If done right, any effort to make your restaurant succeed is worth it.
As the saying goes, your customer is king (or queen).
You serve them great food and drinks, you both feel happy. Everybody wins.
But you want to serve them better.
How do you do that?
By knowing what they want.
And marketing the appropriate messages to them, the right way.
Restaurant marketing, like any other, takes some trial and error to get things swinging in the right direction.
One of the more common restaurant marketing tools used to entice customers to return is the use of a loyalty program.
This helps to reward customers who keep coming back so they’re not only a repeat customer but also someone who tells their friends to check out your establishment.
Read on to understand what makes a loyalty program successful and whether or not it’s worth implementing.
What is a Loyalty Program?
A loyalty program is a long-term marketing strategy that encourages and rewards customers for repeated buying behavior.
Loyalty programs are an age-old concept that began in supermarkets somewhere in the 18th century and have since come a long way.
Gone are the days where customers carry punch cards in their wallets to collect stamps on every purchase. Today, rewards are commonly collected either through point-of-sale (POS) systems or via standalone apps of multi-chain restaurants and cafes (think Starbucks).
Whatever the method of collecting rewards, the main idea still remains: loyalty programs are used to drive desired behavior, create repeat customers, and increase sales.
Loyalty programs revolve around two key areas that you, as a restaurant owner or restaurant marketing manager, need to focus on:
1. Offer an Incentive
Create loyalty by offering your customers an incentive to return to your restaurant. Typical incentives include “get a free drink upon your 5th order”, “collect 10 points for every dollar paid” etc.
2. Gather Information
Don’t stop at offering your customers rewards. Get them to fill up details such as name, telephone number, and birthdate. With their profile set up, you can track what their regular order is, where their favorite seat in your restaurant is, and even send them an SMS for a coupon or a slice of cake on their birthday.
This is great, you think.
But how do you start?
Here’s an idea: Say your restaurant is located in a central business district. Tap into the lunch crowd by offering them a lunch promotion.
When paying for their meal, inform them about your loyalty program and get them to sign-up. Once you key in their details, you can continue to send them off-peak promotions and even birthday goodies that’ll make them feel good enough to return and tell their friends too!
Loyalty programs that work the best tweak their incentives after analyzing user information over a long-term basis. Keep an eye out for what works and what your audience is responding to the post.
Did you know? According to Aaron Allen & Associates, loyalty programs can boost a customer’s lifetime value by 30% or more through increased frequency and spend per visit.
Types of Loyalty Programs
Before deciding to start a loyalty program, you should know what kind of loyalty program you’re offering.
The first step to figuring this out is to take a look at the competition.
If you analyze what your competitors have to offer, you’ll realize not all loyalty programs are alike. There is no one-size-fits-all when it comes to enticing your customers to return.
There are, however, preferred reward programs that are considered best practices.
For instance, millennials prefer certain types of loyalty programs when compared to Gen X or Baby Boomers, according to research conducted by Software Advice.
Other typical loyalty programs include the following:
Reward your diners with points for placing orders at your restaurant.
One way is to give away points for every dollar spent, just like Dunkin’ Donuts does.
The idea is straightforward – the more dollars and cents a customers spends at your restaurants, the closer they are to receiving a reward.
Alternatively, Nando’s is a great example of a loyalty program that allows customers to collect points by number of visits.
Regardless of how much a customer spends, he or she is rewarded for every order. Nando’s loyalty system is exemplary as it clearly demonstrates the value a customer gets after collecting points for every visit.
Also, aren’t their graphics just so pretty to look at?
Loyalty programs that are tiered help you divide your customers based on their consumption and spendings at your restaurant.
Ride-hailing and food-delivery app Grab is popular for using a tiered reward system that encourages passengers to keep using their app, bumping them up to the next tier as the number of points they collect multiply.
Starbucks does this too. By implementing a gold status for regulars, it helps them to focus on high-value customers and deliver exceptional and customized benefits to keep them coming for more.
Did you know? A study from Coniq demonstrated that tiered based loyalty programs serve almost 3 times more value per F&B customer compared to restaurants that offer ‘one off’ rewards.
Technological advances have enabled you to offer any reward system you can imagine.
Some focus on seasonal rewards.
Others offer tiers where the rewards become greater the longer you patronize a business.
Pro-tip: If you’re new to creating loyalty programs, go a step further by integrating jumper’s ordering tool to entice customers to get more reward points by ordering online. This method works great as it is simpler to keep track of, has a lesser fee processing plan, and is great to drive direct sales.
Tips to Make Your Loyalty Program A Success
What sets a weak loyalty program apart from a strong one?
According to Bond Brand Loyalty’s 2017 report, loyalty programs that work “offer superior customer experience that recognize the best customers”. Having a good loyalty program that captures the attention of hyper-aware customers is a definite advantage for any business, including restaurants.
1. Plan Your Loyalty Program Out
Before you start your loyalty program, define what purpose it will serve.
Questions you can ask:
- What type of loyalty program are you willing to commit to long-term?
- What do your customers want?
- Are looking to save more money?
- Are they millennials who like to be in touch and get direct messages from places of interest?
Depending on your answers, choose the right type of loyalty program. Plan how it should roll out on a long-term basis to keep customers enticed.
2. Gather the Right Information
If you offer good customer service, people will come back for more.
And they will also be willing to share more about themselves.
But having too much information may not necessarily be helpful.
Build a database with information that matters. Collect phone numbers, email addresses, birthdates, areas they work or live in – so you can direct them to your restaurant’s nearest outlet if you have more than one.
3. Keep It Simple
A customer research survey amongst US customers by COLLOQUY indicates that 53% of U.S. consumers identified “easy to use” as the main reason for participating in a loyalty program, topping “gives me great discounts” (39%) and “easy to understand” (37%).
Be clear about the incentives you want to offer.
For example, are the points based on amount spent or visits to your restaurant?
Most loyalty programs have terms and conditions and yours should too. Just define them early and make them easy to understand.
Leave fancy mechanisms aside if you’re new or if it doesn’t relate to your target audience. For example, if you target students, consider removing terms like “minimum amount to be spent before receiving rewards” to appeal more to budget-concerned audiences.
Pro-tip: Want an easy solution to leverage on social media platforms and service customers you are already familiar with? Try using jumper – one of the easiest and preferred solutions by restaurateurs and marketers.
Make sure rewards are also easily attainable.
Research by HelloWorld states that 53% of their respondents said it takes too long to earn a reward. Instead, they suggest that programs should be designed for instant gratification with frequent rewards built in.
4. Make Your Customers Aware
What is the point of having a great loyalty program if your customers don’t know about it?
There are typical ways to make them aware – run advertisements, give out flyers, do cross-promotions with influencers etc.
To get your regular patrons hooked onto your loyalty program, consider running marketing promotions during holiday seasons.
Say you’re planning Christmas specials. A few weeks prior to Christmas, get your waitresses or cashiers to ask your customers if they would like to join your loyalty program to get discounts off your upcoming Christmas menu.
You can also try the same for Valentine’s Day.
The best marketing tool, even in today’s digital shift, is word of mouth marketing.
Introduce refer-a-friend systems just like the folks at Happy Way have done.
It’s a great way for you to recognize if your regular customers love your restaurant enough to help you spread the word. Plus, it helps to reduce advertising costs.
Zoom in on the “surprise and delight” function, especially for customers who don’t visit your restaurant personally. Configure jumper’s order taking tool into your social media accounts and inform customers of your loyalty program.
This might attract them to sign up and even dine-in at your restaurant in the future.
5. Track Customer Habits
Get feedback from your customers on how you can improve your loyalty program.
Ask them what would encourage them to come back. Take note of times in a day you get most visitors and how you can offer different rewards during holiday seasons.
More importantly: check if your customers have points that they are not redeeming.
Send them messages and emails to keep them aware of how many points they have, how they can check it, how they can redeem it and if points are expiring.
We can’t say this enough – adapt to the changes in your customer behavior and according to market trends.
Did you know? There are also loyalty programs that can go wrong. One Chinese restaurant had to shut down because it offered a loyalty card that customers ended up abusing. This could’ve been avoided by understanding what the customer habits are in the area that you operate.
6. Make It Special
Wouldn’t you love to patronize a restaurant where the servers knew your name and favorite seat when you made a reservation?
We sure would!
Create unique relationships with customers who have signed up for your loyalty program.
In the case of Chili’s, they offer members a perk above the rest.
This makes it worthwhile to become a member, plus there’s also a personalized feature for a customer as they feel special on their birthday!
Making It Worthwhile
Are loyalty programs guaranteed to work?
No. In fact, millennials will often quit loyalty programs if they don’t get see the benefits – quickly.
So how do you know if your loyalty program is worthwhile?
First, check if it’s working:
- Calculate the redemption rate by dividing your points spent versus points issues. The percentage you’re looking for falls somewhere between 20% to 30%.
- Figure out what your repeat purchase rate is. Compare the total customers you’ve had in a year versus the repeat customers that have ordered from your restaurant.
Essentially, if the goals you created when you planned your social strategy are met, then you’re in the green.
Do not expect to implement a loyalty program today and see an increase in revenue tomorrow. Roll out your loyalty programs and promotions strategically, analyze your customer responses and adjust your offerings overtime.
And remember: these efforts cannot replace the rapport you build with your customer at your physical place of business.
Loyalty programs should be considered an added value to customers who already see value in your menu, store location, customer service and other things that make them feel good about your restaurant to make them want to return.