A business is only as good as its customer base. After all, without customers, especially loyal customers, a business won’t be very successful for long. And in a competitive market, it’s important to acknowledge and reward your customers, their support, and their loyalty.

It’s no secret people have favorites and this is especially true when it comes to restaurants and the hospitality industry. People will go out of their way to frequent their favorite establishment and often post about their experience on social media and tell their friends. 

This is a key marketing tool that is essentially free to any restaurateur – word of mouth which is the most effective referral program for restaurants.

However, what is the best way to keep these customers satisfied and increase referrals for your restaurant? 

While there is no one perfect way, a restaurant can use a marketing tool called customer lifetime value, which tells you how much a customer spends in their lifetime. 

What is customer lifetime value and why is it important?

Customer lifetime value is the total amount of money that a customer will potentially spend on your business for the duration of your interaction.  It’s an estimate of how much your loyal customer will bring to your business.  It is important because it acts as a good indicator of customer satisfaction which means more repeat business.  And if that customer is happy, they will feel inclined to spread the word and potentially bring you new customers.

So the longer they stay with you, the more they spend, which means your business reaps the benefits and, in turn, the customer reaps some benefits as well.

So exactly how do you build up a customer lifetime value? 

You can do this through a loyalty or referral program for your restaurant which rewards loyal customers and new customers.

Loyalty Program vs Referral Program

There are two main marketing strategies to keep customers happy and increase a customer lifetime value, either through a loyalty program or through a referral program. 

There are subtle differences, with the main difference being that a customer will be rewarded for repeat purchases with a loyalty program. Think of a punch card you have for your coffee shop that gives you a free cup of coffee after your fifth purchase, for example. 

A referral program is a marketing strategy whereby a customer will recommend your product to their family and friends and, if those family and friends engage with said product, your original customer will be rewarded. 

Essentially, this loyal customer becomes a brand advocate for you. This is beneficial as most people will trust someone they know to give them a personal recommendation vs an ad on television or a mass marketing campaign.

How to Communicate your Rewards Program to Increase LTV?

A restaurant must know how to properly implement a reward program to build their customer lifetime value. It’s important to realize the benefit of your customers and to keep them happy in order to bring in new customers that might not be aware of your business. 

Personalized communication, though sometimes time consuming, will work better than a mass email, for example. It’s important to know what your customers are looking for and engage with them to get their opinion. 

After all, if they are going to promote your business, they should promote something they themselves will want to be a part of. It’s important to establish your restaurant’s brand and how you want to present yourself so these brand advocates continue the same story.

Social media is a big part of brand promotion and your business advocates will often turn to their social media channels to tell others about your business. This gives you a wider net to engage with customers you wouldn’t normally reach through conventional marketing methods.

Read: 4 Ways to Boost Engagement on Instagram

That being said, we all know when there’s an issue, we want it solved. Customer service is another way to improve your customer lifetime value. Whether this means replying to comments or questions on social media without lengthy delays, or simply listening to your customer – in today’s fast paced environment, you must stay engaged. 

A customer will remember the service they received, whether it was while they were dining at your establishment, ordering delivery to their home or via an interaction after the fact, like on social media, this will affect how someone speaks of your establishment.

This could involve discounts, special or exclusive dinner invitations, or something as simple as complimentary items when spending a certain amount in your establishment. 

Remember that the loyal customer not only brings you their business but also potential business, therefore, whatever you offer, it should be unique and even go beyond what they are expecting.

Using Technology to Increase Customer Lifetime Value 

There are programs which can help a business implement a rewards program for their customers which makes increasing and tracking a customer lifetime value easier to manage.  Choosing an ordering platform which has loyalty built-in is a good start. Smooth Commerce’s ordering platform provides a convenient ordering experience, and with loyalty built-in it ensures that your customers are rewarded whenever they order from you.

Apart from that, you should have a dedicated landing page and the navigation on your website should also have a visible link to your loyalty program so it is easy to join. 

Customers should also be made aware of your loyalty program when they are in your restaurant via a QR code as well as signage throughout your restaurant so they can easily download your app. And for customers who are newly signed up, an incentive should be given for a referral to build on their current enthusiasm.

 And, of course, use social media to your advantage and post about your loyalty program.

By using a “refer-a-friend” feature, it makes it easier for customers to share their favorite restaurant with friends and family. Through this feature, your loyal customers can share their unique code with others who in-turn can receive special offers, rewards and/or items. 

From a business standpoint, you will be able to leverage your loyal customers to help grow a new customer base. That can pay dividends to your bottom line down the road as word-of-mouth and your referral program continue to grow. 

The restaurant and hospitality industry are constantly changing. And when you have a customer based business, emphasizing the customer experience from start to finish is paramount. If a customer feels valued, they will stay loyal to your business and spread the word. And increasing your restaurant’s referrals will become much easier.

About Smooth Commerce

Smooth Commerce is an all-in-one digital commerce  and customer marketing platform for restaurants that combines online and mobile ordering, delivery, loyalty, and powerful marketing tools to help you grow your business, while giving you access to your customer data to help grow your restaurant. If you would like to learn more or talk to a representative from Smooth Commerce about how our platform can help you meet your loyalty goals, contact us at learnmore@smooth.tech.