How a mobile app wins millennials’ loyalty
Bernie Sklar describes how a mobile app improved customer feedback for Hank and Harry's Delicatesssen.
Buzzy Sklar, CEO and co-founder of Hank and Harry's Delicatessen, had no second thoughts about the importance of winning the millennial market, or about the need to engage with this customer via mobile app when he opened the new Miami Beach, Florida, restaurant. The company operates three Hank and Harry's stores with another three under construction.
"The millennial market is one of the fastest growing markets for your restaurants," Sklar said at the outset of his presentation at the National Restaurant Association Show in Chicago's McCormick Place. Sklar described how the company deployed the LoyaltyPlant mobile customer engagement app and the quantifiable benefits the app has delivered.
"Mobile is the way everything is going," Sklar said.
Millennials eat out more
One reason why it is important to win millennial customers is their propensity to eat out.
Millennials eat at restaurants 30 percent more often than other consumers, Sklar said. More than half of them (54 percent) eat out at least three times a week and, when they do, they spend 14 percent more than other diners.
Sklar knew that to win millennials, he needed to provide a mobile experience that was personal. He cited statistics from hospitalitytech.com showing that 55 percent of millennials want a more personalized experience, while 56 percent are drawn to mobile loyalty programs and 79 percent order food online.
Hank and Harry's invested in a white label mobile app that integrates with the company's Revel POS system, and includes a customer success manager module, a mobile bonus loyalty program, targeted marketing, automated marketing, a customer referral program, in-app customer surveys, mobile ordering and a quality control system.
The app is easy to use and entices customers with high-quality pictures of the food, Sklar said.
Hank and Harry's raised awareness for the app by placing flyers and coupons around a college campus near the store, Sklar said. Within eight months, the app was downloaded 1,400 times.
"Money talks," Sklar said. "Dollars work the best because it allows the guest to use it any way they want."
Millennials use mobile ordering
Sixty-five percent of people who downloaded the app are millennials, Sklar said, and mobile orders through the app account for 20 percent of all sales. More than 82 percent of customers who download the app use it every time they visit the restaurant.
Neary three quarters (72 percent) of all app orders are pickup orders, with the balance being placed in store. A total of 14 percent of all orders are pickup and delivery.
Because people spend more money when ordering with the app, it's worth converting existing customers to app customers, Sklar said. App orders also incur less labor expense since they don't require a live order-taker. "The mobile ordering has been phenomenal," he said.
The company is also able to send customers discount offers on specific items they have ordered in the past. And communications from customers help the company to develop new products. Customer input resulted in a new corned beef sandwich.
Most important: Customer feedback
According to Sklar, one of the most important benefits of the system is the customer feedback. After every order, the customer is asked how satisfied they were with the experience.
Customers are asked to rate the service with every order. Any rating under three stars automatically prompts a notification from the restaurant for a detailed review of their service and loyalty points. "I want to get to them before they go to Yelp," Sklar said.
In the event of a less than satisfactory experience, "they're actually complaining right to us," Sklar said. "That, to me, has been the greatest thing about our mobile app strategy." He credits this to making the customer a guest for life, and said that the campaign delivered a 1.2 percent monthly revenue gain.
Loyalty program wins
"Being able to target through your loyalty program is very important," he said.
A weekly bounce-back coupon campaign proved helpful in stimulating additional visits. Nearly 60 percent of all customers who received a push notification opened the app, and 19 percent placed an order. The campaign delivered a 2.2 percent bump in monthly revenue.
On customers' birthdays, the company sends notifications for a free cookie. Fifty-seven percent of customers opened the birthday offer and 29 percent took advantage of it, netting a 2.1 percent monthly revenue gain.
A push notification campaign for lapsed customers generated a 1.3 percent monthly sales gain. The company decides how long to wait after a customer's last visit before sending a notice saying it's been a while since they visited and showing a food item. This campaign generated a 46 percent open rate and a 12 percent conversion rate, Sklar said.
While it's important to give loyalty rewards, it's also important to do so in a cost effective manner. Sklar said rewards should never cost more than what the business has budgeted for discounts. Hank and Harry's offers 12 percent discounts.
He gave the example of a $5 discount on a first order using the app.
Referral program pays off
The app's referral program has also been a winner. Every shared recommendation on the app brings eight app installations, Sklar said, yielding a 2.3 percent average monthly revenue gain.
He credited the mobile app with a 7 percent annual revenue gain.
An online survey of 560 customers found that 54 percent of customers are willing to recommend the brand to friends and relatives, while 61 percent are willing to recommend the app, Sklar said. Sixty-five percent said they visit the store more often because of the app.
Following the launch of the app, Hank and Harry's saw a 27 percent average visit increase per app user. In addition, the app users' average check is 16 percent higher than that of non-app users, and the average restaurant check overall has increased 8 percent since the app was introduced.
The cost of the loyalty program is 0.7 percent of the company's total revenue. The company has realized a 174 percent return on investment since the launch.
A company should not have to invest more than $10,000 in an app, Sklar said.
Companies: Revel Systems
Elliot Maras Elliot Maras is the editor of KioskMarketplace.com and FoodTruckOperator.com.