Customer loyalty is more important than ever as prices continue to rise and operators compete to attract and retain customers. Along with keeping the dining room full, studies show that increasing customer loyalty by just five per cent can raise restaurant revenues by anywhere from 25 to 95 per cent.
But competition is also fierce among loyalty programs, with today’s diners often prioritizing value. 57 per cent of restaurants offer loyalty programs, and the average person now has 19 loyalty memberships, with only nine of those remaining active.
RELATED: Looking at loyalty and building genuine customer connection
84 per cent of consumers are more likely to stick with a brand that has a loyalty program, so getting creative with your loyalty program can help your restaurant get noticed in a sea of others, attract a new crowd, and keep your regular customers engaged. Here are a few ways restaurants are making the most of their loyalty programs:
- Dunkin’ gives reward program members 10 points per one dollar spent, or 12 points if they visit 12 times a month and unlock ‘Boosted Status.’ This tactic means that customers don’t need to spend a lot of money to earn rewards, but it encourages them to visit regularly, potentially making it a long-lasting habit.
- Chick-fil-A offers tiered rewards, with the option for higher-level members to gift their points to family and friends. This option helps make the experience shared, encouraging members to strive for higher status by increasing their spending.
- Starbucks has partnerships with airlines and banks that allow customers to get extra perks by linking their accounts. This approach means that their customers may keep them top of mind when purchasing at another company, recognizing a broader range of perks from their membership. Starbucks also offers a free drink of any size on members’ birthdays, celebrating their customers and adding a level of personalization to the program.
With the valuable data that operators can glean, it pays to put the work into implementing a solid loyalty program. Using the data to learn diner preferences, examine redemption rates, monitor popular menu items, and more, allows you to tailor your approach to include personalization for continued encouraged loyalty and a better bottom line.
If you haven’t implemented a loyalty program yet and are weighing your options, there are a few avenues you might choose, depending on your business model:
Points per dollar: Customers earn a set number of points for each dollar they spend, often it’s one point per dollar spent, allowing customers to “cash in” their points for rewards. Be careful not to make the rewards too high to achieve, or you may frustrate customers, discouraging them from participating and turning them off of your restaurant altogether.
Points per visit: This system rewards customers when they visit more frequently, similar to the old coffee card method when you visit nine times, and the tenth visit is free. This one can encourage more frequent visits but is often tied to only one item, which may not increase your sales optimally. If you go this route, choose an item with a high profit margin to maximize your results.
Subscription: Subscribers pay a flat fee and receive rewards automatically or for reaching certain membership milestones. Panera’s Unlimited Sip Club is an example of this model; subscribers can choose any size drip hot coffee, hot tea, iced coffee, iced tea, lemonade, or fountain beverage every day for a nominal fee per month in the U.S.
Promotional: This type of loyalty program offers exclusive perks, early access, or personalized LTOs to its members, and they don’t have to be tied to any spending. This program can help you boost business during slow periods, try out new recipes, or encourage guests to spend their birthdays with you – all helping you grow those repeat visits.
No matter which loyalty program you choose, consider what will bring in more dollars while offering better value and a superior experience for your guests. Loyalty is the key to long-term restaurant success, and operators getting creative, connecting with their customers, and adding value with their program may see a higher return on their efforts.
