Building Brand Loyalty

Dale J. Venturini
President/CEO, RI Hospitality Association

When is a deal not really a deal? The answer: when it fails to build brand loyalty by rewarding your best customers.

With the economy still struggling to recover, many families continue to stay at home, forcing restaurant owners and hotel operators to search for creative, new incentives to lure both previous patrons and new customers into dining rooms and hotel rooms. Cost-conscious consumers who do open their wallets have returned to old tricks to help them save. Coupon clipping has seen a popular resurgence, and over the last several years, the internet has exploded with dot-com companies that specialize in deal of the day offers.

Online deal of the day offers provide steep discounts for customers, creating a sudden boom in business for the establishment taking part. A day that typically sees a slow trickle of activity can become your busiest for the week, month, or even quarter. But, participation in these deals should be approached with caution. Just as a consumer will weigh the value of a deal by asking if it is worth the price of purchase, restaurant owners and hotel operators should also evaluate if the potential return on reinforcing brand loyalty justifies the impact on the bottom line.

It is important to consider who really benefits from participation in a deal of the day offer. The consumer is the biggest winner, and that’s the way it should be. The purchaser often receives a gigantic discount, sometimes up to or in excess of 50% off the final bill. The third-party also benefits by receiving a large cut for advertising your generous deal to its users. Lastly, there is you, the merchant. What’s left? Usually, not a lot, and that can be a problem in an industry that often operates on razor thin profit margins to begin with.

Deal of the day offers are a great way to lure countless new customers through the door. However, it’s important to remember why they are there at that time: an enticing deal offered by an exciting brand. The trouble for us is that the third party usually gets most, if not all, of the credit. The customers who pack our dining rooms that night aren’t loyal to our brand. They may not even realize we have a brand. They are loyal to the third-party, and they are loyal to the deal.

With that said, don’t worry! Hope is not lost! This is where our work must begin. Deal of the day offers can be an excellent tool to use as part of a comprehensive marketing plan; just don’t make it your entire marketing plan. Use it as one part of a long-term approach to build and reward brand loyalty.

Building brand loyalty does not happen overnight. It is a long term project that can take months and years to establish. Your brand is your identity in the community. It is your message and your mission. Brand loyalty is a powerful force that will not only keep your best customers coming back time and time again, but it will also lend cache to draw new customers in the door.

Instead of using a deal of the day offer to bring in new clientele to give you a one-time bump in business, try using that very same deep discount to reward your current customers. If you don’t have the budget to create coupons or purchase gift cards, use your own database to let frequent diners know that a deal will be presented by a discount website so they’ll have the opportunity to get in on the action. Or, cut the coupons and the websites out all together. When it comes time for the bill, simply subtract that discount at the register, unprompted, then let everyone at the table know you just wanted to say thank you for their valuable business. Imagine their delight; delight that will go a long way toward building and reinforcing loyalty to your brand, not someone elses.