5 Tips for Implementing a Successful Restaurant Loyalty Program
By: Agnes Teh Stubbs
Returning customers are vital to the success of any restaurant. Loyal regulars tend to spend more and generate larger transactions. According to Gartner, 80% of future revenue will come from 20% of your current customers (full content available to clients).
So, how do you keep diners happy and coming back for more? Aside from great food, experience, and customer service, nothing entices a first-time customer to return quite like a restaurant loyalty program that consistently rewards them.
Exactly what attracts repeat customers to sign up and engage with your restaurant loyalty program regularly? To answer that question, we ran a survey of over 200 U.S. consumers to find out.
- Reward loyalty on each and every visit
We asked customers how likely they are to dine at restaurants that offer loyalty programs over those that don’t. Sixty-eight percent of customers say they are “somewhat” or “very likely” to dine at restaurants that offer loyalty programs over those that don’t. Of the customers that said that, about 36% are in the 26-35 age group.
What this tells us: Loyalty program customers are more likely to return to your restaurant. Given the choice between a restaurant with a loyalty program in which they’re already enrolled versus one in which they’re not, customers are more likely to dine at the restaurant where they’ll accrue additional rewards.
This is especially so when a restaurant loyalty program rewards them consistently for every visit, whether it’s through accumulating points towards a discount or the ability to redeem a voucher by reaching a certain number of visits.
One thing to note, says Anne Schultheis, loyalty marketing manager of frozen yogurt store sweetFrog, is striking the right balance with reward frequency:
You don’t want to be giving free rewards out every other visit, but you also don’t want them to feel like they never earn anything. Anne Schultheis, loyalty marketing manager of sweetFrog
- Make your restaurant loyalty program simple
When asked about the restaurant loyalty programs they belong to, or have considered joining, we asked customers how important is it that it offered the following perks.
The ability to accumulate points towards rewards is a clear favorite among customers as a total of 73% of customers consider points to be “very important” and “extremely important.”
What this tells us: Consumers are familiar with the concept of earning reward points for their purchases. That familiarity makes adoption of your program simple and provides a better user experience, making it more likely that customers will engage with your restaurant loyalty program.
There’s also the psychological aspect of working towards a goal. For example, by visiting your restaurant, they are now 40% of their way closer to earning that free entrée. That means every visit creates more revenue for your restaurant.
Gift certificates also appear to get customers excited to enroll in restaurant loyalty programs, as 52% of our respondents said they are “very important” and “extremely important” for earning a certain level of spend, points, or visits.
What this tells us: Implementing gift cards as part of a restaurant loyalty program provides customers with the flexibility to claim rewards however they wish.
Here are a couple reasons why this is such a popular loyalty program reward:
Customers have the option to choose a specific menu item they want rather than receiving a reward already pre-selected by your restaurant.
Customers get to choose to use a portion of the gift card and save the rest for later visits. Research shows that consumers with gift cards often spend well above and beyond the amount in the gift certificates, by as much as 25% or higher, tapping into the psychology of “I’ve already spent the money.”
- Go beyond monetary rewards to provide personalized experiences
After points and gift certificates, over half of respondents consider personalized rewards to be “very important” and “extremely important” to them.
What this tells us: Customers love discounts and savings—but just as much, they value personalized rewards and experiences, such as the preferential treatment of receiving a free meal on their birthday. Based on the free menu items it hands out for customers’ birthdays, sweetFrog found that the average spend from those transactions emerged as one of the highest among its rewards. “Not only are people coming to redeem them, they’re purchasing more products from us during their visit,” says Schultheis.
Loyalty members are more likely to engage with your restaurant loyalty program if you provide relevant rewards or offers. For example, you can ask customers if they want to “receive more offers like this;” or, after a customer purchases a pizza for an entree, you can offer another pizza on a discount.
- Establish a digital and mobile strategy for your restaurant loyalty program
Over 70% of customers find the ability to redeem their rewards on digital and mobile platforms “important,” “very important,” and “extremely important.”
What this tells us: Customers like–and expect–to interact with restaurants digitally. This demonstrates a huge opportunity to build customer loyalty and increase customer retention through a digital or mobile strategy. Having a digital and mobile presence enables restaurants to gather information and preferences to provide the best personalized experience for customers. “’Mobile coupons/rewards’ is on trend with what we are seeing and where we are moving with our programs as well,” says Schultheis, acknowledging plans to introduce that to their loyalty programs.
- Educate staff on the restaurant loyalty program
Encourage your employees to ask customers if they’re a part of your restaurant loyalty program and train them to be confident in talking about the benefits.
If customers have already signed up, highlight benefits of the program to encourage more use. If they haven’t signed up, provide an incentive for them to sign up on the spot (e.g., 10% off your purchase if sign-up is completed). It doesn’t require much effort from customers, and all that’s needed is a “yes.”
Here are the key areas employees need to be educated about on your restaurant loyalty program:
✓ What type of rewards structure the loyalty program is based on
✓ How rewards and promotions are sent out (e.g., email, text, and app notification)
✓ Functionality and flow of the app or rewards platform, from the customer perspective
✓ How to answer and overcome objections to signing up
✓ Frequently asked questions about the program
Positive customer experiences are the foundation of every successful restaurant and well-executed loyalty program. Before implementing a loyalty program, it is imperative that you have a fully equipped and functional restaurant POS system that sets your restaurant up for growth.
Not only is the right restaurant POS essential for managing and analyzing customer data (e.g, customer purchases and habits), it enables your restaurant to deliver greater customer experiences by saving time and streamlining daily operations.
Agnes Teh Stubbs is a Content Analyst at Software Advice. She joined the team in 2018, and covers technology and changing trends within the retail and restaurant space. Her research focuses on how small and midsize retailers can use software and technology to succeed in the competitive landscape, with topics ranging from how small retailers can implement marketing strategies to drive sales in the e-commerce space to how bitcoin could change the restaurant space.
About Software Advice
Software AdviceTM is the leading online service for businesses navigating the software selection process. Advisors provide free, personalized software recommendations, helping companies of all sizes find products that meet their business needs. Software Advice also features objective research by industry experts and reviews from validated users, saving buyers time and resources. Software Advice is a Gartner company. For more information, visit softwareadvice.com.