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The Why and How of Choosing the Right Restaurant Loyalty Program

We have our small business guest blogger here today with some great insights on why choosing the right loyalty program for your restaurant is crucial, and how to get it done. Enjoy!

Thousands of independent and franchise restaurants offer loyalty programs, and the trend is not new. Currently, about 30 percent of all restaurants offer some form of loyalty program. According to the National Restaurant Association, 56 percent of family restaurants and 69 percent of fine dining establishments have detected increases in loyalty-program participation. The research also revealed that 57 percent of adult consumers are more likely to visit restaurants that offer reward programs, so loyalty programs are here to stay.

However, consumers increasingly use mobile devices to make dining decisions, share restaurant recommendations, post Instagram photos of their food, etc. This means that you can’t offer a run of the mill loyalty program anymore, it has to have some digital upgrades to keep up with your increasingly tech savvy customers. Store coupons and mobile communications make loyalty programs more dynamic, convenient, and easy to track and administer. Since engaging customers requires more than offering static websites, modern digital loyalty programs can help. They drive customers to share socially, connect on special occasions, earn personalized rewards, and receive benefits without needing to save punch cards or remember to get them punched.

Benefits of Digital Restaurant Loyalty Programs

Restaurant loyalty programs provide the ideal platform to run multiple marketing strategies since not all customers are the same. Some consumers shop to save money, some respond to the chance at big prizes. Today, the millennial generation likes (and expects) to interact personally with restaurants and share their experiences online.  The best in class restaurants offer modern digital loyalty programs to not only incentivize their customers to come back, but also to provide customers a venue to connect with the business however they like.

These types of loyalty programs are a win-win: great for the customers, and great for the business. If you structure your loyalty program effectively, like have multiple tiers or rewards and encourage customers with various attitudes, the typical benefits for your business include:

  • Understanding customer preferences
  • Creating custom rewards for each customer
  • Increasing spending during visits
  • Promoting specials with same-day efficiency
  • Providing benefits that a competitor can’t offer
  • Helping to monitor advertising responses
  • Reinforcing preferred customer behavior
  • Generating business during slow periods
  • Encouraging customers to share restaurant recommendations
  • Providing a forum for customer suggestions and complaints
  • Displaying personal details about customers to facilitate emotional connections
  • Testing promotional offers and new menu items
  • Making rewards hassle-free

Digital loyalty programs work

Let’s dive into a few of these benefits.

1.  Drive Same-day Sales

Every business has sales slumps, and filling the slow periods in restaurants is especially crucial for staying profitable. Restaurant loyalty programs and mobile communications provide an unparalleled benefit for restaurant management—filling seats during slack times. Mobile marketing allows managers to promote daily specials through rewards programs, offer discounts for early diners, promote signature drink specials if legally allowed, and encourage breakfast or lunch guests to return for dinner service.

Research shows that 91 percent of adults keep their cellphones close 24/7 and that most people look at their text messages. Restaurants can remind customers of specials and events, offer discounts on slow-moving items at the restaurant, encourage dessert and takeout sales, and achieve other restaurant objectives through well-designed restaurant loyalty programs.

2.  Celebrates Birthdays for Fun and Profit

Recognizing customers’ birthdays impresses people and builds loyalty for all businesses, and restaurants gain additional benefits from birthdays. People spend more money on birthdays, and encouraging people to celebrate at a given restaurant increases business, encourages larger dining parties, creates goodwill and boosts repeat business. The National Restaurant Association states that 70 percent of people visit restaurants to celebrate birthdays. Loyalty programs inform management and staff when customers have birthdays, and a little recognition for the birthday guy or gal generates powerful PR and goodwill.

3.  Offers Unique Marketing Benefits

Repeat customers are easier to persuade with marketing materials than strangers. According to research from FohBoh.com, loyalty programs are more successful than other forms of advertising because they identify people who are already receptive to the message. Repeat customers spend 33 percent more new customers and refer their favorite restaurants to friends and families at a 107-percent rate. Advertising costs about six times as much to attract new customers as it does to keep established guests returning regularly.

4.  Consolidates Social Media and In-house Promotions

Rewards programs integrate well with social media promotions, and restaurants can promote their foods, culinary philosophy and customer-targeting strategy in coordinated campaigns across multiple platforms and media outlets. Drive more customers to websites or brick-and-mortar locations by promoting loyalty rewards, creating fun games, encouraging customers to share reviews, and inviting new guests to join the programs.

POS integrations include most popular forums such as Facebook, Google+, Twitter, LinkedIn and Pinterest. Great guest experiences happen when customers have an “aha” moment, and reaching a layered loyalty milestone, sharing a family celebration, or receiving useful information about a restaurant event could certainly qualify as an “aha” experience. Connect with guests across multiple forums to share sympathy for causes, build loyalty and provide personal recognition.

Choosing the Right Loyalty Program and Strategy

Restaurant loyalty programs offer all kinds of rewards and use various levels of technology. Points awarded for each dollar spent allow customers to choose from various rewards, and these accumulate each time a guest dines in the restaurant or orders takeout food. Choosing the right program involves assessing hardware and software expenses, deciding whether customers need to carry identification, and choosing or developing an optional mobile app.

Choosing the best program involves assessing costs, analyzing customer behavior, and determining which kinds of rewards generate the desired benefits. Managers can assess loyalty programs by taking the following actions:

  • Study behavior of existing customers
  • Conduct a survey that studies customer opinions of several types of rewards
  • Try limited-time promotions to see if theoretical rewards actually provide business benefits
  • Research programs to discover details such as how many other restaurants participate, how easy it is to change strategy, and whether the program retains ownership of a restaurant’s loyalty database if service is canceled

Most restaurants seek similar goals from rewards programs, but unique food businesses might want specialized results. The five most common goals of loyalty programs include the following benefits:

  • Increasing business through repeat business and higher guest checks
  • Staying competitive with local restaurants
  • Understanding customer attitudes
  • Developing menus and services that are more customer-centric
  • Generating superior customer experiences

Choosing strategy and analyzing results help restaurants refine their loyalty programs and interact more efficiently with customers. Games, discounts, free food, expanded services, recognition and more complete dining experiences serve as compelling rewards for customers.

1.  Make sure your loyalty program has game-like qualities

Customers and digital addicts love games, and those that offer real financial or personal rewards attract new patrons and strengthen loyalty among repeat customers. Loyalty rewards can be based on games such as purchasing the most of a certain menu item, testing skill at virtual-reality games with real-world audiences, or educating customers about culinary practices in ways that favor particular restaurants. Games can test trivia knowledge during each restaurant, and tests scores qualify customers for different discounts. Managers could offer a free meal to the first person that answers a daily trivia question correctly.

2.  Differentiate your restaurant from competitors

Loyalty programs allow customers to view menu items, more detailed descriptions and even cooking techniques on their tablets or smartphones. Devising ways to give customers unique experiences encourages referrals and repeat business in ways that competitors can’t match.

3.  Ensure your loyalty program has the features to build an extensive customer base

Integrating loyalty program members, online newsletter subscribers, and social media friends helps to build customer databases and attracts new customers. A creative rewards program draws media attention and increases referrals to build marketing lists for email campaigns and company newsletters.

4.  Offer a unique experience to delight your customers

Restaurant rewards programs offer unique guest experiences that draw on customer emotions. Sending birthday cards, offering a special dessert, providing a special anniversary meal, and recognizing family or business milestones are more attractive offers than financial incentives for many customers. Guests might enjoy receiving the recipes for their favorite dishes, cook books or hands-on cooking lessons. Choosing a unique reward that creates a memorable experience is more important than saving money for well-off guests, but getting a hassle-free discount or free side dish impresses fast food customers. Tailor rewards to provide the best incentive for type of cuisine, time constraints and the demographic market.

The Wall Street Journal mentions some of the more visible rewards programs for restaurants. Examples of creative and compelling rewards include the following incentives:

  • T.G.I. Friday’s allows loyal customers to preview and rate new menu items.
  • Customers get 10 percent off all meals when they sign up for P.F. Chang’s China Bistro’s Warrior card.
  • Outback Steakhouse gives customers chances to win Tim McGraw memorabilia, branded cologne or CDs.
  • Starbucks offers gold-level members chances to buy limited-edition coffee from the Galápagos Islands or get discounts on trips to these islands that Darwin made famous.

The Right Loyalty Program Will Boost Your Bottom Line

Loyalty programs for restaurants build long-term relationships through incentive-based initiatives. People respond to promotions with 70-percent emotion and 30-percent logic, so restaurants can achieve impressive results by simply engaging their customers and appealing to their pride. Choosing relevant incentives for rewards and targeting the right demographic group get astonishing results that include increasing restaurant spending, convincing customers to recommend a restaurant or dish to their friends, and encouraging customers to return regularly. Statistics confirm the efficacy of modern restaurant loyalty programs:

  1. A 2009 Gallup poll suggests that sales relate directly to customer engagement.
  2. An IBM study found that getting customer opinions was one of the top business strategies according to 88 percent of CEOs.
  3. ABI Research estimates that companies will spend $15 billion on location-based marketing by 2015, but loyalty programs provide a cost-effective database of actionable intelligence specifically tailored to each restaurant’s market.
  4. A study conducted by the Center for Retail Management predicts that 12 to 15 percent of the most loyal customers generate 55 to 70 percent of sales.
  5. A Granbury Restaurant Solutions study revealed that 82 percent of loyalty program members refer at least one new customer.
  6. Multiple surveys suggest that social-issue advocates are willing to change their shopping and dining habits based on finding businesses with compatible attitudes on environmental, health and social issues.
  7. A restaurant loyalty program provides sufficient metrics to understand the customer base and relevant social opinions.

Restaurant loyalty programs become increasingly common because they create personal relationships with customers. Customers can decide how much information they want and when to receive it, so people don’t get bombarded with unsolicited advertising. Loyalty programs transform customers into an army of PR agents who work without pay to promote and recommend bars and restaurants to friends, families and business associates. Armies always travel on their stomachs, so loyalty programs can provide the right logistical advantages for finding the best deals, meals and venues for memorable celebrations.

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Have questions about choosing the right loyalty program? Let us know in the comments or reach out to us here: http://www.fivestars.com/businesses/

 

Angela Prilliman

By Angela Prilliman

Angela Prilliman is FiveStars’ Content Marketing Strategist and the Editor in Chief for the FiveStars Loyalty small business blog, where she likes to sneak in animated .gifs when she can. Chat with Angela via Twitter or Google+.

 

Customer Loyalty Marathon

One Thought on “The Why and How of Choosing the Right Restaurant Loyalty Program

  1. Like this article says, 91 percent of adults keep their mobile devices close to them at all times. So a mobile app of a customer loyalty program would be the best solution to reach more customers the most convenient way possible. One of the biggest benefits of a mobile loyalty app is getting to know your customer better by gathering data on their behaviors.

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