retail business, need to track key customer metrics to understand how their customers feel about their brand. In an environment where customers are hugely impacted by online reviews, if you’re not tracking customer satisfaction, sooner or later you are going to see the effects of that failure on your revenues. The same is true for customer loyalty.
Not sure what metrics you should be tracking to understand and improve your customer loyalty? We've compiled four key metrics to help you get started, plus the Wi-Fi analytics tool you need to get the data underlying those metrics.
Ask yourself: are you currently tracking how your customers feel about your brand? Do you know whether your customers are returning? Are you receiving accurate, measurable data from key metrics, or imprecise and vague anecdotal evidence? Anecdotal evidence and online customer sentiment cannot give you the crucial data points you need to understand one of the most important ingredients for your business’s success: customer loyalty. Increased customer loyalty means increased revenue.
So, what metrics should you be using to measure customer loyalty? And what do they mean for what really matters: revenue? These four metrics are a great place to start.
#1. Customer Lifetime Value
The lifetime value of your customer directly relates to how long a customer remains with you over time. And, of course, how much they purchase during that time. The more loyal the customer, the greater their lifetime value. Loyal customers not only purchase with reliable frequency but they do so over long periods of time. Increased lifetime value of each customer improves your revenues and has overall financial relevance for your company.
Countless tools exist to try to track and understand lifetime value, but it boils down to knowing how often a customer visits and/or makes a purchase over a certain period of time. Once you have that data about your customers, you can extrapolate the numbers to understand the revenue you can expect to generate, your projected growth, and even the overall valuation of your company. That’s a metric you take to the bank. If you’re not tracking your customer’s lifetime value with accurate and measurable data, you are missing a crucial customer loyalty metric.
#2. Customer Return or Repeat Rate
Similar to lifetime value, whether a specific customer is returning or making repeat purchases is critical to your company’s revenue and growth. If your customers don’t return (i.e., your customer churn rate is high), you have a serious problem. A one-and-done customer is a huge drain on your marketing resources. Not to mention, if you’re in the restaurant business and folks aren’t coming back for seconds, you have a big problem and it needs to be addressed yesterday.
If your data indicates your return or repeat rates are low, you know it’s time boost your restaurant marketing: roll out coupons to your email list, promote your new menu items on Facebook and Instagram, and bump up the incentives for joining your loyalty program. But, taking action starts with knowing the data. How do you currently track whether a specific customer is returning? (Clue: “It’s not possible” is the wrong answer.)
#3. Customer Loyalty Program Participation
How many of your customers want to join your loyalty program? How many are actually participating after they’ve signed up? It’s important to know if your customers love you so much that “of course!” they want a digital punch card or membership perks or if they see participating in your program as pointless. Getting your customers to participate is also important because the loyalty program is a direct-to-consumer restaurant marketing channel.
Once customers sign up, you can send promotions and offers, track whether they are opening your emails and visiting your website, and ultimately, know whether they are cashing in on the perks. Knowing the redemption rates of offers is a key data point that helps deepen your understanding of the “sticking” power of your brand (and tells you if you’re spending your money in the right places).
Do you currently present each customer who walks into your business with the option to join your rewards program? How are you tracking whether they show interest? How are you tracking whether those in the program redeem their perks? Ignorance is not bliss.
#4. Net Promoter Score
A Net Promoter Score is an index that measures the willingness of your customers to recommend your company’s product or service to others. Understanding where your customers fall on this index helps you understand your customer loyalty, because it helps to gauge your customer’s overall satisfaction with your business. How many of your current customers promote your business to others?
People share their favorite businesses and products for a few main reasons: increased social capital, financial gain, and the rare selfless share (helping a friend out, etc.). But, even when they are getting the benefit of sharing, people still want the process to be easy. So, it’s important to give customers an easy and accessible way to share their love for your business. Once you’ve made it easy, all you need to do is track the response. Giving your customers the opportunity to share that they are at your restaurant when they log-in to your Wi-Fi is a great way of making it easy!
If the response is low, you have an opportunity to make adjustments. With anything, knowing there is “room for improvement” can be a good thing, but especially for retail businesses. Room for improvement means there is room to improve your restaurant marketing and grow your revenue. But without the data underlying this metric, you don’t know that the opportunities exist.
Get the Data You Need for the Growth You Want
These four metrics for customer loyalty are crucial to understanding your current client base and areas for improvement. With accurate, measurable data in hand, you can effectively and efficiently take action to improve your customer loyalty. Generating the data with the proper tools, like a customizable Wi-Fi marketing and analytics tool, is the first step. If you don’t take that step, you’re missing out on key opportunities to improve your marketing strategies and grow your revenue.