See how this restaurant chain found a $32M opportunity to serve smarter marketing
Stuffed crust pizza. Unlimited pasta bowl. Doritos locos taco.
These are some of the more well-known limited-time offers (LTO) from prominent restaurant chains (the last item even became a regular on the Taco Bell menu). But let's face it: Too many restaurant marketers let the LTO drive their strategy.
The problem here is that’s using a one-size-fits-all approach for talking to new customers and reengaging current customers (albeit with mouthwatering dishes).
The benefits of the LTO campaign are obvious. They're relatively simple, effective "enough" and easy to measure—just track how many items were sold. But there's a bigger issue here: You're assuming that everyone in your database wants and needs the same message to motivate them to come in.
This approach not only creates media inefficiency and ad waste, but also a poor experience for the end user who receives a generic offer from your restaurant that likely isn’t relevant to them. It’s time to understand that each individual dines out for different reasons and also chooses your specific restaurant for different reasons. It’s time to think beyond the LTO.
Your opportunity is to engage each person with messaging that reflects what, exactly, would incentivize them to return to your restaurant over others.
To help illustrate how and why this is so important, here’s what it looks like for a real restaurant.
Understand customer spend to find opportunities
This concept is best illustrated by a recent conversation we had with a client. Our client, a full-service restaurant (FSR) chain, wanted to understand what opportunities they had to serve more relevant marketing to their diners.
We did an analysis for them where we matched their first-party data on their diners with our 200 million customer profiles. These profiles include transaction data from 1.5+ million merchants and tracks over $2.8 trillion in consumer spend each year.
Through this matching, we were able to get to know their diners better. Namely, we could see how loyal each person is to their brand versus the FSR category at large. There are low, medium and high affinities for our client and the analysis shows their customers’ spend across light, medium and heavy spend in the full FSR category (the numbers add up to 100% of our client’s diners).
We can see that 24% of our client’s diners are both high client affinity and heavy spenders in the FSR category overall, which makes sense based on the category.
But there’s another 33% (15% plus 18%) of their diners that only visit their restaurants occasionally (low and medium client affinity), even though they are heavy FSR users. These visitors love the FSR category, but they’re dining with this restaurant’s competitors instead of them.
This represents an opportunity for them to win over more of the diners that regularly spend at other FSR locations.
We also dissected the data to compare spend at the restaurant versus the overall FSR category:
The circled segment shows high spend at the restaurant and medium FSR category spend. They love our client’s restaurants, spending $156 over the course of the year, and people in this group spend $910 in the category overall each year. That’s 17% of their spend in the category that goes to our client, which is even more than the high/heavy group on the chart, who spend a lot at the restaurant, but that spend is just 5% of their spend in the category.
This group clearly likes coming to this restaurant even though they occasionally choose other restaurants. It should be fairly easy to convince these folks to grab another bite at their restaurant over other competitor brands.
Based on the number of diners (not visualized) in high/medium category, this restaurant could increase revenue by $32 million by getting this segment to make just one additional visit per year.
Activate the customer insights for personalized marketing
When you understand what each of your customers spends with your brand compared to what he or she spends within your category, you can find pockets of opportunity (like this restaurant did) and message those people appropriately.
Our client has two great revenue driving opportunities here:
- Get the low- and medium-visit customers that are heavy category spenders to choose their restaurant over others.
- Get one more trip from loyal, medium-spend customers that already love them.
They can and should treat these groups of people differently.
The heavy category spenders need to know why they, specifically, should choose this restaurant over others. Maybe the location is convenient to their home or office, or the chain accommodates their special dietary restrictions. This is an opportunity for our client to show consumers that they know them and give them a personalized reason to dine with them over other FSR competitors—or even QSR and fast-casual options.
The loyal diners need a reason to dine more often since they’re likely to choose this restaurant over other options. This is great time to highlight the brand’s loyalty program—or it might be the current promotion that brings them in.
It’s your opportunity, too
Just like our client, all of your diners have a different reason for going to your restaurant, too. Sending all of them the same generic promotion isn’t the answer to driving more visits. You need to identify and understand your most valuable guests, versus your lapsed guests, versus your new guests to deliver against your various goals—whether you’re looking to drive additional visits, increase ticket size or incentivize more online orders.
The more that you can treat a guest like you actually know them (because you already do), the more they will want visit you in the future.
Interested in learning more about how this works? Check out how we worked with Cracker Barrel to speak to individuals across dietary preferences and age ranges.