How To Use Data Analytics To Improve Customer Retention

When you own a growing restaurant, you want it to do exactly that: grow.

Many restaurant owners think the best way to grow is by acquiring new customers.

Not only is retaining customers less costly than acquiring new customers, but research shows that improving retention by just 5% can drive profits up by over 25%. Retaining customers doesn’t just save you money; it also makes you money.

That means once you attract new business, the next step is to think about how to get them to stick around.

Unfortunately, customer retention is currently down 20% in the hospitality industry. 

Now is the time to shift your focus toward modern retention tactics informed by data analytics. 

Keep reading to learn about:

• Retention trends in food service 

• How to uncover and shape customer behavior through data analytics

• Practical strategies for using data to improve restaurant retention

• Data analytics success stories 

Retention in the food service industry

According to a survey conducted by AlixPartners, 74% of people plan to reduce the number of times they dine out yearly. This statistic might explain why restaurants are seeing such a decrease in customer retention.

But as a restaurant owner, you likely already know that your industry has long faced retention challenges. A Thanx study found that 70% of restaurant customers never make a return visit. That number doesn’t just apply to brand-new customers. It also applies to previously loyal customers who were once frequent visitors. 

That said, newer research suggests that customers are again looking for restaurants to give them a reason to stay repeat visitors.

According to a PYMNTS study, more than half of U.S. consumers use a restaurant loyalty program, suggesting that customers are open to incentives to keep dining out, even if the average rate of dining out in the U.S. appears to be decreasing.

How can you find out what incentives may work for your diners? You can collect data on their demographics, behavior, spending patterns, preferences, etc. Then, apply data analytics to that information to gain insight into what kinds of programs, menus, marketing, and other programs might keep them returning for more. 

This insight is crucial for uncovering opportunities to attract the attention of potential repeat customers and turn them into loyal customers who engage with your marketing and recommend your restaurant to their friends and family. 

Understanding customer behavior through data analytics

What type of data should you collect to monitor and boost your retention? 

• Order history: When you collect order history data on your customers, you’ll learn information like your bestsellers, what time they order, and how frequently they turn to you for their dining needs.

• Delivery preferences: Delivery preferences tell you whether you’re getting more pick-up or delivery orders, whether people tend to order more from home or work, whether your customers prefer contactless delivery and more.

• Third-party app usage: Many restaurants use multiple third-party apps, like DoorDash and Uber Eats. Your data analytics can tell you which apps your customers are turning to and how frequently they use them.

• Cart abandonment: If your cart abandonment rate for food delivery is high, you may be able to spot several issues, such as a too-difficult checkout process, too many hidden fees raising the final cost, and your estimated delivery time deterring potential buyers.

• Customer feedback: Direct customer feedback, such as via reviews, is one of the best ways to gain insight into your customers' thoughts. Customers want to feel heard and are more likely to return if they know you’re listening.

When you gather and maintain high-quality data, you can better understand your customers and cater to their needs. A study found that 80% of companies using real-time data analytics saw revenue increase.

When you work with accurate and timely data, you’ll have a blueprint for your customers’ needs, personalities, and preferences. The better you understand your customers, the more you can make decisions that directly address them.

Practical strategies for using data to improve customer retention

Ensure data safety and consistency 

Bad data costs companies not only monetarily but can also cost you relationships. When relying on inaccurate, incomplete, or out-of-date data, you can make decisions or launch campaigns that don’t have the ROI you’re looking for.

When you c

ollect data on diners, you must establish a data maintenance plan to ensure it stays organized, actionable, and secure. That requires a data governance strategy that calls for frequent data audits, careful permissions, and more. Most restaurant managers don’t have the time or skills to take this, so they’ll invest in a data management platform for assistance. 

Deploy informed customer profiles

Building customer profiles can help you segment your audience and develop marketing campaigns and other strategies to retain your customers, but these profiles go further than helping you tailor your marketing.

Retention relies on a seamless customer experience, especially when people don’t always have a touchpoint with a human being, such as when placing online orders. Data-informed customer profiles can help you ensure that every interaction is smooth by delivering on diner preferences regarding sauce selection, free versus paid add-ons, electronic payment options, delivery choices, etc. 

Build personalized experiences

One of the biggest trends among younger generations, who are only going to increase in spending power as they grow older, is personalization. 45% of Gen Zers will leave a website if it doesn’t predict what they want, like, or need. 

Your data can drive this personalization. For example, say you have a customer who tends to visit your restaurant for all the big events in their life, including holidays. By integrating data into your email marketing platform, you can automate sending them a personalized email with a discount when holidays and personal events such as their birthday are coming up. 

This will help keep you top of mind so they come back and spend time at your restaurant every time they celebrate. 

Turn data into smart marketing

A part of data gathering for a restaurant is seeking customer feedback. Online reviews and social media posts are the best places to find feedback. You can reuse this material to market your location.  

Applying user-generated social proof in your flyers, billboards, email campaigns, and beyond can be a great way to show your customers how and why they love you.

Data analytics success stories

Roosters Piri Piri

Roosters Piri Piri set out to prove that fast food doesn’t have to be unhealthy, and in almost three decades, they’ve grown to over 40 locations and developed a fanbase throughout the U.K. But they were looking to improve their delivery operations. That’s where Deliverect came in.

Using Deliverect’s data analytics, Roosters Piri Piri gained insight into driver wait times and assignment times, finding opportunities to increase productivity, retention, and revenue.

The Wagyu Bar

Born from the meat-loving brand Meat N’ Bone, The Wagyu Bar is a Miami-based walk-in tasting room that launched during the uncertain times of the COVID-19 pandemic and was able to tailor their delivery offerings with the help of Deliverect’s sales data reporting. 

Deliverect consolidated sales data from multiple platforms on one dashboard, enabling the team behind the restaurant to see sales trends at a glance. The Wagyu Bar could see which platforms worked best, improve retention, and make data-driven decisions about their delivery offerings. 

Conclusion

Becoming a data-driven restaurant means investing in collecting and maintaining data analytics on your customers. After the initial investment, such a program can help you better understand your customers. This can allow you to tailor everything from your payment processes to your marketing campaigns to what your customers want.

Tools like Deliverect’s reporting dashboard help you to predict customer behavior, personalize customer journeys, and turn them into repeat eaters.

Request a demo to learn more about how Deliverect’s data analytics can help you keep your customers and stay ahead of the competition.

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About the author:

Jacqueline Gualtieri is a writer and editor whose work has appeared in The Huffington Post, Insider, and The Slowdown. In addition to writing, she works as a digital media consultant and content marketer, driving online traffic for her clients. She’s always looking to advance her skillset and believes strongly in the early adoption of new technology.