Wishing to do more than surmise about why sales or guest frequency may be rising or falling, restaurant chains such as family feeder IHOP are embracing customer relationship management, or CRM, technologies or services to gain better insights into such developments and cement bonds with their clientele.
"We may think things are going well because sales are up," says Patrick Piccininno, Glendale, Calif.-based IHOP's vice president of information technology, or IT. "But instead of using gut feel and conjecture, we want to find out what is actually driving customers to us."
The activities at Piccininno's 1,278-unit chain are part of an emerging trend that finds some restaurant organizations embracing CRM systems or services centered on forging closer communications links with customers. Other members of that group include the Hard Rock Cafe casual-dining chain of Orlando, Fla., and the Silver Diner retro-diner group of Rockville, Md.
In general, CRM software and services, whose prices vendors said range from around the mid-five figures for a basic package to well above $100,000 for an enterprise system, allow operations to more closely manage any interaction with existing or prospective customers. IHOP had this in mind when it implemented Oracle Customer Hub software, from Oracle Corp. of Redwood Shores, Calif. That technology, along with dedicated toll-free telephone number and e-mail address, permits diners to report problems they encounter at any of the chain's restaurants in the United States and Canada.
IHOP uses the system to log complaints received via either e-mail or phone. Agents contact the restaurant in question with the feedback, then follow up to ensure that the issue has been resolved with the customer. All results are recorded in the software database. Prompts issued by the system remind agents to complete the follow-up step.
Every month IHOP records 5,000 customer contacts, chain sources indicated. Since adding the Oracle software, the company has reduced the time needed to resolve complaints from 10 days to three, according to Piccininno, who said, "The goal is to maintain brand consistency and make sure none of our guests goes away for good feeling they had a bad experience and no one handled it."
Achieving such consistency is critical in all multiunit businesses but can prove even more challenging in an organization such as IHOP, where almost all restaurants are franchised or licensed to others.
Piccininno added that the CRM tool also enables management to more readily access customer feedback and identify trends. Such information then can be leveraged to improve operations and, in turn, relationships with customers. For instance, not long ago, the system identified a dearth of affection for one of IHOP's limited-time offers, or LTOs. The message from some customers, Piccininno said, was that they "hated" the item. The wide variations in reported quality showed that IHOP needed a better way of ensuring consistent preparation across all of its restaurants. As a result, the company has increased training for LTOs from four weeks to six and now provides more detailed preparation instructions within its training videos.
Hard Rock Cafe, which currently has 124 stores in more than 40 countries worldwide, has taken a similar approach with Epiphany E6, a tool offered by Infor Global Solutions of Alpharetta, Ga. The chain receives an average of 3,000 customer e-mails weekly, through a link on its website. Before the technology was implemented, issuing a response to these e-mails took an average of one week to 10 days, and individual store managers had no way of finding out about problems occurring in the units for which they were responsible. "We knew we could be more efficient in responding to our customers," said Kelly Maddern, senior director of IT.
With the system in place, Hard Rock administrative assistants route emails to the appropriate managers, who as their IHOP counterparts do, follow up on customer comments, complaints and issues. Most e-mails get a response within a day or so, the executive noted. The system also interfaces with Hard Rock's customer database, so that any ancillary information culled from the e-mails — for example, customer preferences — can be used to craft targeted offers. All in all, Maddern noted, this type of CRM technology "permits us to engage a dialogue with our customers and provide offers that are relevant to what they want," thereby fulfilling the overall promise of customer relationship management.
In another example of using CRM tools to take customer communication to a higher level, Silver Diner, with 19 locations in Maryland, Virginia and New Jersey, is more completely leveraging the technology underlying its 3-year-old Blue Plate Club loyalty program, with 100,000-plus members. The mymicros.net iCare platform hosted by Micros Systems Inc. of Columbia, Md., is the technological backbone of that program, involving one in every five Silver Diner customers, and captures from each club member card presentation such information as store visited, items ordered and check total.
Blue Plate Club members receive personalized emails based on data captured in this fashion. For example, the system issues "thank-you" messages recognizing diners for visiting Silver Diner a certain number of times within a given period or acknowledging that the customers have reached a certain spending level. Most such emails include a coupon good for a discounted or free item recipients have ordered previously. Silver Diner also utilizes the system to issue similarly personalized "Miss You" emails to so-called "lapsed users," or "club" members who have not dined at any of its restaurants within the past 90 days. As an added enticement to patronize Silver Diner once again, the emails contain coupons good for a free dessert. "It's been fairly well received," said Mike Snow, IT director.
Silver Diner recently started sending targeted "reminder" emails to Blue Plate Club members to let them know they need just two more visits to one of the chain's restaurants before a certain date in order to receive another discount offer. "Customers tell us that they like the extra push the messages give them," Snow noted, adding that Silver Diner now sends out a total of 10,000 to 15,000 "ongoing communications type" emails per month and executes an average of 100 Blue Plate Club transactions per restaurant per day, with 60 percent of the club members visit a Silver Diner location multiple times during a given month. A third of the club participants patronize the chain more than once a week.
"We're now attempting to figure out how to use targeted emails to persuade people who come to Silver Diner for breakfast to eat dinner here, and vice versa, or to get customers to order something they usually don't," Snow concluded. "It's been hard to change peoples' habits, but we're trying."
