Restaurants are facing their fair share of challenges this year, from talent shortages to astronomical costs, supply chain disruptions and razor-thin margins. According to Restaurant Dive, over 66% of independent restaurants have seen a decrease in sales due to inflation. To combat the downturn, restaurants are testing a number of strategies, including more discounts and promotions, reduced operating hours, reduced staff and removal of lower-margin menu items.
Now more than ever, it’s critical for restaurant marketers to understand their audience, drive traffic and sales with personalized messages, and measure the efficacy of offers. Loyalty programs serve as part of this strategy. McDonald’s, for example, announced they’ve acquired nearly 26M loyalty members this year, helping to drive more visits and incremental sales for the chain.
In the race to profitability, marketers must approach new solutions and strategies with added scrutiny—and make sure they have the data they need to connect with customers now and into the future.
New third-party solutions to the rescue?
Third-party vendors are looking to cash in on the challenging environment for restaurants. DoorDash, for instance, recently announced the revamped DoorDash Merchant Suite. Billed as a self-serve platform with solutions for small and medium-sized restaurant partners, it affords restaurants:
- The ability to offer promotions like 20% off your first order and free delivery (to attract new customers & increase order volume)
- Access to more of the population (DoorDash reaches 94% of the U.S. population)
- Easy access to capital without a loan application process and hidden charges using DoorDash Capital
The platform aims to help restaurants increase business and compete in the face of rising costs and supply chain shortages. From a marketing perspective, however, third-party partnerships can present a significant challenge: the fight over data. DoorDash, for example, sued the State of New York last year, contesting their new law requiring delivery apps to share customer information, like names, addresses and email handles, with retailers.
In the case of Merchant Suite, the platform promises customer insights like zip codes for delivery, popular items and sales analytics. But in terms of customer information, you will be limited to reviews, star ratings and whether a customer is new or returning.
The takeaway: Make sure you’re in a position to collect and leverage the customer insights you need to meet your marketing goals when considering outside partnerships.
Loyalty: the old standby hitting new markets
A more direct way to ensure you’re getting all the information you need is through a loyalty program. These are especially popular in the QSR space, with Starbucks Rewards serving as the gold standard. Now, less traditional players are joining in on the trend.
Wow Bao, a virtual brand, and Paytronix recently announced Bao Bucks, a loyalty program that allows customers to earn points on online orders. As many as 41% of independent restaurants are operating virtual brands. The idea of the virtual brand is to grow digital sales and diner reach without having to invest in a brick-and-mortar expansion. Within that strategy, the loyalty program creates access to customer data that can be used to tailor products and promotions.
The takeaway: When you launch a loyalty program, you may gain the type of information you need to improve personalization and targeting—but not necessarily at the right scale. Keep in mind that these programs only represent a portion of your overall audience. In fact, just a 15% penetration rate is considered successful.
What if you already have the data you need?
New third-party partnerships promise strategies for attracting and retaining customers, but may not be an unlimited source of customer insight. And even if you get the insights you need, you’ve only covered the portion of customers who choose third-party ordering or delivery to begin with. Loyalty programs present a similar limitation in that they can only provide a partial view of customers and their purchasing behavior.
The solution may be simpler than you think. What if restaurants already have the data they need to better understand their customers, even those without an e-commerce component?
It may seem unlikely, given that many restaurants have only outdated POS systems and siloed data at their disposal (with added restrictions for franchisees in many cases). Technologically speaking, the industry lags behind retail, but despite these limitations, nearly all restaurants have a key capability: they can process card transactions. And with that capability comes data that, when leveraged properly, can unlock a wealth of insights on all customers.
By enhancing POS data with bank transaction data and proprietary census of offline identity and behavior, you can begin to identify individuals behind card transactions–as well as actual purchases, seasonality, daypart, channel preferences, and more. This information delivers both the scale and specificity you need to understand what’s working and what’s not.
We recently helped a client identify which daily special promotions were most effective by tracking YoY spend and frequency, as well as highest repeat rates for new customers. As a result, the client knew which days of the week and times of day to place daily offers for maximum results.
Position POS data for privacy-safe targeting
We help our clients build unified, privacy-safe profiles of loyalty and non-loyalty customers with SKU-level purchase history and hundreds of enriching demographics, socioeconomic and lifestyle attributes that power analytics, targeted marketing and closed-loop measurement.
To learn more about the first enterprise customer data platform (CDP) that enables the identification, understanding and engagement of all customers (loyalty and non-loyalty, offline and online), contact us today.