Exploring customer retention strategies managers implement in the fast-food industry in the North West province
Abstract
The fast-food industry is a highly competitive industry that is continuously expanding. It is important to implement effective customer retention strategies to ensure that the business has a competitive edge in the industry. Customer retention is a key element in the success of fast-food restaurants. Managers of fast-food restaurants need to understand the importance of customer retention as well as customer retention strategies, as this will lead to an increase in the profitability and sustainability of the restaurants that they manage, especially considering the devastating economical effect that the COVID-19 pandemic had on businesses. As a result of the devastating effect that COVID-19 had on fast-food restaurants, it is crucial for managers of fast-food restaurants to differentiate themselves from competitors through customer retention strategies. Keeping existing customers (through customer retention strategies) is more time and cost effective than acquiring new customers in this competitive industry. Existing literature is limited in providing strategies to enhance customer retention in the fast-food industry in South Africa, and no studies have been conducted on strategies to enhance customer retention from a manager's perspective in the North West province of South Africa.
The primary objective of this study was to explore the strategies that managers implement to enhance customer retention in the fast-food industry in the North West province of South Africa. This objective was fulfilled through an in-depth literature review and empirical investigation into customer retention in the fast-food industry in the North West province of South Africa. This study employed an exploratory research design and used a qualitative research approach to collect the data. A combination of convenience and judgemental non-probability sampling methods were used to select participants – managers of established fast-food restaurants in the North West province of South Africa. The sample size consisted of 13 participants. The collected data were analysed by the use of the Morse and Field approach, and the ATLAS.ti (version 22) software programme was used to code the data as well as conduct categorical and thematic analysis. Through the analysis, four themes emerged with nine subcategories. The results from the empirical investigation suggested that participants regard customer retention as an important element in their business, which will enhance the growth of their business. The results also indicated that the participants made use of software systems to monitor customer visits to their restaurant and also agreed that returning customers generate more income than new customers. Participants also stated that they have daily meetings with their employees to highlight the importance of customer retention and they also evaluate their employees through various methods to establish where they fall short in terms of understanding customer retention. The main challenges that participants identified with retaining customers can be attributed to a combination of poor product and service quality, as well as the limited financial capacity of
customers to buy products from fast-food restaurants on a frequent basis. Participants further stated that they focus on enhancing product and service quality to retain more customers. Furthermore, participants used methods such as aggressive marketing and value-added products as well as loyalty programs to retain more customers. Concerning strategies that participants implemented to retain more customers during and after COVID-19, it was identified that they made use of food delivery services – a differentiation strategy.
It is recommended that managers of fast-food restaurants should ensure that they use high-quality ingredients when producing products, as well as set up intensive customer service training schools for employees. It is further recommended that aggressive marketing such as social media sites should be used, where the restaurant includes its health and sanitary protocols. Managers should further focus on producing more products that are budget-friendly but still high quality. To enhance customer retention, managers should also invest in generators or solar power to allow them to operate during power outages. It is also recommended that managers of fast-food restaurants should try to convince the majority of their customers to register on the respective loyalty programme of the restaurant – as this will allow them to offer customers benefits and track their spending behaviour. Lastly, managers should invest in their own delivery services, since third-party delivery services are expensive and customers are more price sensitive.
Future research studies can make use of a quantitative research approach, or a larger target population and an extension of the geographical area could also be considered. Research can also be conducted on employees' views of customer retention, and customer retention strategies in other industries can be investigated and compared to this study.