The Promotional Web

I just returned from a panel entitled "The Las Vegas Restaurant World" at Hotel Ezra Cornell, an annual tradition at The Hotel School during which hospitality industry executives descend upon Ithaca for a weekend of fun, food, and lively discussion. Given the current state of the economy, the panelists, which included food and beverage luminaries such as Elizabeth Blau, Todd English, Jason Lapin, Damian Mogavero, and Steven Schussler, elected to discuss the restaurant industry in general as opposed to focusing on Las Vegas specifically. And although there is much to report from their discussion, I would like to focus on one comment made by Todd English - the rise of restaurant promoters.

According to Mr. English, restaurateurs have begun to leverage promoters as a channel through which they can spread the word about their restaurants. This is not surprising given the industry's reliance upon word-of-mouth marketing; what is surprising, however, is that the practice is becoming more formal in nature. In order to ensure that these efforts are effective, restaurateurs should leverage the data contained in their POS systems to target the right people for the job.

How might a restaurateur go about identifying and courting the ideal promoter? To begin the process, it is first necessary to determine what the characteristics of an ideal promoter are. In the absence of restaurant-specific data, I would suggest that restaurateurs search for individuals who (a) make reservations for large parties and (b) who spend a significant amount of money while dining. With this definition in mind, transactional data can be analyzed to identify these key individuals and their primary means of contacting the restaurant. Promotions can then be designed in order to encourage them to spread the word about the restaurant.  For example, reservationists can ask guests seeking to make reservations how they heard about the restaurant.  If the guest indicates that he or she discovered the restaurant through a recognized promoter, that promoter would receive credit towards future dining at the establishment and that guest could be designated for special service by management.  By providing both the new guest and promoter with incentives to return, the restaurant will be able to increase repeat patronage.

Although there is always the potential that a promotional system such as the above could be exploited, I believe that its benefits outweigh its drawbacks.  Considering the fact that word-of-mouth is so important in the restaurant industry, it only makes sense to ensure that the practice is occurring in the most effective and cost-efficient manner.  By using transactional data to identify and court promoters as opposed to randomly rewarding certain guests, restaurateurs are much more likely to see a return on their investment.