Unlocking Financial Growth through Customer Experience (CX)
At this point, there’s no denying the link between customer satisfaction and financial growth.
Disregarding the value of investing in customer experience (CX) will prove detrimental to your restaurant’s financial health. To emphasize: based on McKinsey research, brands that focus on CX grow their revenue 1.7 times faster than businesses that don’t—they also grow their customer lifetime value by 2.3 times on average.
If you’re a CFO, now is the time to start taking an active role in your brand’s CX initiatives to offset any long-term economic hurdles.
As your organization’s financial advisor and gatekeeper, the decisions you make are crucial in paving the way to future financial success. And the future is customer-centric.
Staying on top of customer sentiment involves using solicited feedback (received through surveys) and unsolicited feedback (received through channels like social media, online reviews, or customer emails) to produce insights you can act on. Knowing what your customers want is the solution to creating a superior guest experience—which has an unequivocal impact on your restaurant’s sales and traffic growth.
The proof is in the stats:
- A study by Weber Shandwick revealed that global executives attribute 63% of their company’s market value to their company’s overall reputation.
- McKinsey analysis has shown successful experience-led growth strategies can increase cross-sell rates by 15 to 25%, boost companies’ share of wallet by 5 to 10%, increase cross-sell rates, and improve customer satisfaction and engagement by 20 to 30%. Customer-centric brands achieved more than double the revenue growth of companies that didn’t invest in CX between 2016 and 2021.
- According to our recent data, brands in the top quartile of service net sentiment have a 1.5 times better four-year sales growth and 6 times better traffic growth than their competitors. Brands that saw the most improvement in their value net sentiment scores over the past four years saw 1.5 times better sales growth and 8 times better traffic.
Still not convinced?
By focusing on guest sentiment, a Black Box Intelligence customer was able to dissect feedback, identify systemic issues across their brand, and put effective measures in place to address them.
They began making improvements in the worst-performing areas first. Within one year, the bottom quartile of their restaurants went from performing 40% below the market average in year-over-year sales growth to achieving 2.6% higher sales growth compared to the benchmark.
Investing in CX initiatives has a great return on investment—when done right.
And if a recession rears its head, brands that choose to ignore customer concerns will lag behind their competitors. Research has consistently shown that those who prioritize their customers’ needs perform at the top of their segment, especially in tough economic times.
If you’re operating under a tight budget, having access to customer feedback insights will help you determine exactly where you can cut corners and reallocate resources without compromising the guest experience.
Case in point: When inflation is high, restaurants are notorious for raising menu prices to preserve profits. The caveat is, of course, that without considering the impact that decision has on their customers, they risk alienating their primary source of revenue and profit. For the record, our data has shown that restaurants with the lowest check growth have better traffic, guest sentiment, and customer retention.
The key is having the ability to understand, anticipate, and predict your customers’ responses to any organizational changes so you can make informed decisions that will have the least impact on your sales and traffic growth.
Furthermore, by closely monitoring guest sentiment, you can expose areas where you might be underperforming in terms of service, ambiance, food quality, and value so you know where to focus your efforts.
Let’s say, for instance, your customers are consistently complaining about the quality of service they receive at your restaurant. By being able to dissect their feedback, you can identify patterns and trends that will pinpoint exactly where your service is lacking. Are you understaffed and guests are experiencing long wait times? Are you investing enough in training your workforce? Do you have the right technology to help increase efficiency?
You can’t fix problems if you don’t understand why they are happening. Fortunately, through feedback, your guests are practically handing you the answers on a silver platter.
Break Down Organizational Silos
As a CFO, you have the unique opportunity to bridge the gap between your finance and CX teams and empower collaborative decision-making across your organization.
By leveraging key CX metrics, you can help prove the financial benefits of investing in customer-focused initiatives and gain the confidence of your C-suit:
- Net Promoter Score (NPS): NPS measures customer loyalty and satisfaction by asking customers how likely they are to recommend your company to others.
- Customer Satisfaction Score (CSAT): CSAT measures customer satisfaction by asking customers to rate their experience with your brand.
- Customer Effort Score (CES): CES assesses the ease of doing business with your company. It measures the amount of effort customers need to expend to achieve their goals.
- Churn Rate: The churn rate represents the percentage of customers who stop visiting your restaurant.
- Customer Lifetime Value (CLTV): CLTV estimates the total revenue a customer is expected to generate over their entire relationship with your brand. By tracking CLTV, you can assess the financial impact of your CX efforts and customer retention strategies.
- Customer Acquisition Cost (CAC): CAC measures the cost of acquiring a new customer, including marketing expenses, sales commissions, and other associated costs.
- Customer Retention Rate: Customer retention rate indicates the percentage of customers who continue to visit your restaurant. It reflects customer satisfaction and loyalty.
- Customer Lifetime Value to Customer Acquisition Cost Ratio (CLTV: CAC): This ratio compares the value a customer brings over their lifetime with the cost of acquiring that customer. A ratio greater than one indicates a positive return on investment, while a ratio below one may indicate the need for improvement in acquisition or retention strategies.
- Average Order Value (AOV): AOV is the average amount of money spent by customers in a given period. This metric provides valuable insights into customer purchasing habits and can be used to identify trends, measure changes in spending patterns over time, and assess the impact of marketing campaigns or pricing strategies.
Break Down Data Silos
Data is often dispersed among various systems, resulting in departments operating as separate entities with limited knowledge of each other’s activities. To overcome data silos, create a single source of truth by investing in an integrated system or tool that facilitates the sharing and analysis of data across your organization.
A holistic view of your organization will show you where to prioritize investments and allocate resources that will yield the most significant returns and help your brand become best-in-class in the overall restaurant experience.
If you’re interested in seeing how streamlined data can help you better monitor the overall health of your brand, make sure to download our case study “How Willie’s Icehouse Leverages Industry Benchmarking & Insights to Elevate Restaurant Experience.”
At this point, there’s no denying the link between customer satisfaction and financial growth.
Disregarding the value of investing in customer experience (CX) will prove detrimental to your restaurant’s financial health. To emphasize: based on McKinsey research, brands that focus on CX grow their revenue 1.7 times faster than businesses that don’t—they also grow their customer lifetime value by 2.3 times on average.
If you’re a CFO, now is the time to start taking an active role in your brand’s CX initiatives to offset any long-term economic hurdles.
As your organization’s financial advisor and gatekeeper, the decisions you make are crucial in paving the way to future financial success. And the future is customer-centric.