THE DYNAMICS OF GUEST LOYALTY IN THE RESTAURANT

INDUSTRY

A Presentation forHospitality/Event Management

SeminarSeptember 8th, 2010

with your host: Peter Straube!

“Loyalty” means:

Providing repeat business Resistance to “switching behavior” Giving company “second chances” Less price sensitivity Contributing “word of mouth” advertising

44% of new customers come because of a personal recommendation.

10% more come with a repeat customer

80% of guests in casual theme restaurants are repeat guests. (Source: National Restaurant Association)

Benefits of Loyalty:

Increased revenues and growth rate (due to keeping customers)

Enhanced new customer base (from customer recommendations)

Greater efficiency and higher profits

Common Assumption:

“SATISFACTION”

= Meeting Expectations

The problem:

Between 65% and 85% of customers who defect say they were “satisfied” or “very satisfied” with their former supplier.

(Source: Reichheld, 1993)

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The concept of “Mattering” *

* A term coined by Morris Rosenberg at the University of Maryland

Experimental ApproachLook for the co-existence of:

1. Loyal Behavior

2. Indications of Affiliation and Social Connection

Focus Group Themes:

The Basics Trust Personal Recognition Individualized Service Personal Relationships

Prescriptions for Building Loyalty

1. Raise awareness among staff & management

2. Hire people who have natural rapport-building skills

3. Teach and reward the learning and use of customers’ names.

4. Train and encourage employees to “read” their customers, and to personalize each service encounter.

5. Go out of your way to respond to service failures or customer complaints.

6. Empower employees to respond to customer problems without mgmt. approval.

7. Reinforce relationship-building through employee incentive/reward programs.

8. Invest in Employee Retention.

9. Adjust you guest feedback tools to measure for loyalty indicators.

10. Target the “right” customers.

Conclusions:

• If your guests are allowed to feel “anonymous” in your establishment, it will be almost impossible to gain their loyalty.

• The concept of “Mattering” can be appliedto any relationship: business/customer, business/employee, significant others, etc.

Group Challenge:

BRAINSTORM!