The Best Ways Restaurants Maximize the Benefits of Restaurant Loyalty Programs
The restaurant business is not for the faint at heart. It’s a competitive industry which means owners have to stay on top of how the industry is changing.
Customers across industries are increasingly expecting a certain type of experience. One that is highly personalized, emotionally connected, and requires as little effort as possible.
Developing a rewarding restaurant loyalty program is one of the best ways to meet the customer’s desires and increase retention behaviors. So here are the benefits of restaurant loyalty programs and how big restaurant names have used them.
What Are Restaurant Loyalty Programs?
Restaurant loyalty programs are how restaurants thank their customers for choosing them and helps to keep them coming back. The idea is to track a customer’s purchases and engagement with a restaurant and reward their behaviors. Rewards could include free food, drinks, or meals, early notifications to upcoming menu changes, or discounted items.
We’ve come a long way from punch cards, and the concept continues to evolve. The purpose of loyalty programs is more than making an extra dollar. It’s an opportunity to form a connection with our customers. It communicates to them that we understand and can meet their needs.
Loyalty programs are also a great way to learn about our customer base. Incorporating restaurant tech into loyalty programs gives us insight into key customer data to make better business decisions. Knowing our customers helps us create an experience they’ll come back to and recommend to others.
The Benefits of Restaurant Loyalty Program
COVID-19 devastated the restaurant business. The restaurant industry fell short of its 2020 sales forecast by $240 billion. It’s forced customers to change their relationship with eating out, which is why, according to the NDP Group, mobile orders increased by 124% between March 2020 and March 2021.
Research shows that retaining a customer is 5 to 25 times cheaper than gaining a new customer. And, having a loyalty program in place encourages customers to return and provides an avenue for communication.
1. Customer Retention
As the name implies, loyalty programs increase loyalty and retention. When given the option between a restaurant a customer has a loyalty program with and one they don’t, 78% of customers will choose the restaurant where they have a loyalty program.
The key is to reward customers every time they visit. This could be by accumulating points or the option to redeem a voucher after a certain amount of visits.
The best way to remain competitive is to offer rewards that provide a final benefit. This is a primary determinant factor for 44% - 50% of people when choosing a restaurant, according to a Publisher’s Clearing House report.
2. Loyalty Members Spend More
Studies have shown that a significant portion of sales comes from loyalty members.
According to the restaurant consultants agency, Aaron Allen & Associates, loyalty programs generate higher average checks.
Also, when members are offered a voucher and go to redeem it, they are likely to add more purchases in addition to what they will receive.
The numbers increase when you can provide an even more personalized experience, like offering more of the products they’ve recently purchased. The 2020 Bond Loyalty Report shows that customers are 6.5 times more likely to spend more on highly personalized brand experiences to gain more points.
3. More Customer Insights
Data plays an increasingly important role in the ability to remain competitive and adaptable as a business. Having customers enroll in a loyalty program is one of the best ways to maximize its use. With key insights, you can create a personalized experience for each customer. Even simple information, like a customer’s birthday, provides an excellent opportunity to establish a connection and heighten their experience.
With the correct information, you can also stay in touch with a customer. Providing timely notification can ensure the customer will keep coming back. For instance, if a customer has just signed up, offer a coupon for a discount code that expires within the next few weeks to increase the likelihood of a second visit.
How Big Names are Using Loyalty Programs
In light of the COVID-19 pandemic, more restaurants in every sector are readjusting or adopting an approach for their restaurant loyalty programs.
Starbucks began its loyalty rewards program in 2008 with a punch card. It has now expanded to a full-fledge app where customers earn “stars” to redeem at the restaurant. During the second quarter of the 2021 fiscal year, 52% of Starbucks’ sales came from loyalty members. Here are the main tenants of their loyalty program:
● Earn more stars when you pay using a credit card or uploaded gift on the app
● Use stars to buy food items of your choice or Starbucks merchandise
● Order and pay ahead to avoid waiting in lines
● Free items on your birthday
● Play games on the app to win prizes
● Special days to earn more points
Chick-fil-A is considered a leader in QSR for creating loyalty and an emotional connection. Chick-fil-A works hard to establish an emotional connection with its customers through giveaways. They partner with DoorDash to provide free deliveries for loyalty members. When Chick-fil-A launched its app in 2016, it was one of the most downloaded apps on iTunes. Here’s what it offers:
· Varying tiers of membership depending on money spent at a restaurant in a given time
· Earn points with every dollar spent
· Use points to redeem menu items
· Receive exclusive offers
· Get notified for special events
· Certain tiers offer perks such as a tour of the headquarters and voting privileges
Chipotle is just behind Starbucks in the number of memberships it has. CEO, Brian Niccol shared with CNBC that their membership jumped from 8.5 million members before the pandemic to 21 million afterward. To encourage customers to sign up, Chipotle partnered with Venmo to give away $250,000 in increments of $5 to $500 for customers who signed up over a four-day period. Here is how Chipotle is running its rewards program:
· Offers free chips and guacamole with first mobile order
· Released new menu items on the app first
· Currently only has certain items available via mobile order like their quesadillas
· Birthday gifts
· Earn points with purchases
Implementing a Restaurant Loyalty Program
The right loyalty program can transform the relationship between our restaurant and our customers. It may be difficult to pinpoint the route to take and the tools to use with various strategies to consider. Here are some ideas to get started:
1. Sign-up Incentives
The success of loyalty programs hinges on its reach. The more members we can reach, the better we can drive business and engagement. Offering a sign-up incentive, like the following, can help grow loyalty membership:
· Discount for signing up
· Require membership to make an online order
· Offer free items for those who sign up
2. Offer Gift Cards
When customers use gift cards, they’re likely to spend more than the gift card amount. So, offering the option to earn gift cards can drive your bottom line.
3. Include a Tracker
All of the top restaurant loyalty programs have in common is some form of a tracker. Creating a goal and a sense of accomplishment for reaching that goal can be a powerful motivator, especially if there are tangible rewards associated with its completion.
Grow and Integrate with CRISP
CRISP helps restaurants simplify, integrate, and grow their business with smart technology, making it simple to seamlessly incorporate a loyalty program that highlights the best of your restaurant.
Our Loyalty App integrates with the POS, app, and online ordering. All it takes is gathering your customer’s phone number. It’s so simple that it’s hard to refuse. That makes growing your membership effortless and implementation effective.