Economist Vilfredo Pareto famously noted that there is often an unequal relationship between inputs and outputs when he observed roughly 20% of Italians were responsible for 80% of the income.   Out of this observation came a long-standing principle in business called ‘The Pareto Principle’, commonly known as ‘the 80/20 rule’. In relation to business, it means 80% of your revenue comes from the 20% of customers who are most engaged and loyal.

This reigns especially true in the restaurant business, where keeping loyal customers – your top 20% – engaged and growing their affinity with your restaurant is an all-important element of building your business successfully. Loyalty equals sustainability in today’s world, and a loyal following can mean the difference between success and failure for restaurants.  The Pareto Principle gives restaurant owners and managers a key focus on where to put their ardent efforts, and achieve a significant return on investment (ROI) for their time and money spent.

A challenge for restaurants is developing relationships with loyal customers that fosters and nurtures their loyalty such that they promote your restaurant to their friends, co-workers, and social groups.  The key lies in identifying your top customers, and then nurturing those relationships so your popularity spreads.

Identify Influencers and Loyal Customers

Who are your most positive and vocal reviewers?  Who are your regulars? You can identify influencers by doing a simple observational survey with your staff, and also checking review sites like Yelp for your top reviewers. You can also reference historical data from online transactions. Remember, online purchases are a signal of your most loyal customers.

Nurture Your Relationships

Continuing to provide great service and encouraging your wait staff to build one-on-one relationships with regulars is an enduring, tried and true way to build loyalty.  Another prime way to develop relationships is by creating incentives to promote loyalty and motivate advocates for your restaurant.

When loyalty spills over from one customer to another, you start creating a ripple effect that turns new customers into loyal fans. Someone always asks, “Where should we eat tonight?” or “From where should we order lunch today?”. What restaurant owner or manager wouldn’t want to be a fly on the wall for those conversations and hear their restaurant always come up as the winner!

Not only does loyalty lead to more business, it’s highly efficient and effective marketing. Word-of-Mouth (WOM) marketing is the most cost-effective form of marketing, and often leads to the most productive results.  It can also be one of the most enduring and replicable forms of marketing, lasting up to a lifetime, much longer than any advertising campaign.  Just as social media can take ideas viral, so too can your restaurant’s popularity scales be tipped by the loyalty from within your community through the Word of Mouth phenomenon.

The question then becomes: how?  How does a restaurant build loyalty, and (practically speaking) how does a restaurant build this critical aspect of sustainable business into their everyday workflows?

Introducing NetWaiter’s New Customer Referral System

Introducing our new Customer Referral System – a brand-new benefit to help automatically boost sales and drive loyalty.

NetWaiter, which specializes in helping over 300,000 restaurants across the United States capture, convert and retain more customers has added to their suite of marketing tools a Customer Referral System to help restaurants focus on building this all-important top 20%.

The Customer Referral System allows existing customers to:

  1. Distribute a personal discount code or link, allowing their friends or co-workers to get a one-time discount on their first order at your restaurant.
  2. Collect loyalty rewards for every new customer they refer to your restaurant.

Restaurants can easily activate and manage their Customer Referral System through NetWaiter. Owners and Managers have full control over the system and are able to set the one-time discount amount for new customers, and the loyalty reward amount given to existing customers.

How Does It Work?

When customers order online, a personal link and promo code is generated for them to share with their friends.  They can post the link on social media, email it directly to friends, or have NetWaiter send the code for them.  NetWaiter has a built-in email system allowing customers to enter their friends’ email addresses and the system will automatically send them an email with a link to the discount.

The entire process is automated – new customers simply use the code or link when placing their first order, and NetWaiter tracks the appropriate loyalty rewards for the person that provided the discount.

This Customer Referral System can be run on its own or in tandem with NetWaiter’s existing loyalty program that was launched in late 2016.

With these tools in hand, restaurant owners and managers are equipped with additional mechanisms to promote and foster customer loyalty.  If done consistently over time, this will yield massive, sustainable results for restaurants.

Check out NetWaiter’s new Customer Referral System today and start building loyalty!

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