Personalization may seem like it’s the domain of e-commerce, but the restaurant industry can benefit from it as well.
In this article, we’ll discuss why personalization is important and how it can be done in the restaurant world. Then we’ll explore how specific kinds of personalization can boost revenue.
What is personalization in the restaurant industry?
When we think about personalization, it’s usually e-commerce examples that spring to mind: emails addressed to us by name, push notifications reminding us to renew our subscription, offers and ads tailored to our interests or shopping history. What we may not realize is that personalization is available to the restaurant industry.
Just like e-commerce companies, restaurants often have troves of customer data. So why not use them to tailor diners’ offers, ordering process, and more – and ultimately enhance the customer experience? This will result in stickier customers and in improved revenue.
Sounds great, right? So why is now the right time to lean into personalization?
Why Personalization Is Important to the Restaurant Industry
Aside from the reasons introduced above – namely, that we have the data and the technology to do so – now is the ideal time for restaurants to invest in personalization.
A major reason is that we’re conditioned to having just about everything at least somewhat customized these days. According to McKinsey’s Next in Personalization 2021 Report, 71% of respondents expect personalization. Even more telling, 76% get frustrated without a personalized experience. And a Twilio study revealed that 49% of respondents would become repeat buyers if their interactions were personalized. In the restaurant business, we can’t afford to ignore statistics like those.
So, there’s a short answer to the question posed above: Restaurants need to personalize because it’s what people expect and want. The next logical question is, “How can restaurants personalize interactions with their customers?”. It’s not as hard or as unusual as it might seem.
Examples of personalization in restaurants
Personalization starts with the basics, like greeting repeat customers by name or remembering their special order. But that’s not the only option available to restaurants, nor is it always the most practical. Current examples of personalization in food service include:
Tailoring in-app messaging and content, i.e. by matching the order of menu items to customers’ recent purchases.
Offering promotions or discounts based on guests’ preferences or previous actions.
Customizing win-back programs. When backed by data insights, this can not only increase sales (and repeat customers) but also reduce costs.
Using Artificial Intelligence (AI) and Machine Learning (ML) to suggest items based on customer data.
Sending personal messages to celebrate guests’ important milestones (birthday, customer anniversary, etc.).
And there are more possibilities on the horizon. For now, though, let’s focus on how five specific actions can increase revenue.
5 ways to increase revenue with personalization
As you know, personalization has to start with data. In an old-school neighborhood diner, for example, the data is simply knowing and recognizing customers; it happens naturally. However, most restaurants’ clientele isn’t primarily made up of the same people stopping in every day. So at this scale, personalization starts with a way to capture and use guest data.
1. Use CDP and customer profiles to improve targeting
A customer data platform (CDP) collects, integrates, manages, and analyzes guest data. It can help you track individual diners, but it can also help you segment customers based on shared characteristics. You can use these segments to create customer profiles for various groups. Using these profiles, you can answer questions like:
· What does this group of customers usually order? What do they like?
· What do they pair their items with?
· What messaging resonates with them?
· What motivates (i.e. discount, special deal, etc.) their visits and choices?
With this information, you can then create offers and campaigns that will appeal to each part of your customer base. This is more effective than a one-size-fits-all offer, and it also reduces waste (i.e. sending discount coupons to a customer who is going to come in anyway just wastes dollars).
2. Use AI to enhance cross-sells and upsells
Whether you’re shopping for a snow shovel on Amazon or looking for your next binge-watch on Netflix, AI-powered recommendations are everywhere. Sometimes they are spot on; sometimes they’re miles off. For restaurants, the key is using customer data as described above to make recommendations that the guest will actually use. If you have an app, this could even include location- and weather-based recommendations (e.g. “It’s cold outside, so stop in for our special hot chocolate and you’ll get a free donut”. Or, in warmer weather, “Beat the heat with a free frozen lemonade when you buy a deluxe burger”). If guests are coming in to buy one thing, they’ll very likely buy an accompaniment as well.
3. Deploy data-driven win-back programs
We recently published a case study that demonstrated exactly how customized win-back programs can increase revenue while saving on costs.
We were working with two companies that wanted to turn one-and-done diners into repeat customers. We decided to use an automated program to contact guests who had ordered from a restaurant but who hadn’t placed a repeat order within a few weeks. The automation ensured a follow-up message would be sent, but what should our clients offer? A low-value item (a free drink) or the traditional high-value item (a free sandwich)?
Initially, it was assumed that the higher-value item would create the most traffic. But we had run similar programs and knew that this wasn’t always necessary; a lower-value item could also produce comparable results. And this was borne out in this case, where the free drink performed just as well as the free sandwich. (You can read the full case study here.)
The key finding? Sometimes it’s not what you offer – simply nudging your guests is all that’s needed. But without this data, our clients would probably still be giving away high-value items unnecessarily.
4. Create a better digital experience
A personalized experience reduces frustration. It makes guests’ interactions fast and easy – and that is what everyone wants. And yet, it seems like apps and websites can trigger the most intense frustration among users. So, how can we make the digital experience easier? We can customize it.
This means making it easier for customers to navigate the app or website. Make it easier for them to reorder their favorites or customize their food choices. Tailor the experience to the guest; this will encourage them to spend more time on your site and buy more from you. If you really wow them, they may even become brand ambassadors and give you some of that valuable word-of-mouth marketing.
5. Celebrate specific milestones
Finally, this is a fairly straightforward way to apply the data you have for individual customers. Use their order history to reach out to them for special dates: the anniversary of their first order, their birthday, ordering their 100th item, etc. You can also cast a wider net and create special orders for national holidays or local events (i.e. a playoff win for the local NBA team). Of course, you want to make it relevant to your audience; if data suggests that most of them don’t care who wins the Finals, it’s probably best to find another milestone they’ll connect with.
How Tillster uses personalization to help brands drive higher revenue
Personalization, as we’ve said before, is all about data. And getting the most from that data means having the technology and expertise needed to work with it. This is where Tillster comes in.
Our customer data platform, order management software, and connected tech ecosystem can plug into your existing setup and help you track and use data. Our solutions work across all your touchpoints, from app to website to in-store kiosks. We also provide data analytics and reporting capabilities that allow you to create detailed customer profiles. You can use these to really personalize your outreach. Essentially, we make it easier to keep your brand top of mind to guests, regardless of how they’re interacting with you.
In conclusion, what’s stopping you from personalizing your customers’ interactions and experiences? As you can see, personalization is a powerful tool to drive loyalty and increase customer engagement. It also helps restaurants avoid waste due to mistargeted offers. Why not start small and build from there? Whatever you invest in personalization is worth it.
