They pay off not just in the form of increased customer engagement, but also in dollars and cents.
No one can claim to have all the answers when it comes to the difficulties facing the restaurant industry at this singularly challenging time. From supply-chain snarls and rising commodity prices to the vagaries of the labor market, there are simply too many factors that are outside of restaurant operators’ control.
There’s absolutely no certain way to keep customers coming back in these turbulent days, but there are ways to give your business an edge over the competition—and the fact is that restaurants without loyalty programs are leaving money on the table.
It’s basic human nature; people respond positively to rewards, and they like having their loyalty recognized.
The industry has come a long way since the time when a loyalty program required you to dig a card out of your wallet and get it stamped or punched every time you purchased a muffin or a Frappuccino. Loyalty is a high-tech business these days, and as digital and mobile capabilities grow more sophisticated, restaurant brands are discovering further opportunities to drive business by engaging customers with personalized offers delivered over their own devices.
A recent survey found that 69 percent of respondents said loyalty programs incentivize them to frequent a restaurant more often. Membership has its benefits—survey respondents enrolled in loyalty programs said that they receive personalized deals and coupons; that being a loyalty member leads to their orders being available upon arrival; that they receive better pricing; and that they feel they are getting rewarded for being a loyal customer.
Machine learning is the backbone
Of course, not all loyalty programs are created equal. Restaurant operators should look for a platform that is capable of automated marketing—for example, launching targeted campaigns for events and contests—while providing the operator with the flexibility to manage campaigns on the fly to accelerate and optimize outcomes.
A good loyalty platform should also be able to manage customer data and deliver a real-time, 360-degree view of the consumer, facilitated by artificial intelligence and machine learning. This can provide an understanding of customers' behaviors on a granular level, enabling brands to create new incentives.
This is where AI enters the equation. Machine learning is becoming the backbone of successful loyalty strategies, thanks to algorithms that analyze data on customer behavior and learn to spot trends and patterns. These algorithms are designed to deliver ever-better outcomes through their ability to build upon their successes as they operate. As more data flows through the system, the algorithms adapt to it, updating its’s decision-making based on the results of previous decisions.
Loyalty programs work. They pay off not just in the form of increased customer engagement, but also in dollars and cents. Consider the case of Denny’s, which was the first family-dining brand to launch mobile and online ordering nationally. After inaugurating its loyalty program, Denny’s saw an impressive 65 percent increase in off-premise sales. By adopting a marketing platform with machine-learning capabilities, Denny’s was able to leverage data from POS and online orders to deliver timely, targeted promotions, coupons, and other communication relevant to the brand’s customer base.
A seamless experience
To be most effective, a loyalty program should be fully integrated into all of a brands’ key business systems, including online ordering, POS, and payment systems. It needs to offer the customer a seamless experience across all touchpoints, from in-store systems to mobile apps.
What are diners looking for in a restaurant app? Respondents to the Bluedot survey cited above said they would download such an app if it gave them the ability to access offers and deals, the ability to quickly place an order, and the ability to earn and track loyalty points.
Customers will, however, delete a restaurant’s app if it doesn’t provide them with the full range of menu options, if they can’t customize their order, and if their food is cold upon arrival. In other words, both the digital side and the kitchen each need to hold up their end of the bargain. Apps and loyalty programs can drive increased guest engagement, but true loyalty must still be earned through time-honored factors like good customer service and top-notch food quality.
Some things never change.
Raju Malhotra is Chief Product & Technology Officer at PAR Technology. He joined PAR via the acquisition of Punchh, an omni channel loyalty and engagement startup based in San Mateo, CA. Prior to his current role, he was SVP and GM for Marketing Cloud at Salesforce, Chief Product & Technology Officer at Khoros & in different product & engineering roles at Microsoft. He has an undergraduate degree in Computer Engineering from National Institute of Technology, Kurukshetra (India) and an MBA from the Wharton School of Business at the University of Pennsylvania.