In today’s crowded foodservice climate, offering a robust loyalty program is a must. Loyalty members visit more, spend more, and provide your business with vital insights into customer behaviour.
Those were some of the key conclusions of the new Paytronix Loyalty Report 2022, which found that the top loyalty members are foundational to a restaurant’s bottom line. They overwhelmingly represent the highest spenders and the most frequent visitors, and they offer a lifeline during an economic downturn.
Loyalty members visit more, spend more & tell you more
It should come as no surprise that loyalty members visit more often and spend more than non-loyalty members. After all, they are your best customers and loyalty programs allow them to self-select.
Inflation is leaving its mark, but loyalty members typically respond by visiting their favourite brands more often. Paytronix research shows that more than half (55 per cent) of restaurant loyalty customers increase their average check size more than the price of the average item increases.
Paytronix analysis found that when loyalty programs allow members to self-select, they are responsible for an 18–30 per cent increase in spending and visit frequency. At the end of 2021, loyalty members were spending around US$2 more per visit than non-loyalty members, approximately a six per cent difference.
Brands are looking to take advantage of this, including Panera, which has tweaked its rewards program to offer loyalty members a choice of bonuses based on personal preferences instead of pre-selected items.
Paytronix notes that all indications are that loyalty will remain an enduring driver of spend as customers return to their favourite sit-down establishments and discover new ones.
In addition to generating that consistent lift in visits and spending across industries, brands, segments, and business models, loyalty programs provide other benefits.
The data collected through these programs – from member demographics to visit frequency to most popular menu items – is invaluable to any brand seeking to understand its guests better. This information can be leveraged to make strategic business decisions and market more effectively, and can also be interpreted with artificial intelligence to uncover hidden patterns and trends.
Loyalty also enables brands to establish a direct line of communication with guests via email, SMS, or mobile app notifications – an absolutely critical lifeline in surviving the COVID-19 pandemic. This level of engagement, along with the rewards that guests can earn for repeat visits, fosters greater brand loyalty.
Not all loyalty guests spend similarly
Only about two to three per cent brand’s total customer base qualifies as top-tier members – in other words, those who can be counted on to form a firm foundation of spend. This group represents the top 10 per cent of loyalty members.
Paytronix determined that this top bracket of guests is responsible for eight per cent of overall spend on average, which is likely double or triple the amount of the average customer, and constitutes more than half (roughly 51 per cent) of all loyalty spend.
Unsurprisingly, and as has been well-documented in numerous studies in recent years, Gen Z leads the way when it comes to increasing their loyalty program usage, looking to capitalize on the financial and customizable incentives on offer.
Loyalty guests are also more likely to be understanding and tolerant of menu price increases, due to their desire to support their favourite restaurant. However, Paytronix found that even loyalty members have limits; once the price of items rises more than 10 percent, check sizes drop drastically.
Ultimately, Paytronix concludes that the potential of loyalty to build relationships between customers and their favourite brands “has never been greater”. Restaurants must take advantage by prioitizing their technological offerings and consumer-facing operations.
“Loyalty has always been beneficial, but as the pandemic recedes and a new day dawns for dining customers, restaurants will come to rely on their most loyal customers more than ever before,” ends the report.
Read the full report.