Target your discounts to mine customer data and win loyalty
Consumers expect discounts, according to an Allegra food strategy forum debate, but it can work in an operator's favour. Kerstin Kühn reports
With a customer base that expects discounts, operators must be more targeted in the way in which they appeal to potential guests and create loyalty, industry leaders heard last week.
The Allegra food strategy forum debate Winning the Out of Home Consumer discussed whether it was possible to influence consumer spending behaviour and wean diners off discounts.
Anya Marco, director of Insight at Allegra Strategies, revealed the extent of how much a part of our dining out culture discounting and vouchers had become.
"Frugality is no longer shameful," she said. "Consumers have not only become used to discounting but they are also very savvy about it."
Marco added that according to Allegra research 84% of operators had discounted in the past year, with half of those saying revenue had increased at least 5% as a result.
a great tool
Meanwhile, a survey of 12,000 consumers revealed that if discounting ceased, one in every six diners who use vouchers regularly, would stop eating out.
"If implemented properly, discounting can be a great tool to capture customers' data and allow operators to really get to know their audience," Marco said. However, she warned that untargeted discounting would not benefit operators as much and that schemes like loyalty cards went much further than one-off vouchers to create customer loyalty.
This was echoed by Jamie Barber, founder of Sweet Potato Ventures and owner of Brazilian restaurant group Cabana, who said that discounting could be good if done in the right way. "But it can devalue and destroy a brand if not done properly," he said.
"Two-for-one offers that customers have to do nothing for to get are a bad way of discounting, and it shows a lack of confidence in the brand, that they don't feel their product is worth its headline price. No consideration is given up from consumers at all to get the discount and they will feel shortchanged the next time they have to pay full price."
Barber added that creating brand loyalty was not necessarily about discounting but about using creative marketing initiatives to drive footfall.
Andy Nelson, national sales manager at Vouchercloud, said: "The biggest redemption are not half-price or two-for-one offers. Plant seeds in customers heads, create an event, something special that they can look forward to and feel a part of."
Barber also stressed the importance of social media. "You have to engage your customers and Twitter and Facebook are now essential tools for restaurants; you can't lag behind on that front," he said.
Rob Mosley, creative director and co-founder of the Nonsense Agency, agreed. "Social media allows you to really understand what your customers are thinking," he said. "Use it to engage with them. Customers won't like it if you take vouchers away from them, but you can start to do things differently by engaging with them asking them to do more and make an effort."
While consumers have no doubt got used to discounting and many now expect a deal when dining out, operators must look for new, innovative ways to market their establishments and engage with customers to drive footfall. Creating brand loyalty by really communicating with diners goes further than any one-off deal will ever go.
COMMENTS FROM THE PANEL discussion
"Loyalty and repeat business is key to what we do. You have to frequently change and update your offer to keep customers coming back. Loyalty is about providing an experience - we have to ask what's in it for the customer and promotions should be given to loyal customers first."
Carl Morris, marketing director, Elior UK
"Loyalty means different things to different people. You have to understand your customers through different channels - it's about connecting with customers that want to connect with you. The more you bring to your customers the more loyalty you will generate; you have to keep them engaged."
Kath Ludlow, director, Bright Stuff Communications
"Consistency of delivery is key to creating loyalty and keeping customers. You have to keep reinventing the wheel."
Markus Hofmann, global catering manager - food, snacks and coffee, Shell
By Kerstin Kühn
E-mail your comments to Kerstin Kühn here.
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