Restaurant Loyalty Programs

Restaurant Loyalty ProgramYou certainly can’t control the economy nor the projected erosion of the middle class (see Middle Class Erosion Effect on Restaurants), but you can work to boost traffic in your establishment with a restaurant loyalty program. From air miles to hotel stays to grocery points redeemable for cents off a gallon of gas, loyalty programs exist in practically every industry. For good reason – they work. They create repeat customers who are, well, loyal.

Think about it from the consumer’s perspective: If I can get points or credits that I can redeem for a discount or other value, I’m going to spend my money where I get points. Once I sign up with drug store, for instance, I’ll make a concerted effort to spend there. On top of that, consumer advice always suggests that you pick one vendor in an industry to be able to leverage its loyalty program to the greatest extent. In light of our example, the advice is to pick one drug store and stick with it, even though other stores may also offer loyalty programs.

Convert New Customers into Repeat Customers

It’s “Business 101” and it applies across all industries: Repeat customers are your most profitable ones. It’s easier and less expensive to market to them, and they spend more. Converting new customers into repeat customers should be the focus of your marketing. Of course, you’re providing great food, great service, and great ambiance to start.

In a study conducted by FastCasual.com (“Restaurant loyalty programs pay off in surprising ways”), a nine-store pizza chain saw the following increases: First timers who joined the loyalty program were twice as likely to purchase again with 27 percent returning within a short time and 14 percent ordering at least two more times in a three-month window. For those who didn’t join the program, only 12 percent returned once and a meager three percent returned two or more times.

Plus the study showed that loyalty members spent more. In one study, members spent over $2.00 more per transaction (even after accounting for the cost of discounts and special offers). In a second study that featured a generous welcome offer worth $9.00, loyalty members checked out just 77 cents less than non-member counterparts… and that’s after accounting for the $9.00 special offer.

Loyalty Program Tips

To start, your loyalty program has to be rewarding. If the payoff isn’t valuable enough, you’ll have a tough time attracting participants. According to Loyatly360’s “Four Things Your Restaurant Loyalty Program Should be Doing,” offering a free t-shirt (that’s promoting your business!) after ten visits won’t cut it. Additionally, making patrons jump through too many hoops and work to make your program payoff is another no-no. Tie in other special drawings and prizes, and think big: iPads, mountain bikes, a full-course dinner with a reasonable value.

Your program also has to be seamless. Remember, your patrons don’t want to work for it. The easier it is for them, the more likely they’ll play along. Leverage technology to your advantage, so the program requires little effort on anyone’s part. Food Service Warehouse (“Restaurant Loyalty Programs”) suggests foregoing cards that customers have to carry along. Let them provide their names (or tie it into a credit card) in order to get points. Another approach is to keep their cards on file for them – they don’t have to remember it or carry it around in their wallets.

Randomly give extras. Surprise them with something unexpected and not promoted with your program. Perhaps a free dessert after their second visit. A loyalty program lets you track your best customers – those who return again and again and spend the most with you. These folks deserve special treatment.

The cost of admission to your program can be as simple as an email address, so you can continue to send information about specials and remind to participants to stop in again. Also, promote your program and its benefits on your Facebook page. Up the ante with double points or extra perks for stopping by during your slowest times of the week.

Technology has made administering restaurant loyalty programs easier than ever for both you and your patrons. Don’t skimp on your loyalty program and start boosting your bottom line.