Customer segmentation has been with us for a while – but this crucial marketing tool for hospitality businesses has been given a huge boost by the arrival of AI.
It’s a well-aired fact that marketing campaigns are at their most effective when they actually mean something to the customer. For example, it’s no good pushing cheesy chips to a vegan.
So you segment your customer base.
It’s absolutely vital that you need to know about the behaviour and preferences of the people you are trying to market to. Historically, though, segmentation tools only looked at a single factor, such as their visit frequency, average spend, or items they often order.
That’s fine, and far better than sending out scattershot email offers, but it gives restaurateurs a one-dimensional view of clients. In addition, it provides next to no insight into the areas where your segments might overlap.
But with AI added to the mix…
Artificial intelligence is creating a step change in the way hospitality businesses segment their clientele and engage with them.
It does this by taking multiple factors into account simultaneously to provide a full picture of what customers need and want from you. It means you can respond accordingly and reward customers to build that relationship and loyalty.
NFS Technology, providers of the leading restaurant epos system Aloha, has recently partnered with top customer experience platform Paytronix to put advanced segmentation with AI at their clients’ disposal.
Catch them when you can
Chris Cartmell, NFS chief commercial officer for restaurant technology, says: “The algorithm used in this AI-supported segmentation has been trained using 20 years’ worth of data.”
When drawing up its segments – 12 recalculated every week – the AI looks four factors for each guest:
Number of visits
Average check size
Average days between visits
Likelihood of lapsing
“Assessing how likely they are to lapse gives you the opportunity to catch them before they go – the other factors mean you can re-engage by reaching out with appropriate offers that you know will appeal to them,” said Chris.
The segmentation, integrated with the restaurant epos system, creates hyper-specific segments from the data captured, and provides tips on how to target them. For example, customers who are ‘High Risk” or “Sleeping Valued Members” can be drawn back with a rich reward, while new members can be coaxed into joining loyalty schemes with a nurturing campaign.
Is segmentation really worth it?
“Absolutely it is,” said Chris. “Just look at these statistics on the power of great customer engagement:
• 18-30% – increase in spend and visits that can be attributed to loyalty programmes
• 6% – the average difference between loyalty and non-loyalty checks
• 5-17% – percentage of revenue driven by the most loyal 2-17% of customers.
Discover more about integrating your AI and restaurant epos system
“AI provides fantastic insight to encourage loyalty. When it’s combined with a leading restaurant epos system such as Aloha that creates unsurpassed customer experiences, it’s a powerful toolkit for restaurateurs seeking to grow guest relationships and revenues,” said Chris.
“It’s now time to take an in-depth look at how your restaurant incentivises its most valuable customers – and turn the latest arrivals into loyal diners who will return again and again. Integrating AI and epos make that happen.”
Discover more about customer engagement: Download the Paytronix Loyalty Report 2022