As COVID accelerated the need for restaurants to go digital, restaurant operators started picking up tricks from their retail brethren, who were reshaped in the fires of e-commerce more than two decades ago. Going digital means having access to more data, and when used intelligently, data can improve many business outcomes.
The largest sources of data are a restaurant’s POS, and their payment processing streams. POS systems have been mined for reporting for years, but payment processor data is still a mystery to most restaurant operators. As restaurants adapt to a more digital world, here are five things every restaurant operator will learn when they start to mine their POS and payments data together.
True Customer Acquisition Cost
Customer acquisition cost (CAC) defines how much it costs to acquire a customer. When businesses of all types run marketing campaigns, they strive to understand the true cost of acquisition. While that’s relatively easy in an online world where customers can be traced via links, it’s much harder at your register. Payment processing tokens uniquely track unknown guests on a one-to-one basis, meaning an individual credit card has only one unique payment token. Tracking these payment tokens allows restaurants to measure the impact of their marketing efforts looking at their entire customer base.
True (Customer) Lifetime Value
Similar to CAC, Lifetime Value (LTV) is how marketers determine the long term success of their campaigns. Ideally, brands should never spend more to acquire a customer than the customer will pay out over their lifetime. An even better guideline is to pay back that customer acquisition cost within 12 months, and for a customer’s lifetime value to be at least three times their cost of acquisition. How can restaurants measure this? Unique credit card payment tokens. Monitoring how often a unique token comes back, restaurants can build a better understanding of the impact of their marketing efforts across their entire customer base.
Smarter Capital Allocation: Marketing, Hiring, Remodels & More
Invariably multi-unit restaurant operators stack-rank their stores on year-over-year comps to identify the stores that merit the most attention. But that’s limited to internal data, which obviously can’t tell the full story. With access to broader POS and payments data from competitors, restaurants can more intelligently uncover gaps in the market and direct their limited resources to stores that are much more likely to generate ROI. Payments data allows restaurants to use critical metrics like share of wallet, frequency, and recency across chains, independent restaurants, grocery stores, and everywhere consumers use a credit card to help diagnose and fix the relevant problems in their stores.
True ROI of Business Actions
Measuring results of actions is always challenging. Payment tokens allow restaurants to better measure results across their entire customer base, but it’s still internal. Leveraging POS and payments data outside the four walls gives businesses much higher confidence that their changes moved the needle. Did you take share of wallet? Did your sales rise more than the market? Did you create more new customers than your competitors? This is the advantage of payment and POS data at scale.
Understanding ROI of Loyalty
Restaurants spend a lot of money on loyalty programs, both for the SaaS licenses and the rewards. But is the program working? Taking data from POS and payments, operators can understand the behavior of non-loyalty customers. If those in loyalty programs aren’t responding any better than similar customer cohorts, maybe it’s time to look at how effective all those deals, discounts, and points really are.
Payment tokens are a new and powerful tool that smart marketers and operators can use to get more accurate data on their customers. When you combine it with your POS data, you can make smarter capital investments, better operations decisions, and more effective marketing strategies.