JULY / AUGUST 2012 | PDF | Subscribe | Home

Check, Please!
Keeping tabs on your consumers keeps them coming back for more.

My wife and I frequently go to a Southwestern-style restaurant infused with the gourmet stylings of a celebrity chef. The food is always wonderful, drinks are imaginative, and the room is fun. It has always been in our top ten for a guaranteed good time.

Two weeks ago we invited a foodie friend — and client — to the restaurant for dinner. That night was especially busy and because our table was situated directly in front of the kitchen, we were faced with continuous distraction and additional noise. That was the good news. It took forever to get anyone to wait on us, to get menus, to get water, to get attention!

After we watched our waitress move her lips reciting the specials that we couldn’t hear through the din, she left without asking us for a drink order. Ten minutes later, we were able to order drinks. The key word is “order,” because drinks didn’t come for another 15 minutes. It went downhill from there.

Each course took longer and longer and for the first time the food didn’t taste that good (real or imagined). Our guest thought it was good, but of course he didn’t know how great it usually is. The only thing consistent with the past was the price. We were crushed.

At least for the time being, this restaurant is no longer on our considered list. The restaurant probably lost about five visits, and based on the average ticket, and assuming we invite others occasionally, it lost about $1,200 in business over the next year. If a few other regular/loyal customers were there that night or if that night happens just once a month, the restaurant will lose a lot of revenue.

This celebrity chef does big business and may have a bigger supply of good customers than the average non-celebrity-chef-owned restaurant, but no business can treat regular customers with disdain and survive, particularly now that social media has become an indelible feature of consumer culture.

iooc chartAmerican Express recently released its 2012 Global Customer Service Barometer. It found that consumers who use social media for customer service are significantly more valuable than the general population. According to the report, socially engaged customers are almost twice as willing to spend more for excellent service than the general population. They are also nearly three times as likely to communicate positive customer-service experiences.

That’s the good news. These customers need attention because they are also more than 50 percent more likely to cancel an intended purchase because of poor customer service than the general population. They are over twice as willing to share negative customer-service experiences, as well.

Being in touch with customers is easy to do, but most restaurateurs and retailers take customers for granted and can’t be bothered. Imagine how often customers in an average store — like a pet, grocery or hardware store — are disappointed, frustrated, or annoyed about their experience. Without an interactive communications loop, each customer transaction is treated as a one-time event. Each customer is treated as a transaction instead of a valuable customer. The frustrations and disappointments should be repaired with that customer immediately, and if the problem is endemic to the business, such as lack of inventory or long lines at checkout, the problem can be acknowledged and fixed, quickly.

Let’s deconstruct the customer process. For the average retail location, the 20-80 rule applies: Only a few thousand customers account for 75 percent of the sales and profits of the retail location. Yet, most retailers imagine that there are thousands upon thousands of customers — hoping, expecting and praying that for some reason some of them will show up every day. Not likely. It’s more likely that some of the good ones will go unnoticed or become unhappy, and then it takes hundreds of new customers to replace that one really good one.

If our former favorite restaurant had an engaged, data-driven process that communicated with customers, it would have been able to pinpoint when we had become lapsed customers. By tracking customer purchase cycles, a database would signal when a valuable customer passes a certain period of time without visiting and trigger a communication of some kind — an offer, an invitation, an email.

If the restaurant had a two-way communications process through email or any social-media program, we might have been able to register our disappointment immediately. Knowing us as good customers, they could have simply sent us an email thanking us for coming and giving us some kind of reward, be it a free drink or 10-percent discount or just a “thanks.” Any contact at all might have encouraged us to let them know quickly how poorly the evening had gone. Alas, they didn’t.

With a database and a strategy, you can learn, react, predict and take action. Most of all, you realize that every customer in your top ten percent is worth at least 50 times more than every other customer. And you can tell your best customers you’re sorry when they have a bad experience and give them a free dessert or 20 percent off to make it up to them.

SPENCER L. HAPOIENU is president and co-founder of Insight Out of Chaos, a database and direct marketing company. He can be reached at spencer-@-iooc.com or (212) 935-0044.

JULY / AUGUST 2012 | PDF | Subscribe | Home