Encouraging customer loyalty

Want to learn more about encouraging your customers to keep coming back? Go to your favourite restaurant and watch what waiters do at the end of a meal, writes TRA's business director Greg Sampson.

With the fading of Christmas into memory the difficult task of choosing just the right gift or message in a card for friends and family is behind many of us. Others, like me, have significant birthdays coming up quickly – and let’s not forget Valentine’s Day is not far away. So, how important is it for your relationships that you put in the effort to get that gift that shows you have not only thought about the occasion but the person specifically? Or to write that highly personalised greeting in a card? It turns out that observing restaurant waiters is an unlikely but illuminating source of insight into the problem. It’s all about the mints.

The mints that waiters deliver at the end of the meal are the key to the issue. And it’s not the brand, quality or taste of the mints, instead it’s all in the way they are given.

As a starting point remembering to give people the mints with their bill will get about a 3 percent increase in tips compared to forgetting the mints. Forgetting a birthday present for a spouse could be a little costlier. It turns out, however, you can do a whole lot better by simply drawing people’s attention to the mints. The line “would anyone like some mints before they leave?” will do and you can reap tips 14 percent above forgetting altogether.

With just a bit more effort though you can super charge your tips by 21 percent. Deliver the mints to the table and then return to the table a few minutes later with a new set of mints and let the customers know you bought out the extra mints because you thought they might want some more. Now you get to stand back and watch the tips role in. By making it personal, by making people feel special and feel that you had been thinking about them you reap the rewards of gratitude, which is every gift giver’s goal. And the output of gratitude is a desire to reciprocate.

The evidence from the study of tipping behaviour supports the notion that personalisation is a super-charging element of the underlying reciprocity that drives the tipping behaviour. Tipping is a specific behaviour as regards reciprocity, but what of other behaviour such as repeat purchase or other forms of loyalty.

A comprehensive review of loyalty programme literature suggests that if we want to improve customer loyalty, we have to focus on creating a stronger emotional relationship by demonstrating that we know and value our customers. As marketers seeking to build relationships with customers, we should be playing the reciprocity game better.

We are awash with data about our customers and there is more being generated at ever increasing speed. Understanding thoughtful reciprocity demonstrates that there are two values for this information. Firstly developing better, more relevant products, services and experiences and secondly building true customer relationships rather than simply transactional loyalty. The latter offers much greater ROI than offering a straight price discount for volume for example, or simply placing the mints on the bill with no explanation.

Getting this right takes effort - the effort to sort through and understand the customer and the effort to create and execute the right gift. And the right gift that reaps the greatest reciprocity is the one that shows you know, understand and value your customer.

With that in mind I have a job to do – find that perfect gift for my wife’s birthday and, in this instance mints, are just not going to be enough.

Greg Sampson is business director at TRA.