Recently Justin Guinn, customer loyalty analyst for the online technology consultancy Software Advice, released a report which studied which loyalty programs or platforms can best meet the needs of your targeted customers. Guinn shares his insights about how restaurants can improve their loyalty programs.
Why is a loyalty program so important for restaurants, especially small, single-location restaurants?
Loyalty program help ensure that the most valuable customers—those who frequent the restaurant—continue frequenting the restaurant. These programs establish sustained engagement with customers, which keeps them coming back again and again. Overtime, this engagement will ideally deepen the relationship customers have with a restaurant, graduating them from customers to advocates for the business.
Is there a certain demographic restaurants should be targeting? What makes that demographic special?
The target customer demographic for a restaurant and its loyalty program varies depending on location and business model; however, restaurants should be doing all they can to capture a robust millennials customer base. They have eclipsed baby boomers as the most valuable customer segment, as they now outnumber baby boomers. Nearly half of millennials eat out at least once a week, while over a third order take-out or delivery at least once a week.
What type of rewards should restaurants offer loyalty members?
Restaurant operators should strive to find unique rewards beyond the typical monetary offerings that most programs provide. It’s not that rewards that offer free food and drink aren’t effective, it’s just that restaurants can do better. For example, restaurants can build stronger relationships with customers by aligning loyalty program offerings with causes their core customer base cares about.
What are the worst mistakes restaurants make with their loyalty programs?
Our consumer survey found three primary mistakes restaurants make that drive away loyalty members. The first two are that rewards aren’t valuable enough nor discounts high enough. Almost 60 percent of survey respondents stated they’ll leave a loyalty program for either. The third most common mistake is with the amount of time it takes rewards to accrue, with exactly half of respondents stating they will leave a program if rewards take too long to achieve.
What do restaurants need to get a loyalty program up and running?
Restaurant operators looking to launch a loyalty program need to first have a point of sale system in place. The actually loyalty program will work with the POS to record customer purchases and create a profile containing valuable customer information. While there are third-party loyalty programs that handle all of this data, it’s still crucial for the overall viability of a restaurant that it have a POS system at the helm.
A unique and well-designed restaurant loyalty program can elevate typical walk-in customers to regular patrons and business advocates. Achieving a program like this takes work and multiple iterations will likely need to be explored. But that’s a small price to pay for the sustained value that an effective loyalty program offers.