Customer relationship management in the hospitality industry: examples and benefits

Where does the majority of your business come from? If you had to take a wild guess, would you say that new customers drive your overall sales, or do repeat customers constitute the bulk of your business? According to LinkedIn, repeat customers generate more than 50% of a small business’ annual revenue, and those customers spent 67% more than new customers. That's why customer relationship management (CRM) in the hospitality industry is such a critical concept. 

The hospitality industry today is still in the early stages of understanding the impact of data and CRM. Like the e-commerce shift a decade ago when businesses in the industry newly grabbed ahold of how they could use data to reach customers more effectively, hospitality businesses are awakening to what is quickly becoming an essential element for attracting and keeping loyal customers: the customer experience.

Today, we're going to take an in-depth look at customer relationship management software in the hospitality industry with a focus on the power, agility, and adaptability that a high-quality software solution can provide to your restaurant, cafe or eatery. We'll also explore the key features and considerations that you should look for when selecting a CRM for your business. 

Customer relationship management in the hospitality industry: What is it?

First, some definitions. Let's talk about what customer relationship management actually means in the hospitality industry. 

CRM is designed to help you make the most out of each customer interaction. Essentially, it is a multi-faceted tool that helps you maintain administrative oversight over anyone who interacts with your business. 

A high-quality CRM system will help you gather and consolidate important information regarding customers such as demographic information, purchase history, and overall trends in their spending habits. To understand how guest management is revolutionising the hospitality industry, let's examine how it works.

Customer A visits your establishment frequently, approximately three times per month. Your establishment has a CRM system setup on the back-end that syncs to your point of sale (POS) system. 

Each time Customer A takes an action in your eatery, from simply scanning a QR code menu to settling the check, the CRM system secures a virtual treasure trove of information otherwise known as "declared data." In turn, the more interactions you have with Customer A, the more in-depth their CRM profile becomes. 

Savvy restaurateurs and entrepreneurs can then use that information to craft targeted ad campaigns and incentives tailored directly to Customer A's preferences. If Customer A goes off script and orders something different on one of their visits, that's ok! Every data point that the customer relationship management system grabs makes your establishment more agile and adaptable to the needs of your customers. 

The bottom line? Implementing a CRM provides your establishment with all the tools necessary to increase your bottom line. 

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The importance of guest management in the hospitality industry

Bob Dylan once wrote, "The times, they are a-changin!" As new technology comes to market at an increasingly rapid pace, this sentiment is applicable in almost every corner of our lives, including the food service and hospitality industry.

Once upon a time, cafe owners and others in the hospitality industry differentiated themselves based on the quality of their customer service. All you needed was a warm smile, unwavering attention to the customer and a little bit of ambiance to make your eatery stand out. 

Things have become more complicated, however, and everything is changing for the hospitality industry as its businesses embrace technology and the benefits of CRM data. While some are still slow to get on this train, businesses that are already on board are easy to identify. 

Good customer service still reigns supreme, but in order to keep up with the competition, entrepreneurs have had to develop new service delivery methods designed to ensure customer satisfaction.

Indeed, guest management in the hospitality industry is no longer a novelty that only big-name chains use. It has become a necessity. Given the return on investment that restaurant owners can expect from their CRM, it's not hard to see why. Let's take a look at CRM implementation by the numbers. 

The overall number of businesses in North America that implement CRM software into their daily operations is expected to grow by more than 12% each year through 2028. In real dollar value, that means that the CRM industry will be valued at an unbelievable $129 billion US dollars by the end of that growth in 2028. Over the last 10 years, it's already grown by more than $55 billion. 

In the beginning, customer relationship management software, especially in the hospitality industry, was relegated to big-name companies and franchises that could afford expensive new tech. That continues to change, however, and more and more companies of varying sizes are realising how essential CRM solutions are to the success of their business.

The key features of a high-quality CRM

The hallmark of high-quality CRM software is its ability to handle a wide array of tasks. Think of it as the Swiss Army Knife of sales and customer retention tools. While not every customer relationship management software in the hospitality industry is created equally, there are certain functions that your Swiss Army Knife should contain in order for your venue to stay competitive. Let's start with a brief overview of quality-of-life features. 

First off, you want to make sure that your chosen CRM "plays nicely" with other tech solutions. That means ensuring third-party integrations are a go. Secondly, you want to make sure that using the software simplifies your life through the automation of basic tasks. Finally, you want to make sure that you can retrofit the out-of-box product directly to your venue's purposes. Therefore, customisation options are essential. 

These are all high-level functions. What about the nitty-gritty? What does a good customer resource manager in the hospitality industry need to include? First, you need to be able to database and keep track of your existing customers. The CRM should be able to log a wide data set, from purchase history, to menu preferences to payment tenders. From there, the CRM should be able to deliver real time, customisable analytics based on those metrics. 

Additionally, your CRM suite should help you with lead generation, i.e. prospecting future business. Look for a software package that syncs with your venue's social media accounts. Also, your CRM should be able to create custom-made incentives, discounts, and offers tailored directly to individual customers. 

For example, using the data obtained from each customer touch-point, develop a birthday recognition program where you send guests celebratory discounts. That means that your CRM should also include robust email options. Together, these factors can help drive your marketing efforts and increase your bottom line.                                    

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Improving customer outcomes through CRM usage

When purposed correctly, technology serves to make life better. When it comes to customer relationship management in the hospitality industry, that means using emerging technology to improve customer outcomes. A CRM is essential to strengthening your bond with your clientele and the community at large, all while enhancing your location's profitability. 

Unsure where to start? Let Mr Yum help guide your venue's digital transformation. Contact us today to set up your consultation.  

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