THE EXPONENTIAL EFFECT OF GUEST RECOVERY

It’s hard to downplay the importance of guest recovery in a restaurant’s ability to succeed and grow; and chances are, you’re actually losing money with your current program.  Why is your guest recovery program so important; well, did you know:

• According to an article in CRM Strategy, repeat customers spend 33% more than new customers
• 80% of profits will come from your top 20% most loyal customers, based on a study noted in Emmet and Mark Murphy’s “Leading on the Edge of Chaos”
• An increase in customer retention of 5% can actually increase your profitability by 75%, a study done by Bain & Company shows

With this in mind, you would think a restaurant’s guest recovery program would be at the top of its priority list; unfortunately, this is not the case. According to an article recently published by CBS Money Watch, only 7% of guests felt their experiences with guest services exceeded their expectations, and less than a quarter of them felt companies were actually willing to exceed expectations[1]. With such a bearish outlook on service after the sale, many brands are starting off behind the eight ball. In addition, a report by CBS News tells us that an unhappy guest will tell up to 24 friends about their bad experience (and this was before the ubiquity of Social Media). 

So, why is it that most restaurants are not prioritizing their guest recovery program? From our perspective, there are three reasons why a restaurant’s guest recovery program is being ignored:

• Most restaurants are spending so much time and effort on marketing for new customers, because they do not realize the value behind a guest recovery program; however, even conventional marketing wisdom teaches us that it takes 4 – 6 times more to gain a new guest than to keep an existing one
• Most restaurants’ guest recovery programs do not provide the analytics necessary to prove a Return on Investment for the program, even though these programs typically return up to 400% according to the “International Review of Retail, Distribution & Consumer Research”
• Most restaurants do not understand what best practices are required for an effective and efficient guest recovery program, especially in today’s world of 24/7 digital and social communication

So, how does this get lost in departmental translation? Consider the anecdote of a boat with little holes in the hull, whose captain uses a bucket to scoop out the water that continuously seeps in. When asked why he doesn’t repair the hull to improve the boat’s performance, the captain responds, “…because it works, and have you seen the price of wood these days?” You can’t float forever; fixing those little holes in your guest recovery program might be the single most beneficial investment a business can make.

What’s the catch? Many companies invest in their guest recovery programs with no regard for what have proven to be industry best practices and become discouraged when they don’t see the results they expected. It’s like going to the gym 5 days a week but using bad form when going through the circuits –they’re doing something, but it’s not working out. If you want to generate up to 60%[2] more profits than your competitors, make guest recovery a higher priority than they do, and you’ll see the revenue roll in –exponentially.