Marketing: The Price of Loyalty

Consumer spending is down, but that doesn’t mean businesses can’t create loyal customers. However, creating loyalty takes effort on the part of the business.  

Several years back I regularly visited a small Mexican restaurant called Lenitos Taco Shop. This was one of those quaint, hole-in-wall places with amazing chips and salsa, great food and good prices. The first time I tried Lenitos was with a friend after we received a buy-one-get-one-free coupon. This little taco shop instantly became one of my favorite restaurants.

Every month I’d use their coupons and take a friend there to try it out. When I had family in town they always requested that we eat at Lenitos. The restaurants marketing through coupons kept me a loyal customers and I ate there every couple weeks. After a few years the restaurant stopped sending their coupons. To my knowledge they stopped marketing at all. I continued to go for a time, but invited friends less often since I no longer was getting the coupons.

Soon I noticed I was frequenting the restaurant less and less often. Why? They had lost “mind share” with me. The coupons served as a monthly reminder for how much I liked the restaurant. When the company stopped couponing they stopped reminding me how much I enjoyed their food.

For me, 80% of my dining out happens at the same 3 restaurants. Unfortunately, Lenitos is no longer one of them. A year after my last visit I decided to grab some nachos before a college football game and saw they were out of business. I’m not suggesting that my not eating there was the cause of their demise. My guess is that they stopped working to keep their customers loyal (through couponing, marketing or some other means) and slowly lost customers until they were forced to close shop. When I saw they were closed I thought “If I knew they were going to close I would have come more often.”    

Think of the top 3 places you like to eat out? Are these the same places you’ve always eaten at or has your behavior changed? If it has changed, why? Consumers don’t just keep going somewhere because it exists. Over the years I have heard many business owners say “Once they try our food, people are sure to come back” or “once people see how great our service is, they’ll be a customer for life.” In today’s world this simply isn’t true. People don’t come just because a business has good food, or selection or even prices. Too many choices exist for today’s consumer. I can think of plenty of business that had amazing service, or great food, but still closed their doors.   

Consumers are loyal to businesses that maintain “mind share.” Nike and Coca-Cola understand that they have to keep in front of their customers in order to keep them as their customers. Whether it’s through promotions, specials, coupons or some other marketing, loyalty comes at a price.

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2 thoughts on “Marketing: The Price of Loyalty

  1. I remember Lenitos. What a place! Their nachos were the best I’ve ever had!

    Also, I think you’re right… restaurant owners suffer from the Lake Wobegon Effect–just like the 93% of US drivers that think they are “above average drivers” (http://en.wikipedia.org/wiki/Lake_Wobegon_effect). Most restaurants owners seem to think their food is the best.

    I don’t know about everyone else but I have more good restaurant choices than I have opportunities to eat. Getting me to come back to a restaurant is going to require more than the owner simply buying a higher quality tomato from their food vendor. Good food is just the price of the ticket to the game. Winning is another story. You’re going to have to remind me, engage me, give me an incentive.

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