loyalty programs

Loyalty programs: A different recipe for success

By Patrick Watson

Loyalty programs have existed for decades. Initially created within the airline industry to encourage brand loyalty, they typically provide benefits for money spent and value through progressive elite status. Research shows that we all belong to between four and eight. Unfortunately, research also shows that their ubiquity has created challenges leading to less participation and engagement than ever before.

A recent study by Accenture demonstrated that only one in five of us actively participate in our programs of choice. As restaurant and foodservice establishments continue to compete for the elusive share of the consumer dollar, there is no better time than now to examine what it means to create true loyalty with consumers.

The challenge of simply rewarding purchase

Patrons hopefully walk through the door, enjoy their dining experience and leave, happy and satisfied. However, once they have left, that positive experience is but a fleeting memory. How does a restaurant continue to maintain a place in the consumer’s mind after they have left? Why will they choose to return to that brand’s establishment the next time?

Traditional loyalty programs reward the actions of spending time and money with an organization but this has been shown to be only one piece of the loyalty puzzle, and is simply no longer enough. In most cases, the paradigm is still largely based on a causal relationship: Spend money with us and get benefits. Isn’t there more to loyalty than a carrot at the end of a stick?

Developing a loyalty relationship

Given vastly shifting consumer habits due in large part to the evolution of technology, the causal approach is simply no longer sufficient. Consumers are now accustomed to being engaged regularly and consistently in order to develop a true allegiance to a brand; loyalty is no longer an outcome, but rather an ongoing objective before, during and after the spend. Brands that excel at capturing their consumers’ fleeting attention focus on engaging those consumers as often as they can. An Augmented Loyalty Relationship (ALR) must be developed, one that benefits consumers regularly and as often as possible, not just after they have paid.

Fortunately, the same technological tools that have resulted in a change in expectations by consumers offer brands the ability to foster an ALR like never before. Engaging consumers all of the time has become well within reach of any organization. The main challenge that remains, however, is shifting the paradigm from “wanting” to generate loyalty just through causal means to “fostering” the relationship actively.

loyalty programs

Always engaging consumers – creating a sustainable cycle

Imagine a consumer who has left the restaurant, satisfied and happy. Now imagine encouraging that same consumer to continue the branded experience of the restaurant through an engaging online/mobile environment that continues to extoll the virtues of the brand through games, activities, innovative promotional benefits and other activities.

Key to redefining the relationship with consumers is generating a cycle of engagement that keeps them immersed in the brand on a regular basis and for as long as possible. This online-to-offline (O2O) cycle relies on integration with all forms of marketing/advertising, social media initiatives, and offline marketing.

Five clear objectives help food and beverage brands develop this Augmented Loyalty Relationship:

  1. Treat prospects as clients who just haven’t spent yet

Create a prospect strategy that leverages most of the same tools that would be used to keep your existing consumers engaged, and offer the prospects real value for their loyalty. By getting to know them, converting them becomes much easier.

2. Provide feature-rich, online/mobile loyalty portal of the same quality calibre as the rest of your brand experience

Restaurants provide a form of engagement – the food, décor and associated elements all ideally convince the patron that spending money there is an investment in their happiness that provides a better return than elsewhere. As such, an online/mobile environment should be a natural extension of that brand, rather than simply a place to get point totals, coupons or location information. As well, the experience should be aligned with the level of quality that consumers expect when they walk through the door. A sub-par online/mobile experience will detract from the brand as would dated décor, average food or worn flooring.

3. Offer beneficial, brand-specific content within the portal

Contests, sweepstakes, surveys and other valuable tactics can all play a significant role in engaging consumers and making them feel that the value they derive from their ALR is second to none. Creating a coordinated schedule of content and activities is mandatory in order to keep engagement at an all-time high. As more activities are offered more opportunities for active communication will be generated with consumers who aren’t spending as much as they could. This is the single most important objective to transforming a loyalty program from causal to active.

4. Provide offers to encourage consumers to “visit” before they leave the restaurant

Patrons only spend a tiny fraction of their time inside a restaurant. Although successful food and beverage organizations are adept at offering consumers benefits that encourage them to walk through the doors, equally valuable are offers that encourage consumers to continue their experience after they have left. These can take the form of coupons to redeem online, mobile offers that ensure consumers keep the restaurant brand top of mind, or enticements that are redeemable from the comfort of their home within the ALR portal. A successful Augmented Loyalty Relationship makes the most of the rest of a consumer’s time to ensure that the brand remains top of mind like no other.

5. Personalize each experience

Once requiring massive manual analysis, personalization is now as simple as amassing consumer practices, preferences and metadata and using these to make every experience relevant to consumers. Each communication should use data amassed through actual purchases and online activity to provide information that is truly pertinent to the consumers. Examples can include complementing favourite menu items with similar offerings through couponing, leveraging special occasions for the patron or using data obtained through online information acquisition activities (e.g. psychographic profile building) to drive action. Using data to home in on what is important to a consumer helps make every interaction a personal one, resulting in quicker action and continuous engagement.

Engage the masses to drive individual covers

How does a food and beverage establishment differentiate itself from the thousands of others around them? Quality of food, ambiance, specials and brand equity are key. So too, however, is the experience that patrons obtain after they have dined. Rather than rewarding consumers just for spending money, encouraging them to interact with the restaurant as often as possible at other times allows food and beverage organizations to foster higher level, higher value relationships. Analysis has shown that returns on investment of well over 15-20 times on an annual basis are not out of reach.

Encouraging after the fact loyalty is no longer enough. The most successful companies are leveraging the loyalty tools currently available to them and turning each relationship into both a transactional one and a loyalty-generating one as often as they can. Augmented loyalty is key to fulfilling consumer appetites for personalized and relevant value available not just at the table, but anywhere at anytime in a fun and engaging package that drives them back for more.

About the author:

Splashdot – Always EngagingTM. Splashdot helps organizations keep their clients and prospects engaged by offering unique loyalty strategies and solutions that encourage them to come back and experience the brand way more often. Patrick Watson, Splashdot’s CEO, has been immersed within the loyalty industry for well over a decade. He has worked with consumer goods companies, food and beverage organizations, casinos, lotteries and others to craft unique strategies that have resulted in significant paradigm shifts in the loyalty realm. For more information, visit www.splashdot.com.

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