Two weeks ago:
I had my buddy Jon Taffer from Bar Rescue stop by VaynerMedia for an episode of AskGaryVee. When a fan called in to our show looking for help with his Kentucky based BBQ, Jon gave the three greatest pieces of advice for customer retention and life-time value. I wanted to share our conversation below.
Here is what we had to say:
Restaurant owner in Kentucky running a local BBQ ask’s “How do I ensure my customers return?”
And then, this happens:
Listen, if you buy a guest through traditional media, the cost of that guest is typically 40 to 80 dollars.
Let’s say your rib dinner was $5, concerning the actual “food cost” meaning the ribs, the potato, the platter, the whole thing. I would give out a 100 coupons for a free rib dinner to people that have never been there before. No restrictions.
Now, Gary walks up to the front door of your store in Lexington with a new coupon. “I got a coupon for a free rib dinner. Never been here before.” he says.
“Come on in!” you say. First of all, don’t make them pay until the end. Second, you’re paying $4.65, not $40 to $60 for each customer. And here’s something that nobody else will tell you. If somebody goes to a restaurant for the first time and has a flawless experience, the statistical likelihood of them doing a second visit is about 40%.
The second time a customer comes and has a flawless experience, The statistical likelihood of a third visit is still about 42%. The third time they come, the statistical likelihood of a fourth visit is over 70%. You have to market to three visits, not one. This is the part everyone misses!
How to Improve Visit #1
Visit one, you offer a free rib dinner. You sit them down, put a red napkin on the table, not a white one. Identify them as a first time customer, connect with them and work to get them back a second time and a third time. Everyone on your staff should know what’s going on. These are the inside tricks of the trade. Once they’re there the third time, you own them.
Holy moly, the red napkin thing is genius! We can totally make that work!
Okay, so you put a red napkin at the table. Gary sits down, he’s eating dinner, now he’s getting his free rib dinner, he orders water, and it cost him nothing. I know he’s a first time customer because he’s got a red napkin. When he’s leaving, the manager comes to the table, and writes on the back of a business card:
“$5 off chicken.” “Did you like the ribs?” “Loved them!”
“Well then, you have got to try my chicken. Come in for the chicken!” Now I’m prompting a second visit. Not with a printed coupon, a handwritten card. Now he comes in for the second visit, drops the business card on the table, everybody knows this is the second visit, because the red napkin was the first visit and now he’s got the business card.
So you’re in, but the statistical likelihood of this customer coming back has only slightly risen. You need to get them in the door one more time. It’s never about the one time sale, it’s always about the relationship and repeat business, especially in a hyper-local environment like restaurant and food.
So they finish the meal, you go up you say, “So how was the chicken?” “It was freaking great!” “Are you full?” “Totally stuffed.” “Man, next time you got to try my cheesecake. Offer one free piece of cheesecake.”
Now, you’re on to something. You have incentivized three visits!
The rib dinner cost you $5 in ingredients. The chicken was a wash out because it was a discount. The cheesecake is $1.35. So for about $6 you got 3 visits out of him with a 70% likelihood of a 4th. That’s the way you market a restaurant within the four walls of it.
That is huge right there. That is why you two are the best.
But I couldn’t let Jon steal all my thunder, so I had to jump in and give him a fourth.
This is what I had to say.
Listen. Let me give you one more for the road, Chandler.
There was a very interesting thing that Jon said, because I grew up in that environment too, and Jon’s from the traditional marketing world that we grew up in, and he’s pulling from his world. Notice how he said, “First time customer I’ll give it to you,” but now some of your long time customers may see that and they’ve got this angst of, “Wait a minute. Why am I being not treated that way as a loyal customer?” It’s always been a friction right?
Now, I just went to Instagram, right? I typed in Lexington, Kentucky. Got it?
I’m looking at nine posts right now that are top posts and there are literally unlimited amounts of people posting that are from Lexington, Kentucky. I scrolled down and now I can see the most recent posts as well. Forty pictures down, forty-eight minutes ago. Thousands of people are posting right now on Instagram from Lexington, Kentucky. I go to the top nine posts. I click the middle one. It’s a nice cute couple. They have 298 likes. Abby, she’s lives nearby. She’s part of a sorority it looks like. She has 2,387 followers.
I hit it. It lets me send her a message. I send her a message. “Abby, see you’re in Lexington. We love being part of Lexington. Here’s a $20 off coupon, $10 coupon, free chicken.” Only she sees it. You’re grabbing somebody who has a big social media profile. You haven’t hurt any of your loyal customers like me and Jon because no one else sees it. Abby comes to your restaurant and she posts a picture of the food and creates word of mouth. Now that $5 acquisition created no friction to loyal customers, and because she’s using her social media presence, she amplifies it and you’re getting an 80, 500, 4,000 dollar media amplification against your $5 fucking dollars.
It’s a no brainer. It will work.
Last thing, don’t discount. People get addicted to discounts. They don’t get addicted to free.
Yeah, no, that’s the one thing we’ve probably done right that we’ve never wavered on with discounts. You don’t cheapen the product for sure. Well guys, I appreciate this and I just want to say one thing. When I separated from the Air Force, maybe three years ago now, I watched a ton of Bar Rescue and I watched a ton of Gary’s content and you guys really helped me build this business. I went from a tent on the side of the road to having my own brick and mortar business with very little debt on it and that’s something you guys helped me with. I’m eternally grateful and if you’re ever in Lexington, first rack of ribs is on me and no red napkin needed ;)
And those are the three best tips for customer retention and life-time value!