Loyalty Lessons: A Recipe for Restaurants
In this episode Olga Lopategui, founder of Restaurant Loyalty Specialists, shares insights into how her company helps restaurants optimize their loyalty programs. She delves into the evolving landscape of restaurant marketing, highlighting the increasing importance of technology in enhancing customer experience and loyalty.
[MUSIC]
>> Hi everyone. Welcome back to CX Anonymous,
the series where we provide tactical and practical advice on
successfully executing customer experience.
We don't care who you work for, just how it got done.
I'm your host, Amber Collins,
senior marketing manager here at
AntxCloud, Wiscott-Serson,
Product Solutions Director,
and a host of other guests this season.
Today, we're joined by Olga,
the founder of Restaurant Lillity Specialists.
Welcome Olga, we're so happy to have you.
Could you please tell us a little bit about your company and
your experience in this industry,
why you landed on restaurants, how did you get here?
>> Yeah, absolutely. Thanks for being a member.
My name is Olga Lopatege,
and usually podcast hosts don't even try to pronounce that.
Last name is Puerto Rico,
my husband is from Puerto Rico.
I'm originally from Russia,
so you may be able to hear that a little bit of an accent.
We live in Austin, Texas.
I've been in Texas since 2005,
when I started my second career was Young Bronze.
It's a hard-care, see, talkable,
and then eventually transitioned to TGI Fridays.
About five years ago,
I've started Restaurant Lillity Specialists,
which is a consulting company that
helps restaurants fix some outperforming loyalty programs.
That's a one-line explanation of what we do.
>> The Object Consulting Forum work exclusively with restaurant chains,
and exclusively with their loyalty programs are anything that touches their
loyalty program.
A lot of experience, about 3,000 brands that we've worked with over the past
five years,
from very small five units to very large over 1,000 units.
So wide variety of clients have not been very, very fun guide.
>> You have a global presence with your company, right?
You are open to international companies,
or you just took the North America.
>> We are open to international, but I don't know the transparency.
In this stage of my career was a consultancy,
we've only worked with US clients.
My personal career actually mostly based on international levels,
and international marketing was both young and with TGI Fridays.
Lots of contacts outside the US,
but the last five years we've been focusing on the US market.
I think we had one Canadian client, but that's neighbors, right?
We mostly focused on the US.
I'd love to do more international projects.
>> It's no, we just wanted to get that lens on for our watchers today.
So you are consulting many, many different brands,
helping them engage, delight, and retain more loyal customers.
I think you're actually the first person on that is very industry specific for
us,
so that's really exciting.
So let's just start, let's dive right in.
If you could give an overview of what's happening in restaurant marketing,
the restaurant marketing world,
where are they getting their inspiration from?
What's going on in restaurant marketing?
>> What's going on in restaurant marketing?
So it's a good general question.
I think the angle at IC most is obviously the loyalty and CRM angle.
We're so deep in the loyalty CRM piece that I'm not spending as much time
as I probably should looking at what's happening with brand marketing,
brand strategy and so on.
But with respect to the restaurant marketing and the CRM level,
restaurants are looking more and more towards retail and hospitality.
Restaurants have always been behind compared to hospitality and retail.
They've always, the longest time they didn't have similar technology that they
could leverage.
It was unaffordable, inaccessible, and frankly,
because the restaurant industry is so fragmented,
so many modern pops of very, very small chains.
It is very difficult for them to operate at the level of visible retailers
and hospitality brands in the last five to 10 years, all of this has changed.
There are a lot more providers on the SIS space that are accessible to
restaurants,
a lot of point of sale systems.
Restaurant world exists in the point of sale with the restaurant brands
as a center of their technological universe and a parational universe.
Point of sale systems focused on restaurants are also branching
into providing CRM solutions.
They're introducing email marketing that is much more accessible to smaller
brands.
They're introducing loyalty programs that have their advantages and
disadvantages,
so the technology is much more accessible, much more feasible to use.
So that's been a big change in the technology in our space.
Ten years ago, I wouldn't have thought I would work with a client that has 20
units.
Just because they wouldn't have the tech.
But now, yeah, they exist and they have all the stuff we didn't have.
It picked up 20 years ago.
So a question about that.
We just got some data that the restaurant space has just recently,
just within the last year, overtaken travel and hospitality
in terms of a desire to spend in the technology space.
Or do you think that is due to some of the more economic factors regarding,
if you think of food costs going up, so restaurants need to differentiate,
and loyalty is definitely a way that they do that.
So do you think it's more of an accessibility thing that is saying technology
is now more accessible,
so we're willing to invest in it?
Or do you think it's a we need to do it because food costs are getting so high,
so we need to pull in that same share of wallet that we're used to?
I think we might have joking explanation, is it possible that hospitality and
retail
just can't spend any more.
They're like, we've tapped out, and restaurants still have room to go.
So could that be the reason?
I don't know, probably not.
But I think what we're seeing in the restaurant space is that technology is
becoming just so
ubiquitous, you just cannot run the restaurant anymore without relying on the
very significant
technology layer.
Not just the CRM is one of the layers that is optional, but it's becoming more
and more
mandatory because you can't do the target, you guess, profitably, and so most
other channels.
So I think that's really the reason, and it's becoming more obvious to
restaurants that
this is the way and all other ways are unaffordable.
That's my two cents a month.
That's a great segue to talk a little bit more about that ecosystem and the
technologies
that support this.
The democratization, I believe, that's what we use to call it, you know, the
accessibility
to the technology.
What are those technologies now?
You mentioned the POS being the center of the ecosystem.
If you've got essentialized operations, where does that data from the
restaurant or the
store go to, then how does the rest of the business use it?
And how is loyalty inserted into all of those things?
Just a quick overview.
We don't have to give it to the distributor.
Yes.
So the answer differs by every single brand, and every single brand will have a
different
layout, and that makes helping them much more difficult than you would want it
to be because
everybody is connected in different ways.
So when we work with brands, we mostly operate inside their loyalty systems,
loyalty platforms.
They're marketing automation software that is on the side.
Sometimes it's part of the loyalty platform, sometimes it's on the side.
Some of them will have CDPs, some of them will not have CDPs, some of them will
have
CDPs that don't make up with whatever their loyalty platform is showing them.
Some will have feedback tools, customer surveys on the side, some will have
them baked into
their loyalty platforms or into the PLS systems.
Your online ordering tools of the whole gamut of what it might look like.
The tracking of delivery for the brands that are very heavy on delivery, so
everything
that supports that ecosystem, things like order throttling software.
So all of that has to come together and play well in order for the guests to
have an optimal
experience.
All of it on them ties to the guest experience and their loyalty experience,
how they're
going to, what their lifetime value is going to be, any of the systems failing
and not
capturing their experience results in us not being able to catch them before
they leave.
So let's take good.
That's good enough.
No, it's good, but I'm going to take that plane down a little bit because I
think we
can segment the restaurants in a couple of different categories, right?
QSR and the technologies available to them are more focused on get in, get out,
right?
Versus that entry level, sit down, and I don't mean fast casual because, again,
the ordering
technologies are very similar to that of QSR, but they like to sit down with
like tablets
or things at the table.
Yeah, the CDRs.
Exactly.
To identify yourself as a loyalty member, there's an easy way to do that.
And then you take that next level up where it's kind of gosh to put something
like that
at the table at something at a little bit higher end restaurant.
How do you identify that?
So you see that there are different technology stacks or tiers because of that.
Is that an accurate separation of the three different types or is there other
layers?
Well, it's from the technology perspective, it's not really how that works.
All the good things that would be logical, but that's not how it works today.
So what we typically see in the chain restaurant space, whether there are very
affordable QSRs
or even fine dining, a couple hundred bucks a pop type of restaurants, is that
they generally
rely on the same loyalty platforms and very often on the same marketing
automation tools,
either packed into those loans, platforms, or same effort standing.
What they do is they configure the programs in different ways so that they're
more suitable
for the QSR experience.
When there's a focus on speed of service, drive through, check in at the
counter, all
of those good things, receipt scan, or they configure them so that they're more
appropriate
for the type of sit down experience.
So for example, even QSRs everything is highly self-service.
In casual dining, you will see anything from the guest using their app just can
A QR code on the table to basically self-check in to the guest telling their
phone number
or giving a QR code on their device to scan with a handheld to the server to
self-identify
sometimes at the beginning, sometimes at the end of transaction.
And you have to give them the flexibility because not all guests don't follow
the process.
They just, oh, and we guest them when they remember halfway through.
So we don't see the differentiation on the technology level.
I am actually very excited about the potential of using CRM Stronger and the
Find Dining
restaurants where I think it's underdeveloped.
There is room for so much more in terms of individual touch points and
identifying the
guests as they walk through the door to my knowledge, knowledge that is doing
that.
Yeah, none of our clients are.
That's exactly what I was just thinking as Scott was mentioning, the different
ways that
people are interacting and identifying themselves.
My brain went to, OK.
Ultra luxury, ultra find dining, how are guests identifying themselves?
And is it, you know, the reservation system?
Is it, is it a, do they want loyalty?
B, we find in luxury and anything on that side of the spectrum, it's not about
points.
So what are the programs offering these guests and incentivizing them to be a
part of it?
Let's just dive really quickly into that space because it's so high touch on
the retail side
that almost it's like the associate is doing the entering and the guests isn't
doing anything
self service at all sometimes in some of these high touch client telling luxury
experiences.
So how is that working in find dining right now?
How's loyalty being inserted there?
So the fun thing about it, you said all it's not about the points.
It's actually interesting how many people that are parts of loyalty programs in
find
dining actually are very, very attached to their points.
I'm not, yeah, not only their attached to their points, their attached to their
physical cards.
So one of the clients who worked was, wouldn't even think of getting rid of a
plastic, some
kind of fine, very, very elaborate plastic card that was given to the guests.
That wasn't absolute no, no, because they were flushing those cards with pride
as they
went through the door.
So it's unthinkable to me personally, but that's how they behave and that's
what they
were.
So that's right between restaurant and retail as we think about borrowing from
retail.
That's something that is completely opposite from retail.
But the connection there is the status.
That card is their status.
It's their physical representation of their status.
So some of the interesting experiments, and there are more anecdotal and
systematic, but
some of the interesting things that I have seen brands do is tie in the guests'
loyalty
benefits with additional perks such as you get a free bottle of wine every
month, not
the wine of the month, but you have to come in to pick it up.
They're not going to mail it to you.
So obviously it works very well to build a habit.
So you'll see things like special experiences, chef dinners served by the chef
at the table,
opening hours, ability to get a private party.
So all of those things work very well.
They're hard to measure.
They're hard to, definitely hard to measure, but they seem to be very effective
because
when they're down well, the world of mouse sprouts, and you can see more and
more people,
every time you have one of those events, you see more and more people joining
the program
and more and more people actively engaged with the program.
It's also interesting that on fine dining, we actually see higher open rate on
the fine
dining emails than on QSR.
And I don't know exactly why, but that's really interesting.
I feel like it's because the level of the experience is totally different.
I think that the QSRs are going back to borrowing from retail, sending you the
5%, 10%, coupon
every week, and it's like that it just becomes noise.
But when a highly experiential place takes the time to send out an email, they
're not
going to send it every four days.
They're not going to send you notifications through the app like that.
But when they do something, send you something special and they're something to
be said about
that.
So Scott, what were you getting ready to say?
Well, I was thinking back to our head of strategy and how he likes to describe
certain
promotional partnership events.
So when you mentioned the free bottle of wine per month, how is that typically
funded?
Is that by the restaurant themselves, like they're buying them at a discount?
Or is the wine provider giving them a certain number of free bottles to
encourage the overall
sale?
So who's paying for that?
Who's paying for that?
So there are a couple different things.
You could see there.
So one is heavy-sponsored by the manufacturer, the wine manufacturers.
So there's a lot of branding involved with that.
So in the restaurants, it's not usually not individual restaurants.
Corporate would be picking up the tab on those types of activities.
So that's probably sponsored by the manufacturers that must come on, but not
necessarily.
It's food cost.
Wine is not very high.
The markup is 70%, 80% when you look at the wholesale prices.
It's probably even higher than that.
So it's high value perceived item, but it's not a very high cost item.
Must be picked the right item to give away.
Absolutely.
We talk about that all the time in loyalty.
What are those low cost, no cost things that you can give to members with high
perceived
value?
So like the chef, for example, like you said, let's sit down with the chef.
We talk about employees being your greatest asset because you're paying them
anywhere
anyway to be there.
So if you can just reallocate some of their time here and there for some of
those events,
the perceived value is measured.
But the overall cost to you is zero because you're paying for that chef to be
there at
that point anyway.
Yeah.
Well, I'll take a little exception.
It was fine dining probably.
Once you get a little bit below the fine dining level, putting those types of
programs,
experiential programs together is actually very, very expensive and very
complicated because
you have to enlarge chains.
You have to cascade it down multiple units.
It's a major training initiative.
And then the challenge was QSRs.
Even if you get all of it right, it's very hard to track the return from those
fairly
expensive events.
So it's trickier.
It's doable, but it's much trickier.
That has to be tied to very heavy PR.
So you have to have the PR plan before you do the experience, then it pays for
itself
and visibility.
So speaking of measurements, what are the KPIs that restaurant loyalty
marketers are using
a care about, not even just in the loyalty, but marketing, but in the business
in general?
What are the KPIs that C-speed in this space are tracking that have some
attribution to
loyalty marketing, has some attribution to retention?
I'm curious as we speak more about how loyalty is a business initiative and not
just a marketing
initiative.
Absolutely.
So when you talk about loyalty and restaurants, the two most important metrics
that immediately
jump to mind are the participation rate, which is a percentage of transactions
that
are attributed to a loyalty member and the higher the better.
And the spam lift, which is how much more or less the loyalty members are
spending on
average per visit compared to non-members.
So those two numbers are at the front.
The other one is the frequency, guest frequency.
So how often are they visiting?
Obviously very, very important.
And your ability to influence the program kind of plays between the spend and
frequency,
those two metrics how you can tweak both of them to get your business results.
That's really what it's all about, playing between those two.
So one of the things that we see is very difficult in anything you're adjacent
to the food industry,
including grocery, is really difficulty in moving the loyalty mechanics with
the loyalty
drivers outside of the transactional.
So moving them into the more interactional space.
Everybody knows the phrase like the phone eats first or the gram eats first,
where you
got to take a picture of the food.
Very few of those restaurants are encouraging those social behaviors or the
inclusion of
create a social event through this tool that we have or through this
opportunity and create
those opportunities.
Or watch a video and learn about our new menu.
Or read this article about our sustainability practices, things like that.
You feel like those are not really applicable in today's restaurant space where
we are just
starting to get access to some of these technologies.
So we're taking baby steps or do you feel like they just don't have a place in
the modern
restaurant program?
I think it's a little bit of both.
I think one thing that is grossly undervalued is a point in the information
point about the
restaurant loads of problems when you compare the average lifetime value of a Q
SR customer
and when QSR here, compared to a lifetime value of a retail customer, it's just
so,
so low.
So for a lot of QSR, looking at $200 lifetime value over the course of three
years, and
that's normal.
So your ability as a brand to invest into those experiences is very much
diminished because
the COV solo.
If you're looking at a multiple thousands of dollars in COV, yes, you can
definitely
invest a substantial amount of time and effort into additional experience, like
a fuel-good
PR-based experiences you could lose on some of those and women others.
When the COV solo, it's much harder for people to swallow.
And the other part, yeah, technologically, the restaurants just haven't quite
been there
for a while, it's just not on the habit of doing this, don't have the staff.
So, yeah.
When you talk about the low CLV and that obviously affecting the budget, do you
find
that restaurant marketers, restaurant loyalty, customer experience marketers,
that's a challenge
for them to get buy-in from the rest of the company because it is an investment
in a customer
that has the low lifetime value?
What are the challenges that these marketers are facing in getting buy-in from
the rest
of the business with these programs, considering that information?
I think that's a very big part of it because when you're looking at the ROI on
those types
of events, you essentially have to show the attention of a tremendous number of
customers
to justify those types of activities.
And again, your average transaction is $7.99, maybe no, it's $9.99 low
inflation.
It's a very different story from one of your average transaction is $150 or $1,
500, right?
So we really get into the ROI case of, well, we did this event that cost us,
cost us a
few hundred thousand dollars and we moved a hundred thousand people to make one
additional
purchase, that's not a great ROI.
Even if you got that far, you probably didn't get that far.
So it's very, very hard for brands that are tracking ROI associated with those
types of
experiential events, very hard to justify.
They have to have the PR value.
So what would you say to those marketers?
What's that sweet spot?
How do they calculate it?
You know, what's the opportunity here for them?
I have a very pragmatic view of loyalty.
So to me, loyalty, there's loyalty with a capital L and there's loyalty with a
small
L and the second one is really a more of a rewards program where guests make
purchases
and they get a rewards button and they get to know as marketers what those
guests like
and dislike and can target our marketing message and putting offers and
promotions to them
substantially better.
So it allows us to get them to open their emails a little more, show up another
time
and so on.
And I think that there's nothing horribly wrong because running a loyalty
program based
on that as a front and center.
So if you use the data that you get from your guests to optimize your offers
and discounts,
why not?
It's a wonderful channel to reach your guests.
It's an affordable channel to reach your guests.
It's probably more affordable than anything else that you can find.
Social media, TV, out of home, loyalty marketing is the most affordable way to
get them.
So my advice to marketers is start by doing the most with the data that you
have and make
sure your open rates are as high as they can be and your click through rates
are as high
as they can be and yes, it probably takes a bunch of targeted offers, discounts
and promotions
but nothing wrong with that at all.
There's no shame in it.
If you can prove they are all home and individual campaigns, which is quite
easy.
Yeah.
So this has been a wonderful conversation, very enlightening, very, very glad
to speak
with you Olga and all the experience that you have given that lens restaurant
onto loyalty,
which I personally haven't had and Scott, I'm not sure how many restaurants you
've worked
with.
But as we think about the individual nuances of industries, I think it's
important to have
these conversations because loyalty is not a one size fits all.
It's not going to do and give the same experiences across industries and as you
pointed out across
formats.
And so there's a lot to learn out there and there's a lot to do out there to
help surprise
delight and retain those guests.
So as always, we're going to wrap it up with our key takeaways.
For me, I've said it for a while, a lot of brand marketing borrows from retail.
It's really easy to say that because retail is where most people's brains go
when they
think loyalty.
But I would take away this borrow from anywhere that makes sense, right?
We have B2B customers in the restaurant space, in the food service space.
We have so their manufacturers and we have clients that are, they have a store
experience
and they are, you know, CPG.
So they're sending it out to retailers.
And the way their program works is totally different from the other one and
totally different
from the QSR.
So borrow from wherever makes sense.
Like my assumption was that dining wouldn't want, wouldn't want points.
You've just corrected me and let me know that they do want points and, you know
, and that
status, which, you know, some things, some things are applicable, some things
are not.
So borrow from wherever it makes sense.
And then the KPIs that you mentioned today, we're really enlightening as well,
trying
to understand how to elevate the loyalty conversation from just marketing to
the rest of the business
as loyalty is a business initiative.
And we believe that all companies should have a company culture of loyalty.
So that means speaking, everybody else's language.
So thank you so much for that.
So Scott, what are your takeaways?
My first takeaway is, okay, I could have filled three notebooks of just
questions I have for
you on the subject because things like my, just like Amber had an assumption of
like
points, I had an assumption of a tiered loyalty technologies across the board.
And you said like it's very similar across the board, just the application at
the member
level is different based on the experience.
Also kind of shattered my mind here was the CLTV of average QSR cost was only
like $200
over three years.
So when we approached the loyalty, we are annex cloud and a lot of companies I
've worked
for are more experiential driven.
And if the ROI is just isn't there because of that CLTV value, it's explaining
in a very
interesting way why we're just not moving the needle in some of those spaces
because
the support isn't there, the ROI isn't there, et cetera.
So it is very eye opening for me in that space.
So now Olga, what were your takeaways or what were your things that you want to
make sure
that the audience takes away?
I think for me, the message that is most important to leave our audience with
is that restaurants
absolutely need more loyalty in the sense of having more CRM and having more
personalized
marketing.
There's one thing that restaurants have been really good at for longest time in
blast,
yes, was the same message, same for everybody.
And this transition to personalization has been fairly challenging.
If you cannot do that, if you don't have a CRM system, if you don't have
something like
annex cloud or one of the SIS tools that allows you to do that.
But just having the tool is not enough.
It's like I say, if you get a CRM and a CGP, it's paying for the dream.
You still have to go an exercise.
It just doesn't, those things don't run themselves.
They'll promise to, they don't.
So if there are marketers here listening to this at their end retail or
hospitality, I
highly encourage you to look at the restaurant space because we need more
experienced professionals
to come in and help us lift us up a little bit from where we're at.
We're trying with everyone, but we're not going to shift the whole industry.
So more people with experience and more advanced programs will be wonderful.
So take a look at the restaurant.
Yeah, I mean, it all sounds very exciting because it's obvious that there's a
massive
opportunity here and how often do we get to do big shifts in lots of different
spaces.
So that's really exciting and a very nice call to action.
All you loyalty marketers out there, the restaurants are looking.
Yeah, and they absolutely are.
Well, thank you again all for your time today.
Thank you for inviting.
We're so happy to have you.
This has been another episode of CX Anonymous.
You can check out the rest of our episodes at the loyalty lounge powered by
Annex Cloud.
And until next time, thanks for watching. [MUSIC PLAYING]
you
