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Whatever business you're in, repeat customers are your best and most profitable customers. This is true if you are one retailer OR restaurant, or a franchisor looking to expand your locations. For restaurants and retailers, this means redefining success. With so many options available to customers, year-over-year sales growth is too short-term for the overall health of a business. What really matters is repeat business from customers, what is called Lifetime Value (LVV).
Visitor lifetime value
In it e-book, “Guest Lifetime Value, The True North Star Metric for Restaurants,” Olo defines it as the revenue generated by each guest during their relationship with a brand. He estimates that the top 5% of GLV drives about 30% of restaurant revenue. Repeat guests in the previous six months ordered 2.2 times more than the average guest! Earning customer loyalty will result in more repeat business and higher checks.
It also saves money, because acquiring new customers is not easy or cheap. Sharing yours marketing expenses (advertising, mailing lists, cost of discounts and promotions, etc.) from your new customers (who may not be as easy to track as you think) to determine that cost. How much more profitable is it to get more business from existing customers? Of course, you always want to acquire new customers – the trick is to turn them into lifelong guests.
You do this by not only meeting their needs, but by anticipating them. It is no longer enough to provide quality food or goods at good prices. Shoppers and diners today want to feel that you know and understand them. They want one RELATIONS that will grow and deepen over time. You bring that value to them and they will bring you dollars.
The role of technology
fortunately, technology can help analyze this through loyalty programs, especially those linked to apps. Staff can see if a regular guest has placed an order and suggest an extra, or offer a small gift, just to make that connection. You can reach out through those apps to provide personalized messages that can bring them for occasions (maybe a small birthday discount) or if they haven't been recently and more. This shows that you know and value them.
It may even help you oPerations — as you learn customer behavior over time, this data can help your managers ensure more staff are available at your busiest times, another factor in customer convenience.
It's about Business 101 – anticipate, meet and exceed guest expectations and do it with a human touch.
ABOUT franchisors, the theory is very similar – it is very effective to grow your business if your current franchisees buy more and more locations and territories. Franchisees are your customers and knowing, understanding and anticipating their needs will encourage them to expand their business with you. As with diners, this is more profitable for the franchisor than growing by acquiring more new business owners. (Although we like them too.)
Think about it. After the first handful of units, a franchisee doesn't need all the instructions or background material they got the first time. They have already used your training, implemented the systems and had success. This saves the franchisor time and money, rather than reinventing the wheel with each new franchise.
Here is an example. A franchisee buys six units for $95,000 and does so well, he buys five more in Texas for $90,000, 10 more in Florida and Maryland for $180,000 each, and six more in Colorado for $105,000. But he only had to be trained the first time, and it costs the franchisor the same to do an annual visit for a one-unit owner as it does for a 40-unit owner. After this, royaltiessupplies fees and more are pure profit for the franchisor.
Think of it as your franchise
In addition, think about the testimonial factor – that trust and investment from your existence Franchises clearly makes your concept and business attractive to other potential unit owners and, ultimately, to a potential buyer of your concept.
To achieve this, you need to think like your franchisees and understand that the customer is more than a number. However, unlike your restaurants or shops, there is no app for this. You have to build those links yourself. HOST franchise events and get to know them as people, not just numbers beyond initial interviews. Talk to them about why they are investing, their future goals, their children's names.
Be available to them (within reason). Serve them well, answer their questions, listen to their suggestions and constantly investigate how to improve your business model to improve their sales. This is your GTC.
