All businesses need customers in order to succeed. Businesses in the restaurant industry are always looking to bring in a consistent stream of new customers. This process is referred to as restaurant customer acquisition.
Most restaurants focus on mass communication for restaurant customer acquisition processes. Restaurant marketing strategies, including limited-time offers, newspaper, and radio ads, are commonly used for this.
Measuring how effective mass communication strategies are is difficult. This is because they’re impersonal. That’s why it’s important to understand the customer acquisition definition and process for restaurant success.
What Is Restaurant Customer Acquisition?
Customer acquisition refers to the process of gaining new customers and bringing them down the marketing funnel. In order words, it’s guiding new customers from the brand awareness phase to making a purchase decision.
Businesses use restaurant customer acquisition and its costs to evaluate how much value their customers bring them. This is why customer acquisition management is necessary, and it’s the link between advertising and customer relationship management (CRM).
The Process of Customer Acquisition
The customer acquisition process involves each business’ strategy, which will vary based on the industry. Some strategies are more effective than others and this depends on the niche they target.
Here is the restaurant customer acquisition process that you should follow:
1. Identify Your Potential Customers
When opening a restaurant, opening a grocery store, opening a bakery, opening a coffee shop, or opening a food truck, you have to determine who you’re targeting. This allows you to determine your ideal customer’s wants and needs and ensure that your restaurant marketing is done right.
2. Focus On Achieving Your Goals
In your restaurant business plan, you have to establish your goals. These are important for restaurant customer acquisition because it allows you to work toward achieving them.
To achieve your goals, you have to do research on your target market, keep in touch with your customers, and conduct surveys. You can do this by utilizing different types of email marketing or creating a restaurant loyalty program.
3. Employ the Right Staff
To run a successful restaurant business, you need to employ the proper staff. This includes different types of chefs, a restaurant manager, an inventory control manager, servers, wait staff, and bar staff.
The employees you hire should devote their time and effort to help you achieve company goals. To do this, the employees must have good communication skills, be responsible, and be versatile.
4. Understand CAC
Customer acquisition cost (CAC) refers to your business’s cost of acquiring a single customer. This is part of your business's financial investment, and it’s crucial for you to understand how to calculate it.
5. Generate Demand
New businesses may experience a challenging time generating demand. However, the process gets easier with brand awareness. This is where marketing strategies and the proper restaurant customer acquisition strategies will come in handy.
Customer Retention Meaning
Customer retention refers to utilizing business strategies to maximize repeat customers and minimize customer churn at the same time. Doing this is possible by focusing on nurturing customers to go back through your sales funnel after they’ve completed their first purchase or visit.
Popular customer retention strategies include:
- Targeted email marketing, including eCommerce email marketing or restaurant email marketing
- Branded delivery experiences
- On-site personalization
- Loyalty program perks
Customer Acquisition vs Customer Retention: What Matters More?
Most businesses should focus on finding a balance between customer acquisition and customer retention in order to succeed. If you’re just opening a business, customer acquisition will be your main focus in order to spread brand awareness.
However, if you own an established business, you will want to focus on customer retention strategies. This will improve customer loyalty in the long run.
Combining customer acquisition and retention strategies will allow you to maximize your return on investment. As a result, you will boost your revenue and expand your loyal customer base. Familiarize yourself with the ROI meaning to better understand how this is possible.
What Is Customer Acquisition Cost, and How Do You Calculate It?
Customer acquisition cost refers to the estimated cost of acquiring a customer. Calculating customer acquisition cost (CAC) depends on the business and its industry.
This is because some businesses prefer to measure CAC by directly asking their customers if they’re new. However, other businesses utilize analytics from their loyalty program to differentiate between new and returning customers.
To calculate CAC, a business will need the cost of the marketing budget they set aside to target new customers. Aside from this, you will also need the total number of new customers.
The customer acquisition cost formula is:
Customer Acquisition Cost = Marketing Expenses / Total New Customers
Calculating CAC for an Existing Restaurant
Existing restaurants have an easier time calculating CAC compared to new restaurants. This is because there they are more likely to have traceable analytics that they can evaluate, including promotions and campaigns.
For example, say a restaurant allocates $1,000 on Instagram ads to target new customers that order online. After reviewing the restaurant’s sales data, you determine the average online order size is $30.
The restaurant runs a 10% promotion for new customer orders. This promotion allows you to distinguish between new and returning customers. After evaluating the analytics, you discover that the promotion was used 15 times which means the restaurant gained 15 new customers.
Putting the example in perspective:
- Instagram advertising: $1,000
- Online ordering discounts: 10% of 15 online orders of $30 (10% off of $450 = $45)
- Total new customers: 15
You have to total up the total marketing expenses from Instagram advertising and the discount cost to calculate the restaurant customer acquisition cost.
Marketing Expenses = $1,000 + $45 = $1,045
After this, divide the total marketing expenses by the number of new customers gained from the restaurant promotion.
- CAC = Marketing Expenses / Total New Customers
- CAC = $1,045 / 15 New Customers
- CAC = $69.66 Per Customer
This calculation confirms that the restaurant business spent an average of $69.66 to gain each customer from the promotion.
5 Ways to Lower Customer Acquisition Cost
To lower restaurant customer acquisition costs, a business needs to find the right balance between marketing costs and total sales. If marketing costs start to exceed total sales, you start paying to run your restaurant.
Here are five effective ways to lower your customer acquisition cost:
1. Ask Customers Where They Learned About Your Business
Knowing where customers are coming from is crucial for lowering CAC. It’s possible for them to come from a promotion, social media, paid advertisements, or word-of-mouth recommendations.
Identifying how your new customers found out about your restaurant will allow you to determine if your marketing efforts are working. This way, you can make necessary adjustments to your marketing strategies.
2. Improve Your Sales Funnel
The sales funnel is the journey the customers go through to make a purchase or convert from a client to a customer. The journey starts with awareness, goes into interest, then decision, and ends with action.
Improving your sales funnel helps you understand your customers’ approach, and it guides them toward guaranteed sales. A sales funnel will provide you with insights regarding the customer’s thought process. As a result, you can fix potential problems that push customers away.
3. Perform Tests
It’s possible to advertise your restaurant through different marketing channels. As a business owner, you should test different channels to determine what appeals most to your customers. Testing each channel one by one is the best way to calculate CAC and determine which channel performs best.
4. Utilize Free Marketing and Exposure Tactics
Not all marketing efforts have to be paid. In fact, there are free marketing tactics that you can use to get results.
Free marketing tactics include:
- Google My Business. Creating a Google My Business account is free. All you need is your restaurant’s working hours, location, phone number, and menu. If a customer performs a Google search looking for a place to eat in the area, they may come across your restaurant.
- Word-of-mouth marketing. People love recommendations and word of mouth is a popular and effective form of marketing because of that. You can encourage people to spread the word about your business.
- Social media marketing. It’s possible to market on social media using organic posts instead of paid advertisements. There is a lot of power in social media marketing for restaurants and all you need is the right strategy.
5. Share Customer Reviews
It’s possible to win customers’ trust by sharing reviews. These reviews can be on your website, Google Business page, advertisements, and similar marketing materials. Customers trust reviews from other customers as much as personal recommendations they receive from family and friends.
6 Steps to Create a Customer Acquisition Strategy
A restaurant customer acquisition strategy is a plan that helps bring in new customers to improve profitability. To ensure a steady flow of customers, restaurants should keep up with current restaurant industry trends.
Gaining new customers is how you can have a successful restaurant business. During the restaurant customer acquisition process, the business increases its brand awareness and customer interest in what the business has to offer.
These are six steps to create a customer acquisition strategy:
1. Determine Your Ideal Customer or Niche Market
Establishing your niche market is crucial for your restaurant customer acquisition strategy. It’s also important to look into your competitors with market research. Within the restaurant industry, it’s common to test different niches before deciding on the right one.
It’s also popular for restaurants to test marketing strategies and evaluate which one works best based on the results. This can help them work on customer retention strategies to keep a consistent flow of customers.
2. Establish Your Goals
Setting company goals with customers in mind is essential. It allows you to create a restaurant customer acquisition strategy that guides you through the process of achieving each goal. Such goals should account for customer churn and current customer growth.
3. Identify Your Customer Acquisition Channels
Marketing to customers through different channels can help reach your ideal customer. Perform research to determine the type of content that performs well on each channel. This will also help you calculate restaurant customer acquisition costs.
Common restaurant customer acquisition channels include:
- Paid advertisements. These advertisements are generally short and compelling. They’re published on social media and search engines.
- Search engine optimization (SEO). This refers to written, long-form content that uses white hat practices. These include using relevant keywords, SEO terms, and internal linking to rank on search results pages. eCommerce content marketing is an example of this.
- Instagram. On Instagram, visually appealing graphics, pictures, and short eCommerce videos tend to perform best. It’s also possible to publish paid advertisements on this social media platform.
- Facebook. Common marketing efforts on Facebook include advertising, one-to-one messaging, and live video streaming. It’s possible to publish paid advertisements and use organic posts to reach your target audience.
- YouTube. This social media platform is ideal for longer, informative, and entertaining video content. Businesses can link their YouTube channels to their websites and social media platforms for additional exposure and engagement.
4. Establish a Unique Marketing Strategy for Each Channel
It’s crucial for each channel to have a unique marketing strategy based on the target audience. To do this, consider the type of content that your audience will interact with through each individual channel. Don’t be afraid to test different content types and channels before finalizing each marketing strategy.
5. Communicate With Your Customers
Customer feedback and customer satisfaction is essential for any business. This is because you want to know what your customers think, how you’re doing, and if you should make changes.
Collecting such feedback and information will require you to request it from your customers. It’s possible to do this through social media posts, surveys, email contact forms, customer interviews, and blog posts.
6. Evaluate and Improve Your Strategy
Not every strategy is successful the first time around which is why it’s important to evaluate the results and make adjustments when necessary. This is possible with analytics.
Look into the following metrics of your restaurant customer acquisition strategy:
- Customer acquisition cost (CAC)
- The lifetime value of a customer (LTV)
- Churn rate
- New customer growth
Look into the following factors of your restaurant customer acquisition strategy:
- How your customers found out about your restaurant
- Favorite types of menus and items
- The median age of your customers
With the right approach and restaurant customer acquisition strategy, you can attract high-quality customers. When you maintain the strategy, you’ll have the opportunity to hold onto your customers long-term.
CRM Tools: What Are They, and Which Should I Use?
CRM tools include software that helps businesses reach out to existing and potential customers. The tools help with customer retention and customer acquisition strategies by allowing businesses to manage profitability, customer data, and support.
The customer acquisition process includes different marketing efforts. Examples include eCommerce email marketing, social media marketing for restaurants, DTC marketing, and distributor marketing. With CRM tools, it’s possible to evaluate the success of these marketing strategies.
Reviewing marketing analytics using CRM tools provides restaurants with the opportunity to tweak campaigns according to the results. As a result, they can improve the customer experience.
6 CRM Tools To Use for Restaurant Customer Acquisition
Communicating with customers through different channels will allow you to reach different niche markets. However, it’s important to understand which channels target each specific customer. You can determine this with CRM tools.
Six CRM tools that help with restaurant customer acquisition through different channels include:
- Drift. This CRM tool helps businesses connect with customers through AI-powered Conversion Cloud technology. It’s possible to prioritize customer accounts that you should get in touch with. You can also look into customer insights through real-time personalizations and visitor intelligence features.
- Wunderkind. Businesses can monitor their marketing performances to determine success. It’s also possible to evaluate customer acquisition through multichannel marketing efforts. Wunderkind offers audience development solutions and real-time messaging features.
- GetResponse. This is a digital marketing and customer acquisition tool that businesses use to increase sales and grow their audience. GetReponse helps businesses increase online user engagement through email marketing efforts, landing pages, autoresponders, and automation. It’s possible to create your own sales funnel and increase conversions with their features.
- Unbounce. With the use of AI, Unbounce allows businesses to create conversion-ready landing pages. You have access to A/B testing features, and it’s possible to test the performance of each marketing campaign.
- OpenTable. This tool has CRM functionality features that allow businesses to take reservations. With OpenTable, restaurants have access to guest databases including notes and tags. It’s also possible to send customers personalized messages.
- Outgrow. With Outgrow, businesses have the ability to create forms, quizzes, surveys, and chatbots. These features allow them to increase customer engagement and grow their business. It’s possible to fully customize their website using logos, styles, fonts, and colors.