The "Game-Changing" Customer Retention Strategy from Jon Taffer

Marketing 10 minute read 14th September 2021

Would you consider giving away a free meal to every new customer?

Sounds crazy, doesn’t it? Think of how much that’s going to cost you!

Well, that’s pretty much what Jon Taffer suggested restaurateurs should do in a 2017 interview with social media legend and media empire owner Gary Veynerchuk (or ‘Gary Vee’, as he’s more commonly referred to).

If you’ve never heard of Jon Taffer, he’s a restaurant entrepreneur and television personality. Best known for being the host of Bar Rescue (think Ramsey’s kitchen nightmares but with a questionable cocktail list and you’re almost there), Taffer has helped turn the fortunes of hundreds of businesses and really is worth listening to when it comes to growing a profitable restaurant.

During his interview with Gary Vee, Taffer revealed one piece of advice that completley flips the tables (pun intended) on how you should think about the customers that walk through your door. We think it’s a game-changer when it comes to thinking about customer aquisition and retention.

The true cost of a new customer

According to Taffer, if someone visits a restaurant and enjoys a flawless experience, the statistical likelihood of them returning sits at around 40%.

If they return for a second visit, the statistical likelihood of them returning for a third remains at 40%.

However, if you succeed in tempting them back for that third visit, the likelihood of them returning for a fourth increases to a massive 70%.

“You’ve got to market to three visits, not one,” says Taffer. This is the golden nugget contained within that Gary Vee interview, and it’s the one piece of marketing advice every restaurateur should live by.

The 1 Piece of Advice - quote+graph

However, there’s a catch. If you decide to head down the route of traditional advertising to obtain new customers - and by that, we mean local papers, radio spots or TV ads - you’ll end up paying somewhere between $40 to $80 to acquire each customer.

That can get pretty expensive, regardless of how good you become at encouraging return visits. As noted by Taffer, there are only so many new customers out there; sometimes, it isn’t a case of adding more customers, it’s a question of adding more frequency.

So, how do you do that?

Some customer retention statistics

Before we get into how you can increase repeat visits from your guests, we feel some context is needed.

This is because Taffer’s advice isn’t particularly easy to get your head around if you’re not familiar with the power of customer retention.

Here are a few customer retention stats to raise your eyebrows:

  • if you increase customer retention by just 5%, you could double your profits
  • satisfied customers deliver 2.6 times more revenue
  • you’re 3.5 times more likely to sell to an existing customer than you are a new customer
  • the average customer retention rate from top companies in many industries stands at 94%
  • 33% of American consumers switch companies when they experience poor service
  • lower your churn rate by 5% and you could increase profits by up to 125%
  • 80% of millennials are likely to become long-term customers if a brand reflects their needs

So, with those figures swirling around your head, let’s find out how to encourage those four visits per customer.

(Watch Jon Taffer explain in the video below, we’ve skipped to 46mins, but the whole thing is worth watching once you’ve finished reading)

How to manufacture four visits per guest

“In this industry, you need to pull the eye, pull the body, and then pull the wallet,” explains Taffer. “You don’t get the wallet until you have the eye and body first.”

Most restaurateurs know this, but that can lead to some pretty expensive marketing campaigns. The aforementioned costly traditional ads, PPC ads and expensive marketing agencies might result in a few more customers through the door, but it costs a fortune to do so.

This is why giving away a meal to a brand-new customer makes far more sense. Remember - the cost of acquiring a new customer via traditional media can be as much as $80. How much would it cost you to give them a free steak instead? It’s nowhere near as expensive, is it? Plus you don’t have to spend that money until they’re actually sat in your restaurant.

Jon Taffer explains how he gives away free food to encourage those four visits. It plays out something like this:

  • advertise the free first meal heavily via word of mouth, social media and makeshift billboards near your restaurant;
  • when a new customer bites and pays your venue a visit, signal their ‘new customer’ status by giving them red napkins;
  • when a red napkin guest checks out, hand them a coupon for their second meal; and
  • when they return for that second meal, tempt them back for a third with a free desert.

Remember - once you’ve got them through the door a third time, they’re 70% more likely to return for the fourth, and if that happens, “you own them”, as Taffer neatly puts it.

In this scenario, all you pay as the restaurateur is the cost of the food items you give away, which could be as little $15 in total across those three visits.

Sounds a lot better than $80, doesn’t it?

Stat sources: 99 Firms, SurverySparrow.com

Beambox cutomer log

The importance of capturing customer data

As great as Taffer’s advice is, it’s vitally important to remember the one missing ingredient in the above, which is the desire to capture customer data.

If you get someone through your doors, you immediately have an opportunity to grab their details for future use.

One brilliant way to do this is via WiFi marketing. This is where, in exchange for offering free WiFi, you ask for the guest’s email address during the connection process. It’s frictionless, convenient and not too much to ask. They receive great WiFi, and you obtain their email address for marketing purposes - everyone’s a winner!

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You can go further, too. Capturing the frequency of visits becomes much easier with the technology that sits behind WiFi marketing, and is the perfect accompaniment to retention strategies like those offered by John Taffer.

Beyond those four visits, what happens when they reach ten? If you know when that happens, you can reward the guest again, and further wed them to your brand. By using email marketing to reach out to your most loyal customers, you really can create customers for life.

Just remember to build your value statements and investigate the differences between perceived value and absolute value. What can your restaurant offer that the other one down the road can’t? What experience lies beyond your free first meal or other tantalising offers for new customers?


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