Forget three. When it comes to customer loyalty, four is the magic number.
According to rewards program company Paytronix Systems, retail and restaurant customers show a much greater propensity to become regular customers after visiting an establishment four times. After that fourth visit, according to the company’s research, customers are 90% likely to continue visiting a full-service restaurant, and 85% likely to continue frequenting a quick-service restaurant, on a regular basis.
“With the cost of acquiring new customers continuing to rise, and competition making it harder to retain customers, both QSRs and FSRs who guide their guests to a fourth visit will get the maximum return from their loyal customer relationships,” Lee Barnes, head of Paytronix Data Insights, tells Marketing Daily.
Customer loyalty increases greatly even between a first and second visit, according to the company. For FSRs, the chances of returning after a first visit are only 45%. But after the second visit, those chances increase to 75% for a third visit. (Increases are less dramatic for QSRs; second visits are only fifty-fifty, and third visits only increase to 70%.)
“[Return visits] all starts with a good customer relationship database (CRM), where you can use the data collected from loyalty programs, email clubs, POS systems, and other touchpoints,” Barnes says. “Then, marketers need to develop a customer-nurturing campaign designed to propel guests to their fourth visits.”
Among his suggestions: starting with an escalating sequence of offers that are more generous for lower-frequency customers and offering tangible incentives (redeemable on a second visit) for joining loyalty programs. “Start by measuring how many customers are returning at each visit level, and ideally benchmark that against similar concepts,” Barnes says. “Then set measurable and achievable goals at each visit and test strategies to improve the return rate.”
While Paytronix studied only full-service and quick-service restaurant visits, some of the data can be extrapolated to other sectors, Barnes says. “The loyalty principles we’re discussing apply across retail sectors. We’ll look at other sectors like the Convenience Store marketplace in the future, where unique factors and opportunities exist — such as drawing a loyal gas pump customer in to make purchases in the store.”