Loyalty programs are changing. But one thing isn't: their ability to boost sales and increase customer engagement.

How Restaurants are Driving Success with Loyalty Programs

Restaurants can achieve one-to-one marketing, connect with consumers in the moment, and gain in-depth knowledge of their loyal guests.

Zero to 60 in mere seconds, a claim in the auto industry for years, now speaks to foodservice. Especially if you’re the kind of restaurant operator who feeds on speed to scale, how about going from 1 to 10,000 in under 60 seconds? That would be increasing from one customer connection to reaching 10,000 customers, all in less than a minute.  

It’s yours for the taking, thanks to the integration of loyalty marketing programs with social media and messaging channels. Chris Teso, CEO of Chirpify, explains how restaurants are leveraging technology to change the paradigm of what a loyalty program entails. In this industry, he explains, “loyalty programs have been pretty traditional, typically based around rewarding people for how much they spend at the restaurant. Now, restaurants can reward people for their brand advocacy on social media.”


Craft Beer Breaks the Code
Selection and variety have always been distinguishing characteristics for World of Beer, which offers more than 500 beers at its 75 locations. With the implementation of a new loyalty program in July, courtesy of a partnership with Paytronix, the brew chain has taken that competitive advantage up another notch: ALEgorithm is a community-driven platform for WOB loyalty members that provides tailored beer recommendations based on guests’ personal tastes and engagement. As the company said in announcing the new app: “Think of it like Pandora for beer lovers.”

By brand advocacy, he’s talking about all those foodie photos on Instagram, and the tweets and Facebook posts that give a shout-out to whatever restaurant the consumer happens to be chatting up. “Brands like Silver Diner are using us because it would be crazy for loyalty marketers to ignore this channel and not to recognize and reward the positive behaviors that consumers are taking on social media,” he says.

Silver Diner Strikes Gold

At Silver Diner, the upscale American brasserie dishing up healthy diner food, senior marketing manager Joe Howell explains that engaging diners on social media helps the brand remain relevant with customers even when they aren’t in the restaurant. It also enables the restaurant to give diners rewards that encourage future visits, helps it acquire new customers, and provides “valuable customer data.” 

The way the technology works is pretty simple: The restaurant identifies the kinds of social media activities it wants to “listen” for, and the Chirpify platform conducts marketing automation based on those triggers. “When you talk about marketing on a one-to-one basis, but at scale, our platform sets up the listening triggers—like a photo upload, a hash-tag post, someone sharing a URL to the restaurant’s menu, or someone tagging a friend at a specific diner location—and then it automatically responds to those people,” Teso says. 

On any given night, if 10,000 people post a selfie from the restaurant of a multi-unit brand, the platform is going to respond to all 10,000 with whatever message or reward that brand wants to extend. The responses are instantaneous and, to some extent, individualized, based on the criteria defined for that person.  

At the precise moment that a person uploads her selfie, the platform responds.  If the guest is part of the restaurant’s loyalty program, she gets one response; if she’s posting about her dining experience but is not a loyalty member, then she gets another response—likely with an invitation and link to join the loyalty program. 

In the restaurant industry, where brands are looking to acquire new customers into their loyalty program, Teso notes that loyalty marketing for social media advocacy is a natural extension of customer outreach. “If I see that my friend is sharing a Silver Diner [moment] on social media and being rewarded by Silver Diner for sharing it, I’m much more likely to join that restaurant’s loyalty program,” he says. “We don’t really change consumer behavior; we’re leveraging what they’re doing and rewarding that.” 

Although automated, responses can still contain smart and intuitive communications based on whatever rules the restaurant has established. For instance, a rule could be geo-specific, so the restaurant may respond differently to people based on the restaurant location. Or the restaurant can establish rules to respond differently to someone who has more than 1,000 followers than to someone who has 100.

“You could also change the communications based on the frequency and the economy,” Teso explains, “so you could establish rules that say a member can only earn 1,000 points in a month, or they have to take action five times before they get a response. It’s a really smart platform that can reward people differently based on different criteria.”

For loyalty members, responses often deliver via email or private message; nonmembers receive a public comment on their photo or message. Private or public, all communications are branded to the restaurant.

In addition to the automated response mode, the platform also enables restaurants to moderate the social brand advocacy via a dashboard and insert human interaction into the responses. For instance, this is usually done if the restaurant wants to host a campaign, like a photo contest, and choose winners. 

Spontaneous Combustion—In A Good Way

“One-to-one marketing with customers is a rapidly growing trend in the restaurant space, and [how] to enable that through loyalty applications is a very important part of what restaurants are trying to decide today,” says Don Zimmerman, vice president of hospitality solutions at NCR.  One-to-one loyalty marketing has been around longer in traditional retail, but “it’s emerging rapidly in the restaurant space because consumers want to be interacted with on their terms, and restaurants can only do that by knowing as much as they can about the consumer and the business each consumer does with the restaurant.” 

It’s a trend whose time is now, and technology solutions that empower restaurants to learn more details about their customers and achieve that intimate one-on-one dialogue are surging. Last month, Oracle introduced its Data Science Cloud Services, which includes two cloud-driven solutions—one for Menu Recommendations and another for Adaptive Forecasts. In particular, Data Science for Menu Recommendations will empower restaurants to engage more intelligently with their guests, enabling them to improve up-sell and cross-sell opportunities with recommendations that dynamically update based on customer behavior.  


Loyalty App Drives Sales Increase
Tavern in the Square, the 10-unit neighborhood bar and restaurant based in Somerville, Massachusetts, won the 2017 Paytronix Loyaltees Award for Mobile Engagement.  
In March 2016, Tavern launched a branded version of Paytronix mobile apps, and guests embraced the opportunity: to the tune of 1,000 downloads per month. Within 12 months, loyalty memberships increased to 19,000, and a BOGO offer in January, which used geo-fencing to target loyalty members, produced a 50 percent increase in restaurant sales in one day. 

We’ve entered the age of  “the digitization of the restaurant experience,” Zimmerman suggests. “It’s basically automating, or applying technology, to any channel a consumer chooses to use to do business with their favorite restaurant.”  There are numerous ways this can play out for operators, from up-selling at the table to improved accuracies and efficiencies when customers place to-go orders. In July, NCR announced partnerships with Grubhub and DoorDash that integrates point-of-sale technology to streamline the online ordering process for to-go service. And if restaurants want to catch consumers where they really live, there’s no better channel than social media and messaging networks. 

“Even though being able to reward people for social media actions is new in the loyalty landscape, the large brands like Dunkin’ Donuts are starting to get thousands, even millions, of their members involved in the program, so it’s expanding naturally and brands that are onboard in the platform are creating that groundswell,” Teso says. “In terms of where we see the biggest growth, it’s really not one social platform over the other. There is a lot on twitter because it’s a more decentralized, open platform, where Facebook is more of a private platform. But we see increased activity on all three networks [including Instagram].”

Return on Relationship 

When it comes to inspiring loyal diners, it’s not what you know, it’s who you know that counts. Operators who can recognize their frequent guests and know their dining preferences can build true relationships. The holy grail for hospitality, says Randy Jordan, senior VP of sales at Fishbowl, was best defined by the sitcom “Cheers.” The regulars showed up nightly since it was where “everybody knows your name.” 

“With technology, we’re trying to automate the ‘Cheers’ effect,” he says, and this requires integrating the plethora of data that various tech solutions are busily collecting. 


The Next Loyalty Frontier
Social media, messaging channels, and mobile apps rule the loyalty marketing landscape today, but tomorrow may belong to Alexa, Siri, and Cortana. That’s because the use of voice-activated assistants like Google Home/Assistant and Apple’s Siri is rising, and consumers most inclined to use these technologies are also into food. Thirteen percent of the more than 18,0000 adults surveyed have used a voice-activated assistant in the last 30 days, according to the AudienceSCAN report from SalesFuel. More to the point: 13 percent have eaten at a restaurant or ordered take-out three or more times a week during the last 30 days.

“Everybody has data, but all that data is in silos,” Jordan explains. “The mis-sing link has been the ability to consolidate all that data to know who is sitting in your restaurant—and now we can do that.  The minimum expectation for customer engagement in the fourth quarter is for restaurants to use technology to identify the guest—at least demographically and psycho-graphically.” 

That’s the bare minimum, especially in the casual-dining segment, if restaurants want to be competitive. To gain more traction, Jordan suggests operators up the ante to a level of customer enlightenment. 

This requires an understanding of all the ways that each diner is using the brand, and that knowledge is gleaned by integrating transactional data into the analysis. “In addition to knowing a guest is in his 50s, has kids, and loves golf, data integration can also let us see that the guest only uses the brand on Tuesday, in late dayparts, and always orders a martini with extra olives. Or that a guest only visits the brand when he buys a gift card or to place a to-go order on a mobile app.”

Armed with that level of insight, it becomes much easier for restaurants to drive true loyalty and foster the level of one-to-one marketing that is fast becoming the new norm.  “With digital promotions, you can see every single click-through and the redemption rates—then you can build loyalty, build a relationship with the guest, and measure the return,” Jordan says. Ultimately, it moves the restaurant operator from an ROI mentality to thinking about the “return on relationships.”

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