Noting that customer loyalty was a critical factor for restaurants that survived the 2008 market crash, Paytronix CEO Andrew Robbins told PYMNTS, “When the current black swan finally departs and restaurants begin to reopen, we hope those that truly invested in developing strong relationships will survive.” Read Robbins’ full comments in Black Swan, a special report exclusively from PYMNTS.
What gets brands through the darkest downturns isn’t the financial capital they have on hand – it’s the relationship capital they build with their best customers.
When the 2008 financial crisis hit, Paytronix was already a few years into developing restaurant loyalty programs, and our clients had some practice developing strong guest relationships. Before the crisis, they focused almost exclusively on using our platform to build revenue by increasing both the number of visits and how much guests spent when they came in – but these relationships meant so much more. We later found that relationships forged in the best of times helped sustain the brands through the depths of the Great Recession. Later, those same customers led the recovery.
In looking at the post-recession results from a large fast-casual restaurant client, we found that the top 8 percent of their guests — those who came in twice per month before the crisis — continued coming in twice a month all through the downturn. Those who came in less often dropped off significantly. In fact, those twice-a-month customers accounted for a whopping 35 percent of the overall business.
When we interviewed those customers to better understand their behavior, many told us how they felt “invested” in the brand and had, in fact, dropped other brands to keep up with this one. When we broadened our research and looked across all our clients, the findings were remarkably similar: Those who had invested time and resources in developing relationships with their top guests were rewarded with loyalty.
What we’re experiencing today is vastly different than what we saw back in 2008. There is no precedent for the hit the overall economy is taking right now, and never have we seen an industry hit as hard as those in hospitality. We are, however, seeing signs that the relationships restaurants established with their customers are paying off.
We’re seeing people buying gift cards for their favorite brands just to keep them alive. We’re even seeing local organizations like chambers of commerce and local news publications putting out lists of businesses that have takeout and delivery, so people know where they can order. Some brands have even set up funds to support employees who are currently without tips or have been laid off, and customers are donating liberally.
When the current black swan finally departs and restaurants begin to reopen, we hope those that truly invested in developing strong relationships will survive – and that their best customers will be the first ones standing at the door.