A restaurant loyalty program or restaurant rewards program incentivizes repeat customers by allotting loyalty points per visit or transaction amount that can be exchanged for rewards like free menu items and discounted meals. In these times of neck-to-neck competition, this marketing strategy increases customer retention and average order value.
Indeed, the best customer loyalty programs such as Starbucks rewards program, Chick-fil-A loyalty program, Burger King Royal Perks, Subway Myway rewards, and MyMcdonald’s rewards are helping the brands earn millions from regular customers. For instance, Starbucks had over 16 million active loyalty club members and attributed more than 39% of its overall sales to the loyalty program. Even if your small businesses cannot afford to pitch a Starbucks-sized program, using the incentive solution from the web-based platform, One2 can still be a smart way to make a restaurant loyalty program successful. Here, we shall specifically answer 2 questions:
- Do restaurant loyalty programs work?
- How to build customer loyalty program effectively?
How valuable is a loyalty program to the restaurant?
1. Motivation
Motivation is among the main psychological factors behind restaurant rewards programs. Letting customers earn points for completing particular actions motivates their engagement with your brand.
2. Long-term investment
In the long run, these positive customer experiences help maximize customers values. They will make repeat purchases at your restaurant instead of other establishments since they have no desire of giving up the rewards points they have collected over time (aka a switching cost).
3. Feasible solution amid cut-throat competition
Attracting new customers also costs 5 to 25 times more than retaining existing customers. Previously, you might offer a fantastic ambiance to encourage repeat business. But the pandemic has made customer retention much trickier, with 2020 seeing the restaurant sector’s overall sales at 240 billion USD below pre-pandemic projections.
Fortunately, loyalty programs provide guests with more of what they want and ensure them to keep supporting you through Covid-19 (and beyond). Many many businesses have keyed into this during the pandemic. For example, Panera’s coffee subscription has become one of the success stories and assisted MyPanera, its own loyalty program, in growing to over 40 million loyalty members.
4. Increasing order size
A 5% increase in customer retention improves profits by 25% to 95%. How? Rewards programs can aid you in cross-selling and upselling. For instance, should you provide guests who do not buy a la carte menu but the combo with bonus points, your sales on beverages and sides will increase.
How to make your restaurant loyalty program work
1. Calculate your ROI
We suggest testing your Buy One, Get One Free (BOGOF) ratio with the reward program for 1 or 3 months. And to calculate return on investment (ROI), use this formula: ROI = Net income / Cost of investment. Should your costs be the same as your returns, you may raise the ratio of money that customers spend to earn rewards for free.
2. Take full advantage of the digital loyalty program
A digital loyalty program is the best bet because people today prefer having everything in the digital format. Moreover, compared to punch cards, it:
- prevents guests from forgetting loyalty cards at home, leaving them to go somewhere else,
- gives you the personalization option,
- removes the costs of replacing lost or damaged cards,
- and removes the risk of getting customers to cheat their way to rewards.
One of the fully customizable, built-in, and digital loyalty programs, Order2 Loyalty & Rewards is credit card-linked, which does not require entering a phone number or email address whenever your customer buys. Besides, with this effective rewards program, you can build and monitor email lists to connect with guests.
Order2 online ordering system is also integrated with the loyalty program, letting processed orders and loyalty points instantly be appended to the customer account. Above all, thanks to the Order2 restaurant loyalty program, you can leverage these customer data to produce reports that help with your best, most informed decision in developing a loyal fanbase.
3. Define a rewards structure
Add more to your offer with partner programs. For example, credit card companies offer customers a card sponsored by a particular brand. (Image: MastercardServices)
Some best customer loyalty program ideas for reference include:
- Item-based rewards
- Points based rewards
- Promotional rewards
- Online rewards
- Opt-in email
- Subscription rewards
- Referral programs
- Partner programs
- Community programs
- Tiered loyalty programs
- Early access programs
- Exclusive events pass
4. Simplify your customer loyalty program
A program without a long list of rules will more likely engage customers. Set up your loyalty programs so that any visitor at any time can redeem their reward points.
5. Deliver personalized experiences
Rewards with personalization like a free meal on your guest’s birthday contribute to brand loyalty. According to the Bond Loyalty Report 2020, highly personalized rewards programs are over 7 times more likely to get word-of-mouth for the business. They are also over 6 times more likely to encourage customers to earn more points and over 5 times more likely to motivate customers to keep spending money with them. Importantly, customer loyalty software like One2 helps you gain better customer data and thus offers customers customized rewards that they want.
6. Train employees
The Bond Loyalty Report 2020 shows that potential customers feel more engaged with loyalty programs that have helpful representatives. Make sure your staff can explain the program’s benefits concisely and how simple it is to sign up. Should they have signed up, keep customers engaged.
Watch how it works and collect feedback as well. For example, ask why when guests hesitate to push an offer.
7. Promote your customer loyalty programs
After building customer loyalty system, you should promote it. Some excellent ways to do so include:
- In-store promotions
- Promoting the loyalty program online through online marketing forms like social media channels
- Customer referrals
- Cross-promotion with influencers or other local businesses
Frequently asked questions
1. What reward or loyalty program is best for fast casual restaurant?
Coupons and event-specific promotions are some top loyalty program ideas to foster more loyalty.
2. What data elements are required to deliver customer loyalty program for a restaurant?
- When customers visit your restaurant
- The dishes they choose and avoid
- Whether they order takeout or dine in
- The amount of money they often spend
- Whether they have any special dietary needs
- Birthday and other personal information.
