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How to Reduce Restaurant Churn

08/30/2023

How to Reduce Restaurant Churn

How to Reduce Restaurant Churn

Reducing operator attrition is a primary concern for distributors. Acquiring new customers is a costly process - Bain & Company assesses that acquiring new customers costs 5 times more than retaining existing customers. This same study also finds that a 5% increase in customer retention leads to a 25-95% increase in profits for businesses. So, there are plenty of reasons to invest in methods to reduce restaurant churn and increase retention.

Here are a few ways in which distributors can ramp up customer retention:

E-commerce first sales strategy

E-commerce, now the most preferred B2B buying method, is a surefire way to reduce customer attrition rates. This enables businesses to reach a wider audience, increase customer convenience and offer a wider array of services efficiently. Most B2B purchases are now made online, and B2B buyers prefer to use online channels to make repeat purchases. A rich e-commerce experience, with a detailed catalog can boost revenues, customer retention and customer satisfaction.

US Foods, which has been pioneering e-commerce in the food distribution industry, reports 5% higher retention rates among its independent restaurant customers who use e-commerce to place orders than those who do not. In addition to higher retention rates, these customers also exhibit 5% higher purchase volumes and are more likely to recommend the food distributor to friends or colleagues.

Customer service

Offering consistently exceptional customer service to operators is the cornerstone of improving customer loyalty and retention. Strong customer service can lead to a 4-8% higher revenue growth.

Customer service can be improved by:

  • responding promptly to customer inquiries about products and services
  • resolving issues quickly and effectively
  • having well-trained and highly motivated customer service staff.

Customers, when satisfied, are also more likely to promote your business to their friends and colleagues, thereby generating more leads and customers for your business - which can generate 2.5 times more revenue growth for your business compared to competitors.

Staying in touch

Staying in touch with customers through regular communication can help improve customer engagement. Customers should be kept informed about new products and services, promotions and any updates related to the products and services that are provided to them. Regular communication can increase brand awareness by keeping your brand or business at the top of a customer's mind.

Email marketing is a highly effective marketing strategy, with an average open rate of 18.5% in the restaurant, food and beverage industry and an ROI of $36 for $1 spent. Emails are a direct line of communication with customers and can be used for after-sales follow-up and to engage forgotten customers. Targeted campaigns can encourage customers to go back to abandoned carts or to remind them about your business offerings.  Reportedly, 50% of customers who abandoned their carts and then opened an email reminding them about their carts went on to complete their purchases.

Rewards and incentive programs

Fostering a long-lasting relationship with customers is very important for business. Rewards and incentives for repeat customers can go a long way in fostering this relationship. The main forms of programs that can be deployed are referral programs, loyalty programs, discounts and offers. Rewards programs have been found to increase total revenue by 32% and increase market share by 30%.

Introducing new products

The food space is constantly evolving, there are new and exciting products being developed that operators and customers may not even know about. Updating customers with these new products can generate higher basket values as operators may consider adding these new items to their menu.

The latest innovative product on the market is frozen plant-based ‘seafood’ sushi, by a company called Koncious. Plant-based seafood is a $800 million market and is set to grow further in the coming years as consumers become more environmentally and socially conscious about their food choices. Distributors can become change makers themselves by educating operators about new products and helping them to design new dishes to add to their menu to attract customers.

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