Happy customers spend more. As an opening statement this sounds pretty obvious but at the moment most hospitality businesses – both in the UK and around the world – would struggle to prove or disprove it with any real evidence. That is about to change, according to Christian Nelson, chief operating officer and co-founder of truRating.
Importantly, the customer feedback tools that businesses currently use don’t get to the heart of how the ‘average’ customer feels. They don’t accurately show which elements of the customer experience are most closely linked to overall satisfaction and they certainly can’t connect what a customer feels about their experience to what they buy and how much they spend.
This lack of genuine insight stems from the fact that most hospitality businesses hear from a tiny fraction of their customers – often as few as 1 in 1,000. Of the customers they do hear from the majority are motivated to get in contact (or fill out a long survey) because they want to win a prize or because they have had a particularly amazing or terrible experience. This means that they don’t hear from the silent majority of their customers, so they find it difficult to trust whether their ‘insight’ is genuine, accurate or representative.
truRating is changing this by using the point of sale to make it easy for customers to feed back by answering just one, quick, anonymous question each time they pay. By making it so simple, 88% of customers have provided a rating when asked. These volumes mean we can rotate questions to different customers and get a great sense of how customers perceive elements of the experience such as value, service or atmosphere.
Using the payment terminals means ratings can be linked to other information such as ATV and basket contents so a new seam of information linking sentiment and spend becomes available to businesses.
How much difference does satisfaction make?
So just how much difference does customer satisfaction make to average spend? Within the Restaurants and Takeaways sector we have already collected over 163,000 ratings, and we capture feedback from thousands of paying customers every day. It means individual businesses, and the wider sector, can pinpoint just how much satisfaction drives customer spend.
If we simply split our 10 point scale in two, dissatisfied and satisfied, we can start to see below the difference this makes for one example business in terms of spend.
Already we can see a 13% increase transaction value between our two customer types.
What should I change to get customers to spend more money?
truRating delivers questions across five core categories, Experience (Atmosphere), Service, Value, Product and Recommendability. By looking into the different question categories we can start to understand which parts of the customer experience have the biggest impact on behaviours.
So businesses can now understand the factors that are most important in their business in terms of impact on customer spend. We see a link between all areas of satisfaction and the overall spend but for Restaurants and Takeaways, we have picked out two where the link is clearest – service and atmosphere.
We found a consistent trend that wherever satisfaction is improved spend also goes up. In particular creating a great atmosphere has a significant impact – with those rating a ‘9’ spending £7 more than those rating a ‘0’. At a more granular level raising a customer from rating a ‘4’ to a ‘7’ creates an average jump in spend of almost £2.50 – which can make a big difference when dealing with hundreds of customers day after day.
For a restaurant with 500 transactions a week, moving your average score from a 4 to a 7, could add nearly £1,200 to the weekly takings – or just over £60,000 a year. Being able to quantify these trends means it becomes easy to identify an issue and make the business case for change. You can then measure which actions are creating a benefit (before rolling them out if you have multiple outlets).
With the ability to capture a constant flow of customer feedback – including adding ‘customised questions’ that can get into the detail of specific issues – businesses can test which initiatives improve their financial performance the most.
Some more sector trends
The ratings data also means it is possible to paint a picture of the other factors that are influencing customer experiences and perceptions.
The most difficult day to deliver satisfaction is Friday – especially Friday evenings where satisfaction levels are consistently lower. The other side of the coin is Sunday, where satisfaction levels are pretty much always higher than average.
The obvious conclusion is that reductions in trading volumes make for a better all-round customer experience, but this doesn’t explain why satisfaction levels are lower on Fridays than Saturdays, when trading volumes are very similar.
When you dig into the data, it becomes clear that value for money and service are the areas that are driving this drop on Fridays – so to maintain levels of goodwill (and repeat visits and spend) a little more thought and effort may be required on a Friday than on other days.
truRating is a new UK based company that is leading a global ‘ratings revolution’ – where businesses get better information and use this to provide a better experience and improve their own performance. Since launching earlier in the year truRating has collected over 350,000 pieces of feedback from 150 outlets. The article below first appeared in BDO’s latest Restaurant and Bars Report. http://www.bdo.co.uk/
