With the 2022 holiday season upon us, restaurants are laser-focused on how best to increase foot traffic and optimize sales. Companies like Starbucks and Dunkin’ saw a 25 percent and 9 percent respective increase in foot traffic in the first seven days of launching their fall menus. While some aspects of restaurant operations will remain similar, this holiday season will look different from years past. The pandemic drove massive staff turnovers and saw new technology adoption and implementation across the industry, with 36 percent of restaurants upgrading their technology in 2021. For many, this season will be the first time the new personnel and technology are coming together in full swing.
While restaurants must focus on operational excellence and execution, they must also prioritize the opportunity to attract and retain customers heading into the new year. Here are three questions restaurant marketers should be asking to guide customer loyalty programs in the coming months:
What external challenges are impacting customer data?
Consumer sentiment around data privacy has shifted in recent years due to data breaches and increased awareness of what data is being collected. This shift has left consumers less willing to give their data to just any company and are now expecting something in return if they do. At the same time, new technology and software has made it increasingly difficult for restaurants to collect customer data. Increased use of chip cards and third-party delivery apps, which are expected to have an estimated 53.9 million users by 2023, offer restaurants little, if any, data about their customers
These new barriers to data collection and increased consumer expectations have forced restaurants to refocus their customer loyalty programs as a reliable first-party data source. Brands can tackle both challenges by encouraging customers to opt in for added conveniences and better offers and services. Right now is the perfect time as data shows 61 percent of consumers joined a loyalty program to receive discounts during the 2021 holiday season and loyalty programs are continuing to grow in popularity with the target Gen Z and Millennial audiences.
Are restaurants collecting the right customer data for effective loyalty programs?
When customers opt in to a loyalty program, they are agreeing to share their data with a restaurant. The onus is then on the brand to ensure they are collecting the right data. For many restaurants, the holidays equate to an uptick in customers—on average the holiday season accounts for 20 percent of annual revenue at restaurants. This provides them the opportunity to collect a large amount of customer data.
Restaurant operators need to think of customer data as a three-piece puzzle. In order to leverage customer data for hyper-personalized marketing, restaurants need:
- The ability to identify their unique customers, through either an email address, phone number, customer ID or credit card number
- The ability to know what they purchased, in order to curate a relevant offer or engagement based on purchase intent
- A way to reach that customer to present that relevant offer or engagement
If any of these pieces are missing, the entire campaign will be cut off at the knees and prevent restaurants from effectively engaging with their customers.
Are restaurants considering KPIs that will matter beyond Q4?
This is the time of year to take advantage of increased spending (the pumpkin spice industry, for example, was worth a whopping $511 million in 2019) to optimize the business going into 2023 and beyond. During the holiday season, restaurant marketers commonly “think big” when it comes to tactics and strategies, but many overlook the opportunity to “think big” about their KPIs and the potential long-tail business impact. Marketers should consider how best to optimize their loyalty programs.
The KPIs restaurants should be paying the most attention to concern engagement and discount efficiency. While in the past loyalty to a brand may have correlated with increased spending or number of visits, that is not the case any longer. Marketers should look outside habitual practices for those who are truly engaging with a brand – be it on social media or in opportunities to provide feedback. When teams start paying attention to that, they are able to see where loyalty really lies and if those customers are being targeted appropriately. Discount efficiency, on the other hand, focuses on optimizing each dollar of discount provided. Loyal customers are likely to visit a restaurant whether offered a discount or not so that would not be the best place to focus on. Where the true opportunity lies is targeting a customer who may have visited once to entice them to return. In doing so, restaurants can make sure that the discounts being offered are equating towards greater profits in the long run.
Kellie Zimmerman has in-depth knowledge of the software industry, having spent over 15 years building and leading teams in the tech space. She has spent most of her career at Concur and Avalara, and has held high profile roles, such as Vice President of Sales, as well as General Manager, responsible for a $160M business unit. She has held key leadership roles through both acquisition (SAP’s purchase of Concur in 2014 for $8.4B) as well as initial IPO (Avalara’s IPO in 2018). Kellie has earned a BA from Washington State University, with an emphasis in Management Information Systems. Kellie lives in Bellevue with her husband, Dave and two daughters, Livia and Emmalie.