This question was asked during our Office Hours – Session #1 where we covered the topic of Data-Driven Discounting. Interested in attending our future sessions? Register here:
QUESTION
Discounting best practices for a start-up premium restaurant? Don’t want to discount our premium products, but also need to get more foot traffic in the door and discounts seems to be the easiest/most effective way.
ANSWER
from Sasha Bartashnik, Director of Data Products at Brightloom:
First of all, it is okay and very common to rely on discounts for foot traffic.
The way I’ve seen it after talking to many brands, the goal is to use the discount to establish engagement and loyalty over time. So, you should be using the discount to create a habit or a special relationship with the customer so that they’re more likely to come back in the future without a discount. That is the way to approach it, especially at the beginning or if you’re not getting much traction.
But there are a couple of things to think about when you’re trying to increase engagement using a discount:
- One is, are you using the visit to recognize your customer?
- Are you using it to reward them?
- Are you using it to establish that repeat behavior?
- And then as part of that, are you introducing them to new or exciting products to get them to come back?
Let me unpack that a little bit.
Recognizing your customer
Customers today expect to be known, especially if they’ve given you their contact information. They expect you to know their purchases and habits. They know you have that data.
So emailing and texting customers when their favorite products are available for a discount or back in stock is a way to help use that idea of recognition. By also giving a discount, they will feel like you get them. They are more likely to come back because they feel like you know them and they expect you to let them know something is in stock, even if in the future it comes without a discount.
Rewarding your customer
From a rewards perspective, obviously, loyalty programs are really big right now. If you don’t have a loyalty program, it’s a great way to make discounting feel exclusive rather than a feature of your brand.
And I recognize this customer’s question was about not wanting to position premium products in a way where they feel discounted. So that might be one strategy to consider, because then if you have that loyalty program, you can reward your more loyal customers with perks making them more likely to come back without a discount in the future once they establish that habit.
Establishing repeat behavior
And so encourage that repeat behavior, you can also try incentives on future purchases. We’ve seen a good amount of brands do this. You will still be giving away a discount, but now getting a higher ROI for it because of that additional purchase.
And so over time, your restaurant becomes their go-to place for your type of product. That’s why getting customers to come back even that second time can be so impactful.
Introducing new products
The last thing you want to think about is using the visit as an opportunity to promote add-ons or new products that they might like. This can help keep the visit interesting and encourage them to come back with that discount as they are excited to see what’s new.
Of course, to do a lot of those things, you can use data to help figure out who your customers are and what kind of products they might like. Making your customers feel like you’re anticipating their needs is a great place to start.
You can also segment by value to know who to reward and to what degree so you’re not just giving discounts away for free.
Insight from Nick Lanoil, Sr. Business Development Manager
When customers give their information, there’s an expectation that they’re going to get something back that’s personalized to them. And in today’s world where loyalty programs are table stakes, your customers are expecting something more.
So if you’re not doing anything with the information that they gave you as a future payment for getting something that they really care about back, you’re potentially going to lose a lot of interest from your customers. You’ll start losing their trust and they’ll go to other places. It comes back to the initial statement of earning each and every transaction.
I read the book Atomic Habit not too long ago and the author goes in-depth on a topic of coupling. The idea behind it is that when you want to change a habit that you have right now, for example, doing 10 pushups every day, you can start doing them right after you’ve brushed your teeth. Because you’re already used to doing your usual thing, it becomes easier to introduce a new one.
To connect that to the discounting strategy… If you know someone has been coming habitually on certain days or maybe they get the same thing every time, you can introduce something new that can then become an addition to their already existing habit.
Imagine you’re able to get someone to buy a samosa on top of the entree that they’re buying once a week. That’s an additional two, three, four dollars that you can then really rely on.