Ovation’s CEO on Addressing Customer Complaints

growing up with your dad. Not only you know, three Super Bowls is great, but he also is a five time pro bowler, you know, and so being the best in the world at something and growing up with your dad who is the best in the world, and you know, we always talk about that in terms of like, oh, you got to be the best in the world at something and like, but growing up with a dad who was is just really inspiring because it's it makes it

so much more real. And it's not like this you know, trite phrase that people use, but it's like, no, that's like the guy at the dinner table, you know, the one driving me to church on Sunday. Like I mean, like he's the best in the world at throwing a football upside down backwards between his legs, but hey, best in the world as something.

all right, halftime, let's go, like I'm done. And then as I got older, they would bribe me and they say, Okay, if you stay the second half, then in the third quarter we can go and get nachos, and then after the game we'll go to Red Robin. So that's how they eventually uh bought me into staying at football games. But you'd be hard, Mike you'd be hard pressed to find me watching a football game nowadays. I'm not a huge fan.

put that on pause. So looking forward to picking that back up off the shelf. But Ukraine's a near and dear place to my heart. Love love that part of the world. And then my other companies. One was in AI, so before AI was really a thing. And what we actually did was I developed an algorithm to translate social media data into gift recommendations, and so we were featured in you know, all sorts of publications and I won't mention because someone might be competing, but uh, we were

you know, all over the place. Had a great run there, sold the algorithms. The other one was a child safety wristband. So it was hardware tech for kids, which is if you want to do, like the hardest type of company to start in the world besides a restaurant, uh, get into hardware tech for kids, because that is just, I mean, unbelievably challenging. But it was great. And then we ended up selling the patents for that one. So the company didn't like do phenomenal, but the patents sold and uh,

and so that was that was a great experience. And then and then started ovation. And you know, this is something where because I knew a lot about AI and what AI can do, and I knew a lot about uh, you know, growing up in the restaurant industry. It was just a passion of mine. I mean, my dad when he retired, he actually got a little bit into restaurants himself. He was an investor in a restaurant right by us.

And we had some restaurant to our friends. Actually, the guy that owned the Red Robin, he to this day, every time I go home, he comes over and visits, like we're such good friends to this day, and he comes over to the house all the time for all the holidays and everything, and so we've got some you know, growing up with restaurants, it just was always a passion

of mine and seeing what algorithms can do. And then I did some customer experience consulting for Fortune fifty companies and realizing that there's an opportunity to there's a huge dearth of information about the guests in restaurants and especially around the guest experience, and it just seemed like bananas to me that we're still doing fifty question surveys to try to understand how our restaurants are doing. Like this isn't this isn't the nineties. Like that's not how the

world works. That's not how consumers work. If you're gonna if you're going to ask them to do you a favor and tell you how things are, they don't want to take twenty minutes to get a dollar off their taco, Like that's just that's that's not how it works. And if we're making business decisions based on what that demographic

of people want. Like if you have twenty minutes to get a dollar off your next taco, I don't want your opinion because I want people's opinions that that they value their time a little bit more, you know what I mean. And so that's that's really what got me into starting Ovation. But having those other experiences starting those

other companies was amazing. I learned so many things and it was great and from you know, the ups and the downs of all of that and realizing that, you know, I remember having one kid dm me on back in the day Twitter, and he was from India and he said, Hey, I just wanted to say thing, thank you for starting your company because I didn't know what gift to get from my girlfriend. I got onto your app, I used it and I got the perfect gift and she loved it,

and I just wanted to say thank you. That was like one of the most wild moments for me to realize, Like here I was in this hotel at this conference and this guy in India's messaging me to say thank you for finding this gift, and I'm like, wow, like we can we can do something, Like we could make the world, even even like a little corner of the world a better place. And man, that's powerful. And I don't need to be like Steve Jobs or you know, I guess elon Musk prior to this year and and

make all of these just like world shifting changes. I could change my corner of the world, and that's that's great. And if I could help the world move forward a little bit and help people find a little bit of joy, then I'm all about it. Let's build some value, baby.

to make margins to create a great guest experience. I think that's like self evident, because if you don't, if you're not making money, then you can't create the experience anyway. But it's all about the guest experience, and so it's about how can I create the best guest experience with my P and L. And when I think about that, it's like then I said to myself, Okay, well, how are we measuring that experience? And again it's up to long surveys, which very few people do, or online reviews,

which very skewed people do. Right, the experience has to be very skewed to leave an online review. And so what we found is that if you make a survey simple, and by simple I mean the ovation survey starts with two questions, no matter how much people have paid us to add questions to that survey, our answer is always and will always be no. That survey is sacred. And why we have done the studies. We have done the research.

If you want to get the data, you start with that and you let us, with all the AI that we've been doing with the millions of points of data, let us tell you what that unstructured data means. And it's not just pulling in from the ovation feedback, but we pull in from Google, Yelp, Facebook, Door, dash up Hub. Why Because all of that unstructured data is also guest feedback. You can't treat it differently than your guests that are

giving you private feedback. So we we have adapted our feedback to be in a similar context to what that other unstructured review data is. And by bringing that all together, you now have statistically significant data to make operational changes at location basis, at menu basis, at ease of ordering basis, Like you could know exactly what to fix where in

your operations without harassing your guests with fifty questions. Now, Mike, I do want to have one like giant asterix here while I am the anti survey survey guy, and I think that that's like a very appropriate, very appropriate like title. I do believe that long surveys have a place I think of. I wrote a book about dating, and the way that I think about long surveys, long surveys are are like the first kiss, you know, like when you

go to pick up a blind date. You don't open up the door and just kiss them on the doorstep right when you go to pick them up. No, maybe it was a really good first date. Maybe at the end, you know, and I think that like, but the concept is maybe later on, more more likely than not. But the concept is it has a place, but its place is not initially because when a guest wants to reach out,

they want to reach out for a reason, Mike. They want to reach out because you forgot their sauce, you forgot their fries, that the server, the server was rude. There's something that is on their mind that is a very emotional thing, and that's what they want to tell you. And so I think that that's one of the very key things that's critical to remember is that a survey

is not bad. It's just a survey upfront is And what we say is let the guest get the feeling off their chest, and then an hour later or the next day, you can get the data that you want that might not be structured in that in a in a might not be included in unstructured feedback. For example, we have customers right now that are asking about their ltos.

All right, Mike, you come into zach Shack and we're doing a peanut butter and jelly hamburger, and I'll ask you Mike, did you enjoy the peanut butter and did you try the peanut butter and jelly hamburger. If you say yes, I say great, tell me more about it. If you say no, I say great, here's a here's a five dollars off coupon to come and get that lto So now we're driving you know, recency, and we're driving spend and we're doing it all while collecting data.

And that's just like one example. Another example is if you're you have a restaurant in Vega, and you want to do text marketing, but you don't know who's local and who's not. Great, ask a follow up question, do you live in Vegas? And then you're not sending your text messages to people who live in sheboygan that we're there for a bachelorette party and so you know, or if you want to ask about you know, how did you hear about us? So you can measure the effectiveness

of different forms of marketing. Great, and so all of these things are possible with long form surveys, and all of these things are unlikely to come up in unstructured data. But what we found is that if you ask the two question survey first, and you followed up with a long form survey, you actually will get more long surveys completed than if you start with a long form survey. And so that's the Ovation way is we make sure

that the guest gets the emotion off. We make sure that the restaurant can have a really easy path to handle that guests and either through you know, if they loved it, let's get them to drive more revenue. If they didn't love it, let's have AI help us recover them. But then you need to separate what is a one

off issue and what's a consistent problem. And so ovation helps to bifurcate that with our AI to say, hey, Mike had a problem with the service, and turns out that nobody else complained about service this month, and so let's apologize to Mike, but let's not beat up our

staff over service because one person complained about it. But let's say that there's a specific location that has a five percent higher incident rate, which is, if you take the total number total pieces of feedback and you look at what percentage of those had an incident about service, if they are five percent higher than the average restaurant in your group. Then yeah, you need to go talk to that location about service and retrain them on the

Zach Shack way of being friendly and treating customers. And then the final step to this piece here, Mike, is that all of that data is great and I love being able to share data with restaurants, but you gotta do something with it. And so what we do is we have this whole entire goals module that uses AI to tell that GM, here's exactly what you need to do to improve, here's what you should be focused on.

And then with the guest feedback, we track how well that GM is doing, and we give the brands a dashboard to easily view every location in one spot and which ones are on track, off track, how are they doing, what are they working on, and if you want them to work on something different besides what the AI thinks is going to be best, great, click a button and override that. And so that's that's the power of collecting it, taking action in the moment, finding the trends and fixing

those trends, and measuring that by collecting the feedback. Very cool, And what was the question.

said it wasn't salty enough. You know, someone said it was too spicy, someone said it wasn't spicy enough. Okay, how do we tw tweak? Tweak, tweak. There absolutely is a time and a place for that, and you've amazing. Food is now table stakes. The problem that we find is that food is not usually the reason that people get most angry, and that anger is gonna yield to negative reviews. That anger is gonna yield to I'm never

trying them again. That anger is gonna yield to Hey, I'm telling fifteen of my friends not to go to zach Shack. It's not the food, because food is very it's very preferential based. The same exact food is gonna be you know, it's gonna be great to someone and terrible to somebody else. Right now, there are mistakes that are made. Something is burnt, something is you know, the rice is dry, like there may be some things like

that that, yeah, you can improve operationally. But then you get to this middle ground of service, which is a little more on the black and white of hey, were you nice to me or not. Now, if I'm having a bad day and I go into a restaurant and somebody doesn't kind of go above and beyond, I may

think they're being rude. If I go into a restaurant with four kids and I'm waiting for five minutes for my food, that may feel like twenty minutes, right if I'm by myself, or if I'm just like, if I'm on a date and they bring me my food in five minutes, I'm like, now, like, give me some more time, Like, you know, we're still breaking the ice here, you know, Or my wife and I were sitting down, we want more time to talk because we're finally you know, the kids,

got a babysitter, so like, I'm not in a rush. A little more subjective, but that's going to get you angry reviews. If someone is believes that they were not treated well, if someone was told that they are, if someone like waited too long for their food, that's kind of in that middle ground. But then on the far right you have accuracy. And what we find is that is completely black or white. I ordered fries, I didn't get fries. I ordered a burger with mustard. I didn't

get mustard. Now the black and white may be they ordered it wrong, but at the end of the day, it's still black and white. What they either they placed an order incorrectly, or they placed it or correctly and they got an incorrect order. Either way, that accuracy is going to represent a very small percentage. When you look at food service accuracy, that accuracy represents a very small percentage of feedback, and it represents the majority of negative reviews.

Of the worst reviews you get are about accuracy. So someone can look at our ovation dashboard and say, ah, man, like, you know, I'm getting fifteen percent complaints about food and I only have six percent complaints about accuracy. I'm going to focus on food. You're focusing on the wrong ship here, because those are people where everything was great, but accuracy. That's a fast way to lose customers and gain five

to gain one star reviews. And service is going to be the next, uh, you know, the next ladder up of You got to fix your service. You got to make sure that people are are being treated the way that they're expected to be treated, knowing that there is some subjectivity there. And then with the food, yes, fix the consistent problems, but again, don't be so concerned about the ones that are completely opposite feedback just because the fact is you're a restaurant, you're going to get most

of your complaints about food. So figure out, and this is something that we help you to do. What about that food needs to be changed? And what about that food has been totally is totally preferenced And Mike just

might not like zach Shachsberger's and that's okay. And so anyway, that's that's the advice I give people, is like, if you're going to start with one thing, start with order accuracy, because that makes I mean, last night, Mike, I ordered from a restaurant I'm not gonna say who I ordered from a restaurant. I got home and they didn't give me two sides. Now I've got I just got back from a crazy long conference, traveling all day. My wife is with you know, the four kids by herself for

like four days. She's tired. I'm like, hey, I'll pick up food on the way home. Don't worry about cooking tonight. I get it. I get home, I open it up, and what my wife wanted wasn't there. You better believe. It was like so frustrating. And then when I call them, they're like, okay, well, well we'll make that for you. Just come by and pick it up. And I'm like, that's not gonna happen. I'm not taking an additional thirty minutes to go because you messed up my order. And

so I was very, very frustrated by that. And that is what is going to really cause a a huge concern for brands and going to cause those negative reviews. So watch out for that. Don't be so consumed by the loud or the many that you lose sight of the few, but the important.

gone up in price. People are not shot by prices anymore other than I mean, there's a couple of burger places that I've gone too lately and I got like a burger, a small burger, a small fry, and a small soda, and I spent twenty five bucks and I'm like, I'm like, I'm not ordering door Dash, like I'm right here. But anyway, so that was a little bit surprising. But the fact is that, like, people are used to spending more money, and so they're okay with it, but you

gotta make sure you nail it. You cannot afford to have a missing item, to have a missing ingredient. Especially Oh my gosh, Mike, if you want to see people who are really mad, you should read reviews of people who paid seventy five cents for extra sauce and the sauce didn't come that. Those reviews are fascinating to read because it's just like the vending machine principle of if I put a dollar in the vending machine and my candy bar comes out, I'm like, well, yeah, I got

what I paid for. If I put a dollar in and two candy bars come out, it's like, oh wow, really cool. Like that, that's great. I'm like pleasantly surprised, right, But I'm not like shouting it from the rooftops. Right. But if I put in a dollar, mic and so help that vending machine if that candy bar gets stuck in there. Right, But I mean like we're going hulk on that. We're grabbing that, we're shaking the vending machine, we're smashing into it, because it's not about the dollar.

It's about not getting what you're paid for. And so that's the thing we're seeing in our trends is that the value discussions are tied to unmet expectations, not tied to everything's getting more expensive. But what we are finding too is that people are noticing shrinkflation and they're they're

hyper focused on that. So if you change your packaging, we had a customer same you know, they weigh their food, same exact food when they get it in store versus when they get it delivered or get it to go. But the to go complaints are all about how portion sizes have gotten smaller, and people are hyper sensitive to that, just because the packaging makes it look like it's smaller,

but it's the same weight. But the difference between eating something on a plate and eating something in a you know, to go container, it looks different, it's not as spread out. And so think about that because perception is reality. And if someone thinks they're getting less, guess what. I don't care how much and how perfectly you weigh that to the hundredth of the of a decimal for the ounce. But if they think they got less, then they got less.

And so just keep that in mind as you're thinking about your to go orders, especially because people are noticing they are on the lookout for getting ripped off in their words, and they want to get what they paid for. So That's why, again, the accuracy comes into play so much, because if I order from you and you mess up my order, guess what. There's a lot of fried chicken places out there, and I'm gonna give someone else a shot to keep to get my business to put in the rotation.

before they leave that negative review. But that negative guest, when compared to the average guest, is actually worth more. And they've done PhD studies about the service recovery paradox, and basically the thesis is, and that's been proven out time and time again, is a guest that has a service failure and proper service recovery is more likely to become loyal than a guest who never had a service failure in the first place. So I went to our data and I said, okay, we've got the data here.

I've never seen dollars like how much more valuable. What we found is that the average guest, let's just talk about retention rate. Average guest retention rate is thirty percent. This is, by the way, we followed one hundred and fifty thousand consumers over eighteen months to track this data.

Thirty percent retention rates average. If they have an amazing experience and they're willing to go on and even take an ovation survey and say I had a five out of five experience, they have a sixty percent retention rate, and if they had a negative experience with no service recovery, they have a thirteen percent retention rate. Okay, so here we are thirty average, sixty happy, thirteen upset. Now what

happens if they have an upset? If they're equally as upset, but the only difference is that they get responded to. And I'm going to put a caveat here, if they get responded to using our AI, And I'll tell you why in a second. What happens is that guest compared to the average guest, they don't have a thirty percent or even a sixty percent retention rate. They go from thirteen percent to sixty eight percent retention rate. Not only that, but they come in four times more frequently than the

average guest. Not only that they spend five dollars more per visit than the average guest, and not only that they are twelve times more likely to leave you a five star review. So the recovered guest is actually worth twenty four times the value of the average guest. And the reason I say AI is because what we found is that our AI is actually ten percent better at

winning back. The recovery rate is ten percent higher than if you don't use AI, and there's a few reasons for that, but one of the main reasons is because they're actually you're taking some of the emotion out of it, and so it's not a combative conversation, but it's a understanding conversation. But also because you're using their name, and a lot of times when we respond to guests, we forget to use their name. If we're using like a chat a chat tool, AI will always remember to say Mike,

and they'll say Zach, Mike. Hey, Mike's so sorry about your experience with us and that our our rice was dry. We always drive for excellent food. Seems like we missed the mark this time. Let me give you five dollars off and would love to welcome you back again. I'm Zach. Let me know if I could do anything to help out, you know, like and then we send them that you

could send them that offer. What is interesting though, is that sending an offer it increases the retention rate a little bit, but using a name increases the retention rate more, and so it's less about giving people something, it's more about giving them a feeling. It's helping them feel heard.

Whereas will Gadera puts it feel seen right, because my definition of hospitality, after you know, seeing millions millions of customers go through the ovation platform and see what they care about the most, is hospitality is proving to the guests that you care. And you can care by doing a little bit extra and helping them feel Specially, you

can care by meeting their expectations consistently. You can care by apologizing and making it right, and you could care by fixing your operations and actually following up with people to say, hey, you told us that the rice was dry. We actually realized that we are cooking too much rice in the afternoons. Thank you so much for helping us out with that. We've made that change and hope that

you'll notice a difference. Those those customers who go like above and beyond, they become not just lifelong fans, but they become insane fans. And that's like you're catering my

wedding type fan. And that's what we need to have staying power in this economy and this much competition, and with the cost of getting a new guest being so irrationally high nowadays that you almost can't afford to spend the money required to get into someone's regular rotation, and so you just you have to rely on being very vigilant listening to your fans and making sure that that you create experiences even when things go wrong, that make them want to bring other people in. I love it.