Restaurants Expect Huge Growth Thanks to Text Marketing

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digital marketing for hospitality business

Text marketing programs are all over the restaurant industry. The question remains: are they profitable?

New data from the customer relationship management platform Mobivity shows that text marketing subscribers visit businesses 44% more frequently than non-subscribers. Once a consumer joins a restaurant’s text messaging program, the guest’s spending increases by 23%. Measured over six months, a single text subscriber can be valued at $12.15 on average in incremental revenue.

“We instinctively know that text marketing programs drive value for restaurant operators. But after digging deep into the data, we really saw how large the ROMS [Return on Marketing Spend] is, and how big of an impact we had on restaurants and their subscribers,” says Chuck Moxley, senior vice president of marketing at Mobivity.

The report looked at its own network data of 15 million subscribers and 500 million transactions from 2018 to 2021. Mobivity found that 96% of subscribers remain in a text program after 90 days. What’s more, 90% of them are still in the program after two years. That outpaces mobile app and email subscriber retention by a factor of 2x and 3x, respectively.

Anecdotal evidence had already pointed in this direction. For example, Famous Dave’s has reported a 50x return on its SMS program. Moxley says he was surprised to see a 718% ROMS across all brands’ campaigns with POS data in Mobivity’s study.

This means for every $1 brands invest in text marketing, they are seeing a return of $7 in purchase redemptions. This is all driven by weekly, personalised text message offers.

The big challenges for restaurant marketers today

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Beyond ROI and ROMS, the report tells a deeper story about how modern rewards programs function and the value of personal connections. Compared to this time last year, which was during the fall and winter surge in Covid-19 infections, more restaurant dining rooms are open and more consumers are comfortable going out to eat. That offers far more opportunities for restaurant brands. However, Moxley cautions that situations change quickly and fewer patrons are comfortable dining out in 2021 than prior to Covid-19. That helps to explain why online orders with pick-up and delivery are still at levels far higher than before the pandemic.

The big challenge for restaurant marketers today is how brands are effectively using those fewer dining opportunities. How are they leveraging their owned media channels to drive repeat purchases and increase guest frequency in this changing landscape?

Another challenge that’s growing harder in 2021 is getting consumers to extend their personal information. Why would you give McDonald’s your phone number or email address just to purchase a burger meal, right? This is why brands are rolling out loyalty programs to bribe customers to give up their personal data and share it on each visit.

“But also why our data from the benchmarks report show that getting customers to identify themselves with their mobile number isn’t that hard and doesn’t really require an incentive beyond getting exclusive offers and being in the know on new menu items and events,” Moxley says.

On the horizon, Moxley sees pending privacy regulations as a potential game changer. Android’s recent decision to give its users the option to share their “approximate location” with marketers and app developers has the potential to disrupt the restaurant marketing industry. Moxley says the ongoing debate around consumer privacy and data sharing is one of the reasons why first-party data has become the holy grail for restaurant marketers.

“Being able to target consumers on social media or digital advertising based on propensity to eat out is going to get much harder. Third-party data targeting is going away. And using device location as a simple way to measure foot traffic is not the answer anymore with more than 90% of iPhone users opting out of sharing their location,” Moxley says. “So, the brands that succeed in amassing first-party data from their customers can still target them with ads in digital. And they can use customer data matched to POS transactions to measure not just foot traffic but actual purchases. These things are critical.”

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