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Guest Loyalty: A New Perspective for the Digital Era

Overview

Fishbowl has long been dedicated to helping restaurants navigate the digital landscape.  From our perspective, the restaurant industry has lagged others in embracing the power of digital marketing, missing out on the opportunity to use guest analytics to proactively drive increased visits and incremental revenues.  We call this the industry’s digital divide.  We believe that one of the most critical paths for crossing that divide is to develop a new understanding of guest loyalty.

Based on our years of experience working with restaurant clients building email clubs, assessing traditional loyalty programs, and deploying data-driven solutions, we have developed a unique point of view (POV) on loyalty itself.  And in response to this significant industry challenge, we have developed a guest centric Loyalty Analytics solution, driven by the same CRM methodologies that ecommerce and retail companies have deployed so successfully.

The Fishbowl POV:   Loyalty is a Business Strategy

Loyalty isn’t a card. Data from Fishbowl’s current clients shows that for all guests who enroll in an eClub, only 40-60% will join a traditional loyalty or rewards program. The number is even lower for guests who enter the database through online ordering or other sources.  And even for those who do enroll in card-based loyalty, over 50% of the cards remain unregistered. These programs also miss infrequent guests who are nonetheless strong brand advocates as measured by surveys or social comments.

Companies like Amazon or Zappo’s, the best of breed data-driven practitioners, use customer engagement, insights, and metrics to drive strategy, revenues, and operations.  Most restaurant loyalty programs, however, fall well short of this mark.  Too often they are designed as tactical sales-building programs aimed at a narrow base of heavy users. Even in this limited role they will lack clear goals and success metrics, require too much of the guest, and consequently grow stale. Traditional loyalty programs also miss large segments of the customer base and key touch points like online ordering, catering, guest satisfaction surveys, and social media.  As a result, most programs don’t deliver clear strategic or economic value to the business.  Instead they become a cost center and liability.

funnel_loyalty2Loyalty-as-strategy is best thought of as a continuum that covers the full guest lifecycle and experience.  It starts with acquisition.  One of the differentiators of Fishbowl’s loyalty approach is the integration of CRM methodologies with customer acquisition:  a key metric on our CMO dashboard is customer acquisition cost (CAC).  Performance marketers must know which guests and segments are profitable or else their marketing efforts may be wasted.

Beyond acquisition, the key is to engage with all addressable guests, moving them along the continuum by learning about their dining behavior, preferences, and spend, and then building a one-to-one relationship through smart marketing programs that maximize each individual’s lifetime value.  Restaurant marketers should take these learnings about best guests and apply them to new acquisition initiatives, creating a kind of ongoing marketing loop that they continue to refine and optimize.  In this context a traditional loyalty program may make sense as a program-within-a-program, e.g. as a means of engaging cash customers or heavy users, but it shouldn’t be considered an overall strategy.

Our Approach is Based on Proven CRM Methodologies

Fishbowl’s Loyalty Analytics solution expands upon CRM methodologies employed by ecommerce and retail companies.  Merchants like Amazon use prior purchase behavior to drive recommendations, messaging, and sales. The data comes from linking shopping carts to customer and payment information, a foreign concept to restaurants.  But new standards for PCI compliant credit card tokenization now allow restaurant marketers to use this successful ecommerce and retail technique.

The key to success is to acquire profitable guests, then match transactional data to “addressable audience” segments – guests for whom you have contact information, whether they came from eClubs, rewards programs, online ordering, reservations, catering, or guest satisfaction programs.  As these addressable and matched audience segments grow, so do the opportunities to grow sales and insights.  To strengthen the depth and relevancy of both marketing programs and insights, we layer on additional data from other sources.

guest_centric_solutionOur solution offers restaurant marketers an opportunity to engage a much larger customer set – 2-3X larger in fact – than do traditional loyalty programs.  This approach does not rule out adding a traditional loyalty program, either points/visits based or surprise and delight, particularly where the goal is to capture cash-based transactions or create opportunities to impact the in-store experience by having guests identify themselves. But such programs are a subset of the overall opportunity, not the definition of it.

From an operations perspective, our data driven approach is less of a burden on guests and staff. Guests who don’t want to enroll in an explicit program don’t have to present a loyalty card or phone number for each visit—yet we see all their transactions anyway. And cashiers or wait staff don’t have to change their routines or stay current on all the program rules and details, so there’s minimal impact on operations.

Fishbowl works with clients to build a guest centric loyalty solution by starting with an initial audit of guest behavior using 13 months of historical POS and payment data. From this we develop a Revenue Roadmap that ranks strategies based on their likely financial impact. The top opportunity, for example, might be getting first timers to make a second visit. Or reactivating dormant customers.  Or growing the frequency of online ordering. Or it may be optimizing your offer strategy to drive the highest potential revenue per redemption.

We can identify your best guests, reward them, thank them for being loyal, or even omit low value guests from offers or surprise and delights.

In summary, Fishbowl’s loyalty perspective offers these takeaways:

  • Loyalty is not a one-size fits all model, but rather a collection of guest centric strategies and tactics focused on acquisition and engagement, with the ultimate goal of growing overall sales and profitability by segmenting customers into actionable groups based on their behavior and preferences.
  • Building loyalty requires clear marketing goals, then measuring and optimizing on an ongoing basis.  We eliminate guesswork by modeling the potential financial impact for each segment’s strategies; the combination of those strategies creates a business-wide sales lift model generating greater comp store sales. Most importantly, we circle back on each strategy to see whether we achieved the goals and to mine for insights that can improve that particular strategy as as well as future initiatives, including acquisition programs.

The Technology Behind Our Solution

Fishbowl ‘s Loyalty Analytics solution  is constructed from a  tightly integrated “stack” of Fishbowl-owned technology, all built to enterprise level standards and hosted in secure data facilities. Where appropriate we add 3rd party technology with real-time or nightly batch integrations.

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