Why Your Restaurant Needs to Be More Like Netflix
You might think that a restaurant has little in common with a streaming video platform. But you can learn at least three valuable lessons from Netflix.
Some months ago, Tillster CMO Hope Neiman spoke at a webinar about how restaurants need personalization – and how they could take a lesson from Netflix in adaptability, customer understanding, and getting real value from their data. Here are some of the ideas shared in the webinar.
How should restaurants be like Netflix?
Netflix has long been a leader in using data to understand their customers. We can see it in their Recommended for You feature, which ‘learns’ from each viewer’s preferences and recommends movies that people with similar watch histories have enjoyed. But it’s more than that.
Netflix has proven its adaptability and willingness to embrace digital. This company started as a mail-based DVD rental service, but it successfully transitioned to a digital-first business (although the DVD arm is still active).
Likewise, restaurants have had to pivot. The fast-service chains in particular have had to embrace digital ordering, apps, and the like. And with COVID-19, they have had to adapt to additional changes, such as a greater emphasis on delivery.
Netflix’s ‘secret sauce’
Data-based at-scale personalization has been Netflix’s secret sauce. Although e-commerce might seem a world away from the restaurant industry, food service brands can still learn digital engagement tactics that can build better relationships with customers – and keep them coming back.
Of course, personalization for a restaurant will look a bit different than personalization for a video service. But underneath those differences are some core similarities. First, though, let’s talk about why personalization is so important.
The what and why of personalization
We’ve covered much of this information in our recent post on 5 Ways Personalization Improves Revenue. So let’s just go over the basics here.
Personalization, in the restaurant industry or anywhere else, is simply tailoring experiences and interactions to a customer or a group of customers that share specific traits (i.e. a segment). At its most basic level, it’s saying hi to customers and calling them by name. In the digital world, personalization looks like customizing what the diner sees on their app screen – e.g. making it easy to reorder dishes they like or matching featured offers to their food preferences – as well as sending personal offers and messaging.
Yes, personalization entails extra work. But it’s worth it. Why? One reason is that many guests simply expect it; a McKinsey report showed that 71% of those surveyed expect a tailored experience, while 75% get frustrated when a personalized experience is not offered. Another reason is that businesses that personalize tend to bring in more revenue. Finally, personalization can help you avoid unnecessary costs in the form of poorly targeted offers.
How restaurants can imitate e-commerce’s use of data
Once a restaurant has an app or online ordering, the lines between food service and e-commerce become a little blurred. While food service is all about a tangible item, digital interactions and orders mean that some e-commerce principles now apply. These include:
· Data-driven customization. Just as Netflix uses personal data to customize the video recommendations they show on the screen, you can use guests’ order data to customize their digital experience. Make it easier for them to navigate your app and to order their favorite foods. You can also use aggregated customer data to understand what’s popular with your audience, develop fun and exciting new items or ideas, and trim underperforming options from your menu.
· Letting guests try new features. User testing is an invaluable way to see how real customers use your app or website. Put paying for user testing gets quite expensive. So why not do limited rollouts of new features and let your core customers try them out and offer feedback? Customers feel valued and included, and you get critical real-world information.
· Customized in-app messaging. The tone and offers you use for one-and-done guests will be different than the ones you use for loyal customers. But even more importantly, the words you use in your app or on your website need to match your brand image. This can be hard to achieve when you only have a limited amount of space to get your message across. It’s further complicated when you start customizing messaging for certain segments or individual customers – but it pays off. The more you can infuse your brand’s personality into the experience, the better that experience will be.
Of course, there are many ways you can use data to personalize customer interactions. So why aren’t more brands doing it?
Why restaurants struggle with personalization
One standard message (or, at most, a couple of broadly localized messages) is the traditional way. It seems simpler. It’s less intimidating. Personalization, on the other hand, seems like a complex and daunting task. But it doesn’t have to be.
One of the main reasons restaurant brands struggle with personalization is that they see it as a monolith. But it’s not. It can be broken down into many small successive steps rather than accomplished in one large rollout. So, start small. Add instant re-order buttons. Customize featured foods or images to the customer’s food preferences. Start wherever you are now and do what you can.
Another trap is that brands feel they have to do everything everyone else in the industry is doing. Not only is this unfeasible, it’s not wise. What you need to do is what your guest wants – not what other restaurants are doing. So, find out what matters to your customers and work towards doing that. Make sure your guests feel the love.
Finally, the technical aspect of ensuring that data from different sources is available to make these personalizations is a real hurdle. Not all restaurant technologies play well together! Solving this often requires the assistance of an experienced partner like Tillster, but it can be done quite effectively.
Steps to Netflix-style personalization
Understanding buying motivations and loyalty triggers are an important part of personalization; without these, you’ll struggle to craft meaningful rewards. For some brands, acquiring data can be a challenge. Customers tend to patronize many restaurants and very rarely stick to one and one alone. But finding what customers care about and what they consistently order is enough to kickstart your personalization efforts. For example, our 2022 Tillster Index Report listed convenience, transparency, and short wait times as major motivations for quick service and fast casual customers. Knowing this kind of information gives you a starting point.
All personalization starts with data. Broadly speaking, the following steps will help you capture customer data and turn it into a Netflix-like personalized guest experience:
1. Collect data. Because you’ll be getting data from different sources, it’s very important that you use a Customer Data Platform (CDP). This will gather data from multiple tools and help you take the next step.
2. Ensure data availability. It can be surprising to find out just how many ways data can be stored and formatted – and how few of these ways work across tools or platforms. If you want to get the most from your data, need to be able to view it and use it.
3. Analyze data. This is where things start to get real; you’re turning data from information into actionable insights you can use to inform your business strategy. Critically, this is also where you’ll start to learn about your customers.
4. Segment and target customers. Using the information you glean from your data analysis, you can segment customers into groups based on shared characteristics like order frequency and type, demographics, etc. Now you’re ready to start personalizing. Incidentally, a CDP can handle these four tasks for you.
5. Start where you are. Don’t think that you have to morph into an ultra-personalized presence overnight. Start small. Personalization is a moving target; you need to plan, act, evaluate, and iterate. And then you’ll need to do it all over again. It takes time. The main thing is to get started and work at continually improving.
So when you think about it, Netflix and your restaurant share the same fundamental need: to make customers happy and keep them coming back. Taking a page from Netflix’s use of data to drive personalization can help you achieve this goal. But be patient; success in digital channels takes time and effort.
