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A Restaurant’s Guide to Lowering Customer Acquisition Cost

busy restaurantThe success of a restaurant can really be determined by just a few key metrics, among these metric is the customer acquisition cost (CAC). This calculation conveys how much your company spends on acquiring new customers given its diversified spending towards marketing channels. In its most basic form, it is very simple to calculate, which may be done by totaling your company’s marketing expenditures by how many new customers that you receive. There are many more complicated methods of calculating it, as communicated in this post, but a basic online calculator will walk your through the process.

As a restaurateur, it is likely that this metric has always been at the top of your mind. You search for new ways to generate business, but traditionally, have been unable to measure which ones are the most effective. This article is designed to provide some key points about how to help you reduce the cost of acquiring and retaining customers, while still retaining the same growth rate in the customer acquisition process.

Get More Yelp! Reviews

It is no secret that Yelp! is a key to many restaurants’ success, but I cannot recall the last time that one asked me to write a Yelp! review, or any review for that matter. Blatant bribery is against the website’s terms and conditions, but if you provided a remarkable experience, asking immediately may increase the odds of them completing it. In addition to a good Yelp! review, make sure that your page is properly optimized for keywords that your restaurant wants to be known for, this article on Yelp! profile optimization can help to increase your rank.

Ask Your Customers Where They Came From

If your waiters or hosts strike up a conversion with any customers, it may be natural for them to ask how they learned about the restaurant. For customers, this is light casual conversation, but you are really testing the power of your marketing campaigns. You can assume that three days after a major print publication that a surge in the demand is the coverage, but asking the customers will prove it empirically. It is not necessary to make it obligatory and pressure them into answering, but a sample population of even forty-percent of the customers on a monthly basis can provide good insight. This is especially important if you are trying more than one new marketing channel per month or are unsure about the success of an existing one. If you are spending a lot of money to acquire each customer from a specific marketing channel, seriously consider other alternatives to the budget allocation.

Don’t Forget Your Website

Many restaurants, especially smaller ones, give little attention to their websites. They may think that if they have one, it is just fine and no more effort is required. However, the fact is, that websites even for restaurants should be regularly optimized with split-testing and improvements. Having a basic online booking system on your website can be counted as a conversion and if you set-up Google Analytics, you can run automated A/B tests to find the layout the maximizes the number of bookings and people that contact your restaurant.

Be Friendly with Local Media

Although we all wish a perfect world existed in which reviews were completely based on an unbiased analysis of the reviewee, this is typically not the case. Emotions and money often play a major role in what gets published and how things are reviewed, albeit subtle. Focus on making all of the right connections with local editors and review providers so that they think highly of your management team. If possible, invite them over for a free meal or to have coffee. Slowly building a relationship with them will make them more receptive to writing about your restaurant more often and in a better light. The cost of one cup of coffee is less than $5.00, but a single good news story from a local media outlet can bring in one-hundred $50.00 orders.

Stay-up-to Date

Being old fashioned simply just does not pay off in the marketing world, but either does taking unnecessary risk. Imagine the short-term advantage the restaurants that were the first to have a website, offer online booking, have Yelp! profiles, and be on Google Places were. Most new technologies, even if they don’t cost money, are desperate for early adopters. If your restaurant constantly knows what new methods are to promote yourself and manage your reputation, you will always have a short-term edge of the others that lag behind. Many restaurants still don’t have websites, in fact, some still only accept cash and think a Yelp is just a noise a hurt dog makes. Don’t fall victim to this, otherwise, you will be pushed into the category of a laggard and your cost of acquiring new customers will only increase.
There are many other ways to lower the customer acquisition cost of your restaurant, but the most important way to discover this is to track everything that you can. Many larger restaurants already analyze their data, especially franchises or ones with multiple locations. The use this information to determine how to lower the cost of acquiring a custom, which enables them to drive the savings into quality or reduce the food & beverage prices. Therefore, it is most important for small to mid-size restaurants to have a strong grasp on where their customers are coming from and how they can acquire more at the same marketing budget.

If you are a new restaurant and do not yet have data to go by, this article will help to provide information about the business plan process. The bad news is not having any data to go by will make it challenging to determine what marketing channels are most effective for your business. The good news is that you can structure the business to track all of your marketing initiatives and focus on the most efficient marketing channels from the beginning. New restaurants have the ability to structure themselves from the very beginning to adapt to the data driven and technology-centric society. Those that do not adapt will be harder to find, or continue to pour money down the drain on roadside billboards that generate immeasurable returns.

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