The Customer Confidential Podcast
If you want to find an industry where word of mouth can make or break a business, take a look at restaurants. Positive word of mouth builds buzz: Great food and great service at great prices can create a stream of happy diners who tell their friends about the latest hot (or just plain good) place to eat and generate a ton of new business.
But negative word of mouth can break a restaurant. Unhappy customers tell their friends, complain on Facebook and write about their experiences on online sites like Yelp, OpenTable or Zagat. Too many unhappy diners, and it shows up directly on the bottom line. “If guests are unhappy, your sales drop,” says Jim Howard, head of marketing for Patxi’s Pizza, a 16-unit chain based in San Francisco. “It’s pretty basic.”
Even though diners almost always have an opinion about how well or how poorly their meal went, restaurant managers have struggled to know for certain what guests are thinking and feeling about their experience. Most restaurateurs would love a chance to intervene on the spot if things are going wrong, or to thank and reward their happiest, most loyal customers.
Historically, restaurant managers have tended to rely on broad-brush indicators—sales trends, tip percentages and the like. Sometimes they use register receipts to solicit more specific feedback through online surveys. Others put satisfaction feedback cards in with the check.
But the results are usually unsatisfactory. The broad-brush indicators are unreliable lagging indicators that don’t provide much insight about the causes of an issue, if one is indicated. Surveys, whether through register receipts or other methods, tend to be plagued by minuscule response rates (even with incentives, such as sweepstakes or free items on your next visit). Moreover, none of these methods provides a means of addressing issues on the spot.
To solve these problems, innovative restaurant companies such as Patxi and Tomatina—an eight-unit chain of casual Italian restaurants in Northern California—are putting a range of technologies to work. Based on well-established Net Promoter System® methods to gather feedback and take action, many of these companies are now using mobile-based rewards program technologies to ensure that they hear from a wide range of guests. One tool they use called Thanx offers restaurants a prepackaged rewards system tied to a guest’s credit card.
I recently talked to Jim and Mark Nicandri of Tomatina, along with Thanx CEO Zach Goldstein (pictured below), on the Net Promoter System Podcast. We discussed the challenges restaurants face in collecting customer feedback and how they’re putting it to use to improve the dining experience. Thanx has been central to their approach.
Restaurants that use Thanx don’t need any sort of complex point of sale integration. The customer, after registering for the restaurant’s program, simply uses the registered card to pay for a meal, earning points in the restaurant’s program, with the value and redemption options determined locally. As soon as the transaction goes through the system, customers receive a notification from Thanx’s app with a link to a Net Promoter–style request for feedback. Tomatina, the California Italian chain, gets feedback from about 75 guests every week. Between 20% and 25% take the time to add written comments.
Feedback in this system flows directly to the restaurant manager, who sees a dashboard summarizing the data. “I can see in real time what’s going on with our guests,” says Patxi’s Howard. “Every time somebody uses the app, every time somebody redeems a reward or earns a reward, anytime somebody gives me feedback. I can see it not just for Patxi’s as a whole but it also gives me a glimpse into what’s going on at the restaurant level.”
Data provided by Thanx confirms the importance of delivering a great customer experience. Promoters—those who give a restaurant a 9 or a 10 on the Net Promoter System 11-point scale—outspend all other customers by 17% each month. This group of customers will forgive one bad experience, but a series of bad experiences will lead them to visit much less often over time (as much as 45% less over the next five months). So it’s essential for restaurant managers to re-engage promoters after a slip-up.
Not only is there a strong correlation between higher Net Promoter ratings and customer lifetime value, but just the process of asking customers for feedback builds deeper relationships. Thanx research has shown that consumers are 7% more likely to return in the next two months after being asked for feedback—regardless of their response. And a small reward, such as a free salad or $5 off an appetizer, increases a promoter’s likelihood to return even more.
Growing restaurant chains like Patxi’s and Tomatina need ways to create consistently great experiences for guests as they grow. The Net Promoter System—powered by mobile technologies like that offered by Thanx—can give them many of the tools they need to measure, monitor and coach employees in their remote locations. And by handing that feedback directly to the local employees in real time, they give them the power to manage that crucial word of mouth that can make or break a restaurant.
Mark and Jim’s experiences offer many lessons for companies outside of dining. To hear our conversation, you can listen to the latest episode of the Net Promoter System Podcast on iTunes or through the player above.
Net Promoter®, Net Promoter System®, Net Promoter Score® and NPS® are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.