1. The Sole Proprietor, an upscale seafood restaurant in Worcester, Ma, sought innovative methods to enhance and track customer loyalty. Research suggests that incentive based customer loyalty programs are an innovative and successful tool for such customer-relationship-management initiatives. Two focus group sessions and an electronic survey with a sample of The Sole Proprietors customers suggest that a well-managed loyalty program would facilitate increased guest loyalty. Abstract Understanding and Improving Customer Loyalty at The Sole Proprietor Kimberly Ramsdell (Management), Eric Ruscitti (Management), Advisor: Professor Michael B. Elmes The Sole Proprietor is a top-tier seafood restaurant located in Worcester, Massachusetts. The owners are always seeking innovative and unique tools to help compete in the growing restaurant industry. In the years between 2002 and 2004, the number of restaurants in the United States increased by 14,000 1. Such a variety of restaurant selections has caused restaurant owners and managers to seek new ways to anticipate customer behavior and create a loyal customer base. Background Project Goals/Objectives Primary Understand what makes customers loyal Determine % of loyal customers Seek innovative techniques for tracking loyalty Understand difference between satisfaction and loyalty Implement methods to improve loyalty Secondary Capture guests overall opinion of restaurant Methods/Process Results/Outcomes Conclusions/Recommendations Acknowledgments Madeleine Ahlquist, Robb Ahlquist (Owners) Michael Donovan (Marketing Specialist) Kevin Hunt (General Manager) Dave Anderson (WPI CS Student) References 177 respondents answered rewards/ coupons/ discounts would increase their loyalty Further analysis showed that there are 2 customer segments of interest : loyalists and defectors Loyalists are members of focus group one and others that answered Very Satisfied and visit 8-11+ times/3mo Defectors are members of focus group 2 and 25% of survey respondents that answered Satisfied and visit 0-7 times/3mo Results/Outcomes Loyalists are twice as likely to provide enthusiastic referrals and to agree that The Sole Proprietor sets the standard for excellence Only 4% of respondents are loyalists compared to 25% defectors By transitioning defectors to loyalists, the restaurant will have more repeat visits, increased referrals, and very satisfied customers Over 90% of loyalists and defectors would join a loyalty program at The Sole Proprietor Incentives of interest include free items, discounts/coupons, preferred seating and special members only events Research uncovered the new concept of customer loyalty programs for restaurants. A study in 2004, showed that 50% of table-service customers would be more likely to patronize a restaurant that had a loyalty program 1. Therefore, we tested whether the same was true for customers of The Sole Proprietor. Three methods were used to gather customer opinions regarding satisfaction, loyalty, and specifically, a loyalty program for The Sole Proprietor: Focus group with loyal customers Focus group with satisfied but not loyal customers Electronic survey of all customers The electronic survey was used to capture substantial amounts of data in a short time while also filtering results into a database making analysis more efficient. Focus groups were used to generate a conversation since the electronic survey can be limiting since it is not a two-way discussion. Results from the focus group and electronic survey were analyzed using quantitative as well as qualitative techniques to capture key themes from the responses. Hobler, Randolph. "Late to the Table: Restaurant chains lack loyalty programs." June 15, 2006. Innovative Solution Implement Clever Returns vendor operated loyalty program Program utilizes automated system of email or post mail communications with members Rewards are automated and members can track using a members website Restaurant can track ROI and other measures with customized reports Other Solutions Create a larger waiting area away from already seated guests Offer drinks and appetizers to waiting guests Email updates on new specials Raffle contests