Inside Hospitality

Daily Tip for Thursday June 30th- Six Common Social Media Mistakes Made By Restaurants and Hotels

Posted on 30. Jun, 2010 by Jeffrey Summers in Daily Tip, Social Media

by Jeffrey Summers, Pres., RestaurantWorx Consulting

Just having completed the Restaurant & Hospitality Social Media Marketing Bootcamp in Chicago last week, we wanted to take a minute and talk about some of the most common mistakes we see being made by operators at all levels.

1. No goals. Without setting goals, your efforts become aimless and unfocused. Unless your social media strategy fits seamlessly with your overall marketing strategy, your message becomes fragmented and confusing to guests and results in killing your businesses momentum.

2. No measurement. You can’t pay the bills with fans and followers. You have to tie results to actual cash in the till. Doing anything in social media (or any of your marketing efforts in general) further than two degrees of separation from an actual sale is worthless and a waste of resources. The closer you engage a guest at their point of experience with your brand, the more impact your efforts will have on real loyalty and facilitating great word-of-mouth.

3. No social culture. The biggest factor that prevents a business from having any social media success (or any success in our business period) is that the actual business does not have a culture that encourages real engagement with its guests. FOH staff that can’t have real conversations with guests about their experiences, at the minimum, is not going to be able to fake it virtually. Real social media success begins in the dining room or lobby and without making a tangible difference in the moments your guests share with you, will only allow social media to amplify your mediocre levels of execution.This also includes using the wrong people to manage your social media efforts. You don’t want to give up this tremendous responsibility, facilitating relationships with your guests, to someone who isn’t engaging or who does not know your business. Outsourcing any part of the guest experience is always a definite “No” in our books. If you can’t find someone in your business who is the most “people friendly” then you have more problems than getting started in social media. And I don’t care if they know a tweet from a post, you can teach the technical stuff, but you can’t teach empathy or sincerity. This leads us to the next point.

4. Nothing to say. I get this question so much it scares me. “What do we talk about?” First you don’t talk about yourself. Stop pushing specials, coupons and discounts to your social media community. That’s not creating a relationship with your guests. That’s treating each one of them as nothing more than a transaction. That makes you a commodity and provides absolutely no basis of understanding who your guest is or why they visit you.Second, what you do talk about are those things that matter to your guests. What’s going on in their lives and how can you make an impact in those situations. Do they have kids? What events are their kids involved in at the moment? How can you make an impact in them? What are they celebrating in their life? What problems or difficulties can you help them overcome, within the context of your business? Do they work at a business that you need to establish and build a relationship with? How many names of core guests do you know? Can your staff recognize those guests on sight? What events do you have coming up? Pictures and video to share with your community? The list is endless.Third, understand that the conversation you have offline are no different than then ones you have online. Keep the focus on your guests and what’s important to them. Don’t be a social narcissist.

Our hospitality philosophy is centered around the simple understanding that every time a guest walks through your door, it’s a day in their life. First date, last date, engagement, divorce, birthday, anniversary, new job, old job, every success or failure is celebrated and if you can add to their level of enjoyment by making a significant difference in their day’s event, you can make an emotional connection that plants the seeds of real loyalty. Don’t add to it, and you are actually taking away from their celebration and won’t be remembered for anything positive.

5. Trying to be everywhere. The only platforms you need to engage in, are those where your guests are. Which means you have to have a conversation, at some level, to get a good understanding of where your guests socialize online (and offline!) . Where do they talk with their friends and family? That’s where you need to be, no place else. This might be one of the “Big 3″ (Twitter, LinkedIn or Facebook) but it could also mean someplace more local like your local newspaper’s website, in their culture sections (reviews, community news, etc…). Most likely you will reach more of your guests through these local community sources than the “Big 3″.Most times, the place where you should be, is in your own dining room, simply talking to guests. If 90% of your time isn’t spent talking to guests, or staff who do, then you’re not doing your job. How else will you find out what they’re celebrating today? Why they came? What they love about you? What they hate? Who and how they socialize? How much influence they have within their social circle?  (This goes for both staff and guests!) Which leads me to the final point.

6. Forgetting staff. The most important people in your social media efforts are those front-line employees who greet, shake hands, talk to, laugh with, engage with, celebrate with, encourage, and serve every single guest, at every single table, every single day. They know your guests better and they know your business better. They make or break every guest experience. Your guests know them better than they know you. Plus there’s simply more of them. Ignoring the impact that your staff has and can make is insane. Which is why the first people you need to dedicate yourself to are them. Don’t hold them back from being a part of your social media efforts. In fact, insist on it. It should be a criteria for employment. If you have a decent Facebook or Twitter presence as your main social media focus, then so should your staff. There’s nothing more powerful than a server commenting to a guest on your social media outpost with: “Hey George! Glad to see you visiting our Facebook Fan Page. I wanted to thank you for allowing me the pleasure of taking care of you and Helen when you were in celebrating your 40th anniversary last night. I’ll email you some of the pictures and video we took so you can share it with your family and friends.”

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Today’s tip is brought to you by Inside Hospitality™, a comprehensive and innovative guest experience management and measurement company whose integrated suite of hospitality business solutions achieves tangible results in the marketplace and is the choice for restaurant and hotels worldwide.

Contact us today and learn how Inside Hospitality™ can create a custom solution for your organization. We can be reached anytime @ (888) 260- 0380.

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Social Media Bootcamp- St. Louis

Posted on 13. Mar, 2010 by Jeffrey Summers in Marketing

www.RestaurantSocialMedia.com

April 26th. & 27th.

What’s A Guest Worth?

Posted on 12. Feb, 2010 by Jeffrey Summers in Marketing, Operations

Let’s talk for a second about the value of a happy guest and to outline our discussion I have created the matrix below that shows the effects of positive word-of-mouth as well as how strong your marketing ROI can be when you “get it right”.

What the discussion boils down to is both the value of a happy guest and the value of an unhappy guest because both have equally important values.

Let’s assume you have a $20 per-person-average (PPA) and that for every happy guest they will tell five people within a month of their great experience.  Those five people then visit your restaurant and have a great experience and each of them tell five m0re people and so on. It will look something like this:

Happy Guest #1 is worth $240 to you a year if he visits you just once per month at the $20 PPA level. Do you have happy guests who just visit you once a month? Perhaps but most visit you much more.

So by the end of the fifth month, the initial guest has told enough people about his great experience to garner you over $15,000 worth of business – not bad for just getting it right – and after a full year of positive word-of-mouth, the initial guest has helped create over $128,000 worth of business for you simply by communicating to the people in his close community about how great an experience he had at your restaurant.

Now contrast this with the understanding we all have that when you “get it wrong”, people have a tendency to tell more people about the bad experience than the positive one. Then assume the $20 PPA again and multiple these amounts by a factor of 2 or 3 or 4 (whichever you understand to be the case about the flow of conversations about bad experiences) and you can see how much money is potentially lost from the negative word-of-mouth generated by bad experiences.

Now consider the amplification of the bad experience and subsequent communication about it by people engaged with social media and you see a whole bunch of potential for lost sales as well as erosion of your brand reputation.

Finally, add in the lost opportunity cost of getting the marketing wrong or not listening to your guests and understanding their level of dissatisfaction with your experience.

So the lessons of situations like this are what I rant and rave about to restaurant and hospitality operators on a daily basis. Those being:

• The reason most operators fail is not for lack of capitalization, it’s from bad marketing.
• The reason most operators continue to fail, even when they see how bad things are is because they can’t admit they need help.
• No marketing strategy is more effective or powerful than those which work to leverage positive word-of-mouth strategies and tactics.
• Failing to implement a serious Voice-of-the-Guest program to measure guest expectations is suicidal.
• The potential for success is too great to dilute by using any discounting strategy when what you should be doing is adding value to support and enhance each guest experience.
• Social Media can serve to amplify a great experience or a negative one more so than any other and underscores why you have to be listening, engaging and facilitating with those conversations.

What do you think?

Post by Jeffrey Summers of RestaurantWorx.com

Sorry Denny’s But You Missed the Boat….Again.

Posted on 10. Feb, 2010 by Jeffrey Summers in Marketing

This blog post was published last year (2009) when Denny’s announced their first Super Bowl promotion. Surprisingly it is relevant to this years stunt as well.

On the surface, giving away a free Grand Slam breakfast to anyone who comes in, might seem like good PR – but it’s not if you’re looking for long term loyalty or goodwill.

Yes they garnered massive media attention with the marketing stunt but this buzz will only last the 60 or so hours surrounding the event. Incremental sales will be up for a few days. Lots of kids skipped school to get a free breakfast and locals are complaining about it in their comments on just about every local online news blog in the country – read this one for example.

So what would have been better?

Charge for the meal and donate all of the proceeds to a great national cause. This would garner more goodwill than a momentary full belly that will go away in less than 24 hours. (See Cause Marketing)

You can’t build guest loyalty with stunts – that’s old marketing thinking. You garner goodwill and loyalty one guest at a time – one guest experience at a time. If your focus is maintained on building better experiences every guest, every table, every day, you will effectively build more loyal guests than any publicity stunt could ever hope to.

There’s no value in free if the goodwill isn’t a long term effect. Sorry, but if I was Denny’s CEO the opportunity cost would have simply been too high to pay for this stunt. Putting the money into coaching staff to deliver better experiences would have been a much better use of the money.

More Effective Restaurant Marketing

Posted on 21. Jan, 2010 by Jeffrey Summers in Marketing

Yes there is a silver lining to every cloud!

1. Everyone is cutting back on their advertising (most think falsely that advertising is marketing).
2. Because there is a lack of advertisers, the cost of advertising, across all channels, is rapidly falling.
3. If you have a marketing message that is relevant (something more than the next, great value deal!) there is much less noise to crowd it out of the minds of your guests (think mindshare) and therefore it should be easier to communicate to them more effectively and efficiently.
4. Research shows that businesses that continue to market themselves (or even increase their marketing) even during recessions perform better in the long run. In a McGraw-Hill Research study looking at 600 companies from 1980 to 1985 found that those businesses which either maintained or increased their levels of marketing during the 1981 and 1982 recession had significantly higher sales after the economy recovered. Specifically, companies that marketed themselves more aggressively during the recession had sales 256% higher than those that did not.
5. Price is only a factor if your core marketing strategy is based on consistently low prices, i.e. Wal-Mart.
6. Messages that address the value of your guest experience over others who concentrate on commodity pricing consistently win both margin and share.
7. Continuing to add to the level of consumer fear in your marketing just so you can talk about how your “deal” is what’s best for your guest’s pocketbook, makes no sense. Keep the message positive and focused on the value added.
8. You cannot continue to try and differentiate yourself from your competitors and then send out the next batch of coupons, BOGO’s and 2-for-1’s.
9. If you can feel the price sensitivity in your guests, does it honestly make sense to continue to use your marketing to justify your pricing strategy? Or should you choose a different message?
10. If you’re in a higher end market, you should be emphasizing the emotional appeal of your experience to your guests.
11. Don’t dilute your hard won brand equity by “going cheap” or decreasing in any way the value your guests feel for their experiences with you. Just the opposite. You should be looking to increase the value of the guest experience at every touchpoint.
12. Just as it is more expensive to go after new guests rather than taking care of the ones who make up your core business, so it is with “mindshare”. No longer talking to your market because you have cut back on your advertising is like excusing yourself from the conversation and letting your competition do all the talking. Guess who your guests will remember when the downturn is over? Guess how much more expensive it will be for you to try and recapture their interest? Why wouldn’t you want to be on the other side of that equation?
13. Don’t forget that your best marketing strategy involves running a great operation. Never forget the basics.
14. Positioning is a tremendous opportunity right now. If you can position yourself in your guests mind that you have their best interests in mind, you will win. Hint: you can’t do this by decreasing your experience value.
15. Segment your guests and stop sending out the same piece to everyone. Not all guests are the same so why do you market to them as if they were?. Aren’t you really growing the seeds of your guests resentment of you?
16. Have you looked at what channels your guests are utilizing to receive their information and communicate with each other? Is it still direct mail? How many of your guests are on LinkedIn? Facebook? MySpace? Twitter? Are you really trying to build your email database and capture their social media preferences as well?

Read full post at Restaurant Worx

Guest Loyalty. There isn’t an APP for that.

Posted on 11. Jan, 2010 by Jeffrey Summers in Marketing

Frequency schemes are popular with guests and popular, at least in theory, with businesses large and small.

Guests like them if the rewards are generous, easy to understand, and accumulate quickly.

Restaurants, cafes, clubs and hotels like them because they can attract new guests, increase the spend of existing customers, help prevent guest defection and enable you to build a database.

1. Rewards: Award points for purchases. Points can be exchanged for rewards, unrelated to the brand. Use this type of program when you want your program to also serve as a new guest acquisition program and to differentiate your brand from the competition. This is especially useful if you have a limited product line and don’t have unlimited options of products and services.

Restaurants and service companies use this system where their product lines are limited. Administration can be complex – it needs special equipment, cards and database systems to optimize the benefits of a program. Members will also expect to be able to track and redeem their points online.

Examples: American Express card users accumulate points they can then use for gifts, travel, or transfer to an airline Frequent Flyer program. A restaurant program would allow points to be used for rewards with others eg the Chicago-based Lettuce Entertain You restaurant group offers a wide range of travel, wine and spa packages as rewards for members of their Frequent Diner program.

2. Rebate: Awards a gift certificate redeemable for the next purchase, when the guest reaches a certain spending level. When you have a wide selection of products, this reward program can be used to motivate new incremental purchases. It can also be used to increased store traffic. Department stores use this method to build additional sales from existing guests.

Examples: a simple form of this are the popular Coffee Cards — your card is stamped every time you buy a daily coffee: once you have 7 (or 10 or stamps, you receive one free. Very simple to administer. Clubs and casinos use this method where members and card-holders have a swipe card, and can accumulate points from their gambling expenditure and apply them to food and beverage purchases.

3. Appreciation: When guests are asked whether they would rather have cash or a reward, they will always take the cash. But in giving away cash, you diminish the value of your brand. So offer a rebate when the result will be incremental visits and sales. Offer an appreciation reward of your own company’s products and services in exchange for accumulated points.

The goal here is to increase guest LTV (lifetime value), not to acquire new guests. It can also be used as a device to get good guests to sample more of your other products and services. Airlines, hotels, phone companies use this to accumulate points for additional services within their own brand. Seat upgrades, free tickets, hotel stays at different locations, etc.

Examples: At Cafe Troppo, we had a Frequent Diner’s Club that offered a free Dinner for 4 voucher once a certain level of spending was reached. This encouraged customers to spend up, and kept the rewards in-house – they could only be redeemed Monday to Thursday. They were also likely to bring guests who had not visited before.

4. Partnership: Rewards a guest’s accumulated purchases with a partner’s products or services. Your primary goal is to acquire new guests where you have a partnership arrangement to use the partner’s extensive guest database. Airlines use this frequently when they give you points for renting cars and sleeping in hotels.

Examples: A restaurant could offer rewards to the clients of a Realtor, hairdresser or other local business, in return for that business promoting you to their customer list.

5. Affinity: Once a guest climbs the loyalty ladder and reaches advocate status, your brand is firmly planted in their minds. An affinity program offers special communications, value added benefits and bonuses and recognition as a valued guest. This is used where rewards are no longer needed to cultivate a long term relationship, just as a reminder to learn more about your other products and services.

Examples: airline frequent flyers earn Silver or Gold status once they have earned a certain number of air miles. Night clubs have access to special rooms and benefits for members who have reached a special level of spending or are regarded as VIP customers.

Pssst…Food Cost Is Not A Percentage

Posted on 21. Dec, 2009 by Jeffrey Summers in Operations

It’s real dollars and your profitability can suffer if you think otherwise

Did you ever pay an invoice to one of your suppliers with a check that had the amount being paid expressed as a percentage? I didn’t think so.

When we pay for food (aka, our food cost), we don’t spend percentages we spend dollars and we also deposit our profit as dollars into the bank. Percentages are just one of many analytical tools we should consider in evaluating the financial performance and profitability of our operation. But too often those percentages as analytical tools get more attention than the real dollars they represent and that’s where profitability can get hurt. This is especially true of the dynamics of food cost and menu engineering.

MANAGER ONE

For illustration, let’s take a look at a series of simplified menu abstracts from three different managers pricing the same menu. In the first example, you’ll see that this manager budgeted for a 33 percent food cost and took the safe route to achieve that goal by setting the pricing on each of the individual menu items to meet that same percentage. Safe, because no matter what the customers order, theoretically his food cost should come in on budget and everyone should be happy. Right? Well, before we answer that, let’s look a little further.

MANAGER TWO

Our second manager used a different approach to menu pricing. Using the same menu items, but raising the price on the chicken by $3 and lowering the price on the veal by $12 the natural reaction of her customers was for them to buy less chicken and more veal. And what about the food cost percentage? It went up of course, to a whopping 40 percent, but the profit went up as well, in fact, by quite a bit. She deposited more money in the bank even though her food cost comes in at five points higher than that of manager number one. Manger number two focuses on real dollars, not just percentages.

MANAGER THREE

Okay, so maybe our second manager is a bit more aggressive than you’re comfortable with. Manager number three takes a more conservative approach. Some of his customers consider that $9 chicken dish as an entitlement so he decides to leave that dish and its price alone. However, our manager has simply decided to reduce the price on the veal enough to increase its appeal, moving some customers (two in this example) who would have ordered the chicken to get the veal. The food cost again goes up, this time to 37 percent, but even still, this manager’s profit continues to be better than that of the first manager.

Menu pricing should be more dynamic than setting a percentage based on the budgeted food cost percentage and using that same pricing factor across all items. A lower food cost percentage does not mean higher profitability. And finally, the next time you hear someone brag about their low food cost percentage, you cannot be so sure that their profitability is high.

Our goal is to make as many customers as happy as we can while maximizing profits in real dollars. Setting menu prices and budgeting food cost percentages is more complicated than many think. When we talk about food cost, we must keep in mind that overemphasizing percentages without understanding the dynamics behind them, can actually reduce real profits.