July 22, 2020
No-shows are now a hot topic, particularly in the restaurant business. The obvious and simple answer is to introduce non-refundable booking deposits. But there are a number of downsides to these and not many businesses have considered them. So here are 8 things to think about before you jump straight to them.
Create Them and Us
Creates a Transactional Relationship
###1. Reduced Bookings The big immediate impact will be a reduction in the actual bookings themselves. You are placing an extra hurdle in front of people and if they have even the slightest doubt about being able to make it they will pause. And once people pause their booking process they are unlikely to continue.
Of course if you’re busy then a reduction in bookings is fine in the short-term, especially if it translates into more people actually showing up. Which is a good thing in the short-term (though not necessarily in the long-term, which we’ll get to.)
###2. Strictness of Enforcement How strict are you going to be about enforcing the rules around the deposit? If you have a 24-hour cut-off will anyone cancelling with 23 1⁄2 hours to go still be charged? What if they tried to phone but no-one answered the phone? Will leniency apply to regular customers as well as new ones? Will any discretion be made clear to the customer when they book?
These are issues nobody gives much thought to. But if you have a customer whose child has to be rushed to hospital 6 hours before the reservation is due and you charge them you will lose that customer and their whole family for good, whether they rang you or not. You might make an exception because of the circumstances and because they’re already a regular
###3.Credit Card Security People are constantly being told that they should not give out their credit card and personal details over the phone. What are you going to do to reassure them about this? Where are you going to keep those details and who has access?
All personal information is governed by GDPR regulations, and credit card details by an additional raft of rules.
If the card details get stolen and the customer suspects it’s because you wrote the details down in a book, how will you reassure them? And more importantly how will you reassure the credit card company?
###4. Legal Resell Responsibilities Deposits are taken in case of no-shows. Legally this means if you sell the table or slot you can’t keep that deposit. And you have to make a strong effort to sell it, not just wait for a walk-in.
And of course you have to be able to show all this if someone brings you to any legal forum, where any discretionary element can potentially be used to show discrimination.
###5. Chargebacks Customers don’t have to resort to legal action to get their money back. It is possible to file a complaint with the credit card company and get it returned. This takes a few minutes on the customers side but it can take a lot of time and paperwork on your part to defend the situation. You might think well ok, I’ll let this one go. But do that enough times and you have a very bad reputation with the credit card companies.
###6. Customer goodwill Customer goodwill is the key to any business. It’s why you focus so intently on customer service. Booking deposits destroy this in any number of ways.
Firstly they turn what many see as a personal relationship, one where they are also understanding of issues you might have, into a purely business one. One where you need to provide the service you promise perfectly and with no delays.
And if you don’t enforce the rules around the booking very strictly it can cause resentment among the customers who see themselves as being “picked on.”
###8. Impact on Customer Retention and Long-term Business