Chances are, as a restaurant or hotel owner, you do online marketing. Perhaps you advertise on social media, send mailings and work on the findability of your website in Google. You put time and money into this, but do you know what it brings you? Down to the revenue per guest? If not, read on quickly! Because once you know this, you will get the most out of your marketing budget.
It is sometimes said that half of your marketing budget is wasted money. You just never know which half. This was certainly true in the days when restaurants primarily advertised offline. The result of a newspaper ad, a listing in a guide or a poster in a bus shelter is hard to measure. You don't know exactly how many people walked past the bus shelter. How many of them actually saw the ad? And who of this selection actually made a reservation? You name it. You can hardly track all these people.
Following people online
Yet it does happen these days, that tracking. But then online. Thanks to cookies, it is possible to track people's internet behaviour. And that is what makes online marketing so incredibly efficient. Because this allows you to know exactly:
- How many people saw your ad;
- How many times it was clicked;
- What these people do next on your website;
- Whether they end up booking;
- and even, with a POS link: what they then order and how much they spend.
No money wasted
This allows you to know which ad works and which doesn't, what you can optimise on and how best to use your marketing budget. So that soon none of your marketing costs will be wasted money.
So how does this tracking work?
But how does this tracking work? Cookies are needed to track website visitors. These are small text files placed on the laptop, phone or tablet of the person visiting your website. Some are purely functional and necessary for your website to work properly. Others are analytical and measure visitor behaviour within your website.
You can view this in Google Analytics and it gives you a lot of useful information to improve your website. Finally, there are tracking cookies, which track visitors' browsing behaviour even outside your website.
Conversion pixels make it really interesting
Next, there are marketing tracking codes. Also called marketing codes, marketing pixels or conversion pixels. These codes make things really interesting! Because these are codes that allow advertising platforms such as Facebook and Google Ads to measure within your website. This allows you to see the effect of the ads. In other words: your marketing activities become measurable!
From Facebook ad to booking
To clarify, we will use Facebook as an example. Suppose you place an ad on it. You then see in your Facebook Ads Manager how many people viewed your ad and clicked on it. But that's where it ends. Facebook cannot measure what else happens on your website.
Unless you place a so-called Facebook pixel. This allows Facebook to keep track of people on your website as well. This allows you to see whether people who clicked on the ad eventually made a reservation. In short: you know what your ad delivers, measured in the number of reservations.
Later in this article, you will read how to translate this into revenue per guest. First, we explain how to set these codes easily.
install tracking codes on your website
Not only Facebook, but Google Ads and Analytics, for example, also use these tracking codes. You can use them to measure not only reservations, but also other website actions. Like viewing the menu or signing up for your newsletter. Super handy!
Only, these codes are not easy for everyone to install. You need quite a bit of programming knowledge. Or you can ask your website builder, but that might take a few weeks.
Easier installation with Google Tag Manager
To make action measurement easier, Google has developed the Tag Manager. This only requires the website builder to place a code once within your website, namely that of Google Tag Manager, after which you can then place all kinds of tags, pixels and codes within this Tag Manager. Such as the aforementioned Facebook pixel. The various 'tags' can then measure conversions within your site, such as newsletter subscriptions and reservations.
Measuring conversions
Conversions refer to actions your website users perform. These can be divided into hard and soft conversions, also known as macro and micro conversions.
- Hard (macro) conversions contribute directly to increasing sales. Like, therefore, making a reservation.
- Soft (micro) conversions do not directly generate revenue, but they often contribute to it. It is a step towards a hard conversion. For example, subscribing to the newsletter or viewing the menu.
Measuring the usefulness of soft conversions
These soft conversions are sometimes forgotten to measure, but they are certainly important. They give you insight into the behaviour of your (potential) guests. What steps do they take until they proceed to a reservation? Where do they drop out? You can then capitalise on this by optimising your website, social media or content.
Find out where website visitors drop out
For example, you can measure not only reservations (hard conversion), but also the completion of the reservation form, without visitors clicking submit. Where do they drop out? Maybe your date planner turns out not to be user-friendly enough, or potential guests think they have to fill in a lot of data.
Conversion rate
When you measure conversions, you can also calculate the conversion rate. This says something about the effectiveness of your marketing efforts. This is because the conversion rate is the ratio between the number of sessions (visits) on your website and the number of goals achieved (conversion). The math is as follows:
number of goals achieved / number of sessions x 100%
This ratio does not only apply to your website. You can also calculate the conversion ratio of marketing tools such as Facebook or Google Ads ads or your newsletter. This way, you can easily compare the effectiveness of different campaigns and tools, and discover whether optimisations do indeed lead to a higher conversion ratio.
Translating conversions into revenue per guest
Using tracking codes, you can therefore track visitors to your website from, for example, an advertising platform like Facebook or Google Ads. Or from your mailing programme. Then you measure their conversions, such as placing a reservation. You also know whether the ad was effective compared to other ads, by calculating the conversion rate. But, how much did your ad really generate, in euros?
Two ways to find out revenue per guest
To find out, we look at the hardest conversion: making a reservation. Next, we look at turnover. Now there are two ways to translate the marketing tool into revenue per guest in euros.
1. Assuming averages
First, you can calculate this roughly, assuming averages. To do this, first calculate what the average guest spends during a dinner party. Then calculate how many people a group consists of on average. Because by measuring a reservation alone, you don't know how many people are involved. Say, on average, a guest spends €32 and a reservation consists of 2.9 people on average. So on average, a reservation generates €92.80 in revenue. Now you know that when 12 people booked through your Facebook ad, it brought you an average of €1113.60 in revenue.
2. Link with cash register system
However, with the above calculation, you are assuming averages. As a result, it remains a bit wet-fingered. If you want to know exactly how much turnover a particular drug generates, it is important to calculate the turnover per specific guest link to conversions. And you can do that thanks to a link with your POS system.
Linking information from till to website
In fact, these days there are POS systems that feed information through to your website. The hard conversion then does not stop at 'a reservation', but also measures how many people the reservation concerns, what they have eaten and what the turnover is from that. And that gives you many advantages!
Calculate your Return On Investment
First of all, you can now calculate the exact return on investment of your marketing activities. In other words, what the activities yield. This is also known as the Return on Investment (ROI). You do this by dividing the costs incurred for the activity by the revenues. This tells you which marketing activities yield you the most - and which the least.
Get a lot of sales from Google Ads? Maybe you can increase your budget and get even more sales. Is advertising on Instagram not paying you much? Then you can improve your ads or choose to spend less on them. This way, you will get the most out of your marketing budget.
Fewer reservations does not necessarily mean lower sales
The above choices are less easy to make when assuming averages. After all, fewer reservations does not necessarily mean less turnover. Maybe your most recent Facebook campaign yields 10 fewer reservations than previous ones, but they are all groups or people ordering expensive dishes. Then your turnover could still be higher. Something you know thanks to the link with your POS system.
Experimenting with ads and audiences
Knowing exactly what your marketing efforts are delivering allows you to experiment in a targeted way, instead of just trying something at random. What do you get if you appeal to a new target group? Will a certain wine be ordered more often if you mention it in your newsletter? What happens if you increase your Google Ads budget? Try it, measure and optimise!
Targeted advertising
Finally, this checkout link is ideal for approaching guests in a very targeted way. Because you can see not only the turnover, but also what guests have ordered. So you can show guests who ate asparagus last year an advertisement or send them a mailing as soon as as asparagus is on the menu again. Chances are they will make reservations again!
So you know exactly what your marketing activities are delivering
Thanks to a link with your POS system, combined with the use of tracking codes, you will therefore know exactly how much an ad, mailing or other means has generated. This allows you to measurably experiment with ads and it is possible to show ads to guests based on what they have ordered in the past. All this ensures that that so-called 'half wasted money' from your marketing budget gets smaller and smaller. You know exactly where your budget goes and what it generates, so you get as much out of it as possible!
Getting started
Do you also want to get started measuring the returns from your marketing activities? Measuring is knowing, guessing is missing! We are happy to help you set up tracking codes. We also have links to various POS systems, so you too can translate your marketing activities into revenue per guest. Would you like to know more about this? Feel free to contact with us!
