Food Service – Customer Defection
Having customers return to any food service business is vital to long-term its long-term success. Yet the customer retention performance of most restaurants is terrible and current food service feedback methods are partly to blame:
Study finds 70% of retail and restaurant customers never make a return visit.
This means that 70% of previously loyal customers are “at-risk” and unlikely to return. Moreover, the top 25% of customers are contributing 64% of revenue. Lose one of these, and the business is in real trouble. Reasons for the defection are many. Common ones are likely to include:
- Poor Quality Of Food
- Poor Customer Service
- Unreliable Service Standards
- Dirty Housekeeping
- Incompetent Pricing
In many ways, however, the reason is irrelevant. This is because as the customer has already defected, never to return. Worse, is that they may well have complained online in Yelp or Tripadvisor. So the first you will hear of a poor service or experience is online, where it is already affecting the perception of prospective diners. This is also really bad news:
Ratings matter as 33% of frequent restaurant-goers would never eat at a restaurant with an average review score of less than 4 stars (out of 5) on online review websites like Yelp, Google, and Facebook
Importance of Food Service Customer Retention
All businesses lose customers, but how important is this for restaurants? We have some data to help. In fact, we need not look any further than Starbucks. Consider the following:
- The satisfied customer visits 4.3 times per month, spends $4.06 and is a customer for 4.4 years.
- The highly satisfied customer visits 7.2 times per month, spends $4.42 and is a customer for 8.3 years.
Doing the math, the satisfied customer spends $210 per year and is worth $922 over the span of their 4.4 year customer life. The highly satisfied customer spends $382 per year. Which is an increase of $172 or 82% percent more per year—and is worth $3,170 over the span of their 8 year customer life.
We developed a Customer Defection Calculator to highlight the huge impact of losing customers. It is a free download from this page – just enter your own data. Subsequently, review why you need to focus on customer retention.
Lesson 1: What this means is that food service customer defection can be solved if the management focuses more on retention and less on acquisition. The stats and financials are inescapable. The big lever is moving the customers up to highly satisfied and your sales will follow.
Lesson 2: Stop Using Comment Cards – see below.
So Why Still Use Comment Cards?
So if the restaurant knows it has customer defection and knows the financial importance of retention, why do they still use feedback cards?
..And why are there so many comment card templates to choose from, yet all asking the same ineffective questions:
- Rate your overall experience
- Judge the food.
- Please rate the service you received.
- Consider the ambiance.
- Is there any other information you would like us to know?
Filling these feedback cards can be as boring as watching paint dry, and worse of all, they do not solve the problem of defection. Moreover, there are at least a dozen reasons why a food service operator should immediately tear up its existing comment cards, its current feedback methods and begin again.
Use an Electronic Customer Comment Card Instead
Allow the customer to use their own cell phone to give feedback. Let them use SMS feedback, Phone feedback, Smiley face feedback – in fact, any method they choose. Let them choose the language they prefer. Rotate the questions and alert the staff, within seconds if the customer is unhappy. This enables real-time action to fix the issue and recover the customer before defection. This customer feedback approach helps stop defection and online complaints. More information on the full feature set is here.