WHAT IS A LOYALTY PROGRAM?
Loyalty programs are nothing but rewards, discounts and special incentives offered by restaurants as a way to attract and retain customers. This is a primary initiative taken by restaurants to motivate diners to frequently make visits, leading to repeat business. With a greater number of visits, the rewards are greater too.
A restaurant must not only attract new customers but also find ways and means to retain them and motivate them to keep coming back every time they wish to dine out. That is why loyalty programs are very important for a restaurant. Many restaurants either underestimate the importance of loyalty programs or simply neglect them. The biggest reason is that even if customers support and actively engage in loyalty programs to earn points, they hardly turn up to redeem them. Therefore, the success of a restaurant loyalty program is measured by the burn rate of the loyalty points earned and not by the Earn Rate. Only when customers come back to the restaurant to redeem their reward points, the loyalty reward program can be considered successful.
Most of the time, customers do not understand the way they can benefit from loyalty programs. Due to a lack of awareness, they fail to make proper use of the loyalty programs. So, restaurants must educate diners about how to make proper use of such programs and redeem the points collected over a period of time in the right way. Restaurants can send catchy SMS and emails to customers to remind them about redeeming their points.
TWO TYPES OF LOYALTY PROGRAMS FOR RESTAURANTS
1. Amount Based
Customers can be rewarded points based on the amount they spend during every visit to the restaurant. For example, for every $10 spent, they can be rewarded 5 points. This kind of loyalty program is best suited for fine-dine restaurants and bars where customers tend to spend higher amounts.
2. Visit Based
Restaurants can offer a free drink, starter or any complimentary item on a customer’s 7th visit to the place. Simply to win that free item, customers will be motivated to make repeated visits. This type of loyalty program works well for quick-service restaurants and cafes where the frequency of people visiting is high, but their average spending is comparatively less.
HOW TO CREATE A RESTAURANT LOYALTY PROGRAM
Following are a few points that can help restaurateurs build an effective restaurant loyalty program to drive sales and also convert customers into loyal patrons.
1. Simplifying the Process
Loyalty programs with too many steps and complicated processes tire the customers, resulting in them giving up the desire to earn or redeem points. So, loyalty programs must be extremely simple and user-friendly, making redemption easier. This will increase customer retention.
2. Providing Incentives
Customers must be granted something extra to get them involved in the loyalty program. It could be a 10% discount on every visit or a full 50% discount on their 5th visit or even a complimentary dish during every visit. Sometimes, customers also look for things other than discounts or financial rewards. So, restaurants can also offer customized incentives like a complimentary tasting session or so on.
3. Stay Connected
Restaurants must not stop with enrolling the customers in loyalty programs. This defeats the very purpose of such programs. Restaurants must be in constant touch with customers, inform them about menu upgradations, happy hours and other exciting offers. This will keep your brand on top of the customer’s recall. Instead of sending emails with just the latest news (like your competitors), you could also share recipes for some of their signature dishes.
4. Getting Customer Feedback
Loyalty programs can be used as a tool by restaurants to solicit customer feedback. Customers can be rewarded with loyalty points for filling out surveys or giving their feedback in the form of answers. This serves the dual purpose of procuring genuine and valuable insights into what people feel about the restaurant, food and brand and also keeps customers coming back to you for more such rewards.
5. Customization of the Loyalty Program
To cater to the specific needs of every individual customer, restaurants must customize their loyalty programs. People can be offered special discounts on special days like their birthdays or wedding anniversaries. The order history of customers will also help restaurants understand their preferences, likes and dislikes. Since customized programs lend a personal touch, customers will get hitched to the brand. They will not only make their visits frequent, but also engage in positive word-of-mouth for the restaurant.
1. HOW DO RESTAURANT CUSTOMER LOYALTY PROGRAMS WORK?
Several brands have been associated with their popular customer loyalty programs that mostly operate on a point basis (customers are rewarded with points according to the amount they spend in the restaurant). Once sufficient points are earned based on the number of visits and amount spent, customers can redeem them for further discounts or free meals.
A few restaurants also give unique barcodes that can be scanned during every visit. But, restaurants these days are increasingly moving to online modes to track points earned and also have updated data about the customer’s status and other demographic information.
2. HOW A RESTAURANT CUSTOMER LOYALTY PROGRAM BRING MORE CUSTOMERS?
According to a study, 52% of consumers recommend restaurants that they often visit and are loyal to. So, loyalty programs play a crucial role in turning loyal customers into brand advocates. Restaurant loyalty programs increase repeat customers on an average of 35%. Customers are likely to spend 46% more with restaurants that offer loyalty programs. People tend to keep visiting the same restaurant to earn more points and ultimately redeem them for discounts or rewards. Such repeated visits benefit restaurants as customers making frequent visits also recommend others to start visiting.
ADDICTIVE RESTAURANT LOYALTY PROGRAM IDEAS
Here are a few restaurant loyalty program ideas that can easily be integrated into the business:
1. Reward Networks
This is similar to the loyalty point system. But, the difference is that this is handled by a network of restaurants, that is, restaurant directories are responsible for handling the network. The disadvantage is that customers will be loyal to the entire network and not individual restaurants.
2. Loyalty Points
This is a simple technique adopted by most restaurants. Higher bills equate to more reward points. When such programs are implemented, people tend to spend more money than usual simply because they wish to earn more reward points and redeem them during future visits.
3. Referral Programs
Whichever kind of loyalty program the restaurant offers, it must be paired with a referral program. This will increase the number of customers ordering food from the restaurant. With good food, nominal prices and great service, it is easy to win loyal customers. By adding a referral program to reward such loyal customers, it is an added incentive for them to recommend the restaurant to their friends and relatives.
4. Promotion of Loyalty Programs
Irrespective of the nature of loyalty program that a restaurant adopts, it is essential for restaurants to indulge in heavy promotion of the program through online and other forms of local online marketing. Partnering with a local business in the area and engaging in cross promotion will help reach a wider audience. Even good ideas require a lot of promotion to attain long-term success.
5. Tiered Loyalty Programs
Such loyalty programs are best for restaurants that want many first-time customers to sign up and simultaneously encourage loyal customers to be a part of the program. Tiers can be separated into different categories based on the number of orders. During the first few orders, customers must be given less points and more points for subsequent orders. Such tiers with varying reward points will encourage customers to keep dining at your restaurant or even ordering food online during lockdown.
6. Discounts or Free Items On Special Days
A restaurant looking to make use of a tiered loyalty program in order to build a customer database, then it must provide free items or discounts on special days throughout the year. For example, customers who are members of the loyalty program can be permitted to celebrate their birthday or wedding anniversary with a discount or free menu items. Although the number of special days might be less, it helps foster loyalty with customers.
7. Free Delivery
Loyalty programs must also benefit customers who order food online on a regular basis from your restaurant. This is especially mandatory during this Covid-19 era. Free delivery is an enticing way for customers to choose your restaurant over your competitors. But, in order to cover transportation costs, you could set a minimum limit for becoming eligible for a free door delivery. Free delivery can also be provided to customers who have already earned a specific number of points.
8. Digital Restaurant Loyalty Program
Since plastic loyalty cards no longer appeal to customers and with Covid protocols seeking no-contact transactions, it is essential that restaurants resort to digital modes of enabling customers to participate in loyalty programs. People love going paperless these days as it saves them from the trouble of carrying physical cards. This program executed through emails, text messages and mobile apps facilitates ease-of-use and empowers customers.
9. Secret Menu
If the restaurant follows a point-based reward program in combination with a tiered loyalty program, then people reaching the higher tiers can be provided access to a secret menu. This will make them feel highly valued. This will definitely be a moment of pride for customers as they get to binge on food that does not form a part of the standard menu. To keep higher tier customers engaged, the restaurant can also swap secret menu items every month or two.
10. Experiential Rewards
This provides participants with rewards that go further than normal, standardized transactions. These experiential rewards provide customers with unique experiences that they may not otherwise have access to. For example, loyal customers who are part of the loyalty program can be given early access to new menu items or invited for tasting sessions on a personal basis. Since your loyal customers will not get such personal attention or treatment in any other restaurant, they will get more and more attached with your brand.
OTHER THINGS TO REMEMBER WHILE EXECUTING RESTAURANT LOYALTY PROGRAMS
1. POS Integration
To reap maximum benefits from restaurant loyalty programs, Website for restaurants must integrate it with their POS system. This will enable staff members to enter details directly into the POS system. By integrating the loyalty program data with the restaurant’s POS, tracking the analytics and retrieving data becomes quick and easy. With just a few clicks, the program’s performance can be compared to the sales data providing restaurateurs with valuable insights.
2. Paying Attention To Prizes, Points & Rewarding System
People participate in restaurant loyalty programs primarily to win rewards. Restaurants must select the type of loyalty program based on the type of cuisine served and the nature of business. For example, if most of the customers are millennials, then the loyalty program must be based on the amount spent during each visit. This is because millennials prefer to earn points based on their spending rather than their frequency of visits.
3. Having A Restaurant Loyalty App
Acquiring new customers takes a significant amount of time and money for restaurants. But, retaining them and motivating them to keep coming back does not cost much. A restaurant must resort to a mobile app for building and sustaining their customer base. This is because more than 50% of smartphone users regularly use restaurant loyalty reward apps. App based reward programs are always a successful strategy and an ideal platform to run multiple marketing strategies and engage in niche targeting of customers with different priorities.
Restaurants must, thus make optimum use of loyalty programs to keep customers addicted to their food and brand. Going digital is the primary prerequisite for any activity that is aimed at luring customers. Having one’s own website and mobile app makes a restaurant business lucrative in the long run.
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