How AI is fueling the best customer retention strategies

Customer retention strategies: people eating at a diner

Key Takeaways:

  • Customer retention strategies are essential for restaurants’ success, and utilizing technology to bring people back through your doors is necessary to stay competitive
  • Customer loyalty programs, active customer communication and a strong social media presence are vital to earning repeat customers
  • Voice AI ordering assistants improve service speed and quality, leading to increased guest satisfaction and higher customer retention

The quick-service restaurant (QSR) industry is a competitive market with thin profit margins, so QSR operators are always on the lookout for new strategies to keep guests coming through their doors. Although first-time diners are an important revenue source, no restaurant franchise can survive without a steady flow of regulars.

Prompt and personalized guest service builds positive word-of-mouth and can lead happy diners to make repeat purchases, post glowing online reviews and recommend the restaurant to their friends and family. But professional excellence isn’t the only customer retention strategy. Learn about the available tools and technologies QSR operators can use to satisfy and exceed  customer expectations, and convert first-timers into lifelong loyalists.

Why customer retention is so important

Customer retention strategies: friends eating at a restaurant

Retaining existing customers is cheaper and more profitable than attracting new customers, so developing an effective customer retention strategy is a must for any restaurant owner. In fact, businesses get nearly 65% of their traffic from return visits, and improving retention by just 5% increases profits anywhere from 25% to a whopping 95%.

A good first step is to figure out your current customer retention rate. Customer retention metrics are fairly simple to calculate: for a specific period of time, add up your total number of served  guests at the end of the period (e.g., the number of guests from January 1 through December 31). Next, subtract all new guests—meaning guests who made their first purchase during the time period you’re measuring. Finally, divide by the number of customers you started with (total number of guests as of the previous January 1). 

Customer lifetime value (CLV) is another important key performance indicator, or KPI, to track: this refers to the total revenue a business can expect to earn from a single customer. Once you’ve determined your current customer retention figures, it’s time to shift to optimizing your customer retention strategies.

4 customer retention strategies in the QSR industry

Given how critical customer retention is for any brand, it’s no surprise that there are plenty of established customer retention strategies. Here are a few tried and true approaches to boosting restaurant customer loyalty.

1. Responsiveness to customer feedback

Customer surveys are an excellent way to learn more about guest demographics, customer needs, customer complaints and guests’ interest in new products. It’s also essential that brands maintain a dedicated support team with rapid response times: 50% of consumers expect a response to a social media message within 30 minutes, but only 50% of businesses fulfill this expectation. QSRs will struggle to build brand loyalty if they fail to provide adequate customer support or lag when answering guest messages.

While some restaurant franchises may be large enough to hire someone specifically for handling customer feedback, that’s not as feasible in smaller franchises. A “dedicated support team” may take the form of your area manager, store manager, or if needed, yourself. In today’s digital world, ensuring prompt responses to online reviews and requests by any means necessary is essential for customer retention.

2. Loyalty programs

Loyalty programs with discounts and other incentives have proven to boost customer engagement: 32% of restaurant loyalty program members say they engage with their loyalty account at least weekly. 36% of American diners report belonging to a restaurant loyalty program, and 86% of diners say they’d join one assuming it offered subscribers menu discounts and coupons for free items. Loyalty programs are also an avenue for brand-building and other marketing opportunities.

3. Social media marketing strategies

Just as responding to online reviews and social media activity is essential from a customer service perspective, maintaining an active social media presence is a necessity for any QSR operator. Social media accounts are the perfect channel to advertise new menu items or specials, interact with guests and use behind-the-scenes photos and videos to build a brand, call out staff members and highlight popular dishes. Social media is especially important for reaching and retaining younger diners. In fact, 28% of Gen Zers state social media guides their dining decisions and 39% of Gen Z restaurant guests say they have visited a new restaurant based entirely on a social media influencer’s endorsement.

4. Artificial intelligence (AI) and automation

It’s no coincidence that leading brands across industries continue to implement AI technology solutions to not just improve operational efficiency, but to also elevate guest satisfaction and customer retention. Restaurants are no exception, as advanced technologies like AI, automation and machine learning are sweeping the food service sector. Conversational AI, or voice AI, shows the greatest potential to revolutionize QSR operations and customer retention by enabling restaurants to automate the ordering process. 

AI’s impact on customer retention stems from improvements in service and overall guest experience: restaurant virtual ordering assistants increase the speed of service for guests by allowing team members to prioritize meal fulfillment and higher-level guest service instead of taking orders. Lightening the load for previously overworked staff also benefits the whole workplace and improves job satisfaction. Happy employees are more likely to put in their peak work performance, which leads to satisfied guests and return visits.

With its ability to improve front of house and back of house operations while driving productivity and customer satisfaction, AI can be the single best customer retention tool at your disposal.

Use AI to improve your customer retention rate

Person ordering from a digital kiosk

AI actually builds customer loyalty and customer satisfaction in multiple ways. For example, voice AI-powered ordering assistants remember guests’ past orders and save them as favorites for the next time that guest calls. Voice AI ordering assistants also learn from repeated guest interactions and use this customer data to provide guests with customized service. This is a game-changing retention strategy since McKinsey reports that a personalized customer experience boosts sales, lowers marketing costs and creates more loyal guests.

This research finds that personalized offers result in:

  • 20% higher customer satisfaction
  • 10 – 15% increase in sales conversion rates
  • 20 – 30% rise in employee engagement

While earlier generations of voice AI may have been robotic and impersonal, today’s virtual ordering assistants provide the warm and personalized guest service people look for when dining out. Unlike outdated voice AI platforms like interactive voice response systems, ordering assistants aren’t restricted to mindlessly following a predetermined conversational template. Instead, voice AI ordering assistants use machine learning algorithms to interpret and respond to speech, and continuously refine their algorithms so that each conversation is better than the last. 

That said, even especially friendly service isn’t likely to compensate for excessive wait times and delayed or inaccurate guest orders. Luckily, voice AI enhances at all stages of the customer journey, all the way from onboarding to meal fulfillment. For example, AI assistants keep drive-thru lines shorter and on-hold phone times nonexistent, and handle multiple calls simultaneously—so no more busy signals and missed or dropped calls.

It’s always a risk that busy QSR franchises will lose guests who aren’t willing to wait when they can just dine elsewhere, but restaurants equipped with voice AI won’t need to deal with this hardship. Also, guests can call to get a status on an order in progress which makes them more likely to return since they’re kept in the loop.

Use voice AI to build long-lasting customer relationships

People buying food from a food truck

AI-based customer retention strategies are a wise investment that quickly pay off in the form of loyal customers and larger profit margins. ConverseNow’s industry-leading conversational AI ordering assistants currently operate in more than 1,250 restaurants across 43 states, working with regional and national franchises. Optimize your restaurant operations and improve your customer retention figures with ConverseNow’s best-in-class voice AI ordering assistants. Schedule a demo today.

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