On average, it costs a business between five and ten times more to acquire a new customer, than it does to sell products to an existing fan. What’s more, current customers typically spend around 33% more than new customers, meaning that building upon the loyalty those customers show can help you achieve more frequent sales with a higher spend.
Restaurant loyalty programs can provide a pivotal platform for brand engagement and marketing. Like any other marketing strategy, some aspects work better than others in different industries, as the customers who frequent gourmet restaurants are likely to have different values to those who enjoy spending time in bistro cafes. However, overall, studies suggest that 34% of customers would recommend a business based on the merits of its reward program.
In order to make your loyalty program work for you, it’s crucial for restaurant owners to personalize their approach, while using fundamental strategies that have been tried, tested, and proven to work within almost any restaurant environment. Stay tuned while we cover what defines a successful restaurant loyalty program, from the factors you should be using, to the aspects that work best, and the potential pitfalls you must avoid.
1. A Simple Point System
The most common loyalty program that shows success for restaurants, is one that utilizes a simple point acquisition system. The more points a customer acquires, the more those points translate into some form of reward, whether it’s a discount, a free dessert, or a special gift. A points system works particularly well for restaurants, as it is most lucrative in industries that encourage short-term, frequent purchases.
Sometimes, these reward systems can falter when the relationship between tangible rewards and points is complicated and confusing — people want to know exactly what they’re going to get in response for their loyalty. These programs work best when diners have a choice in their reward, or a pre-established benefit. Statistics show that one of the top two reasons consumers participate in a loyalty program is because it is easy to understand.
Make sure that your diners know how to make the most of their rewards, from gathering points at a POS terminal, to keeping track of the benefits they’re owed as they begin to move towards a goal with the use of apps and online accounts.
2. Tiered Rewards Based on Informed Decisions
One of the biggest problems restaurant owners face when implementing a rewards system, is finding the balance between attainable and desirable rewards. After all, you want to offer something that makes your customer keep coming back to your location, but you can’t give away too much value without harming the profitability of your company. One way to combat this problem is through a tiered system, which rewards initial loyalty, and encourages further purchases.
This system works best when small rewards provide a basis for being part of the program, followed by bigger rewards as the customer continues to spend money and moves up the loyalty ladder. The tiered solution also targets the problems of members forgetting about points, because the time between purchase and reward lessens.
3. Know the Value of Gamification
Eating out should be a fun experience. Adding a touch of gamification to your rewards system can offer an endorphin rush to your customers that makes your brand more exciting and engaging to your target market.
The best way to maximize the gaming aspect of your rewards program, is to host contests and sweepstakes on the right marketing channels. For instance, send emails to your customers if they’re subscribed to a newsletter, get them involved on social media with a contest asking them to enter a photo of their favorite meal or dessert. Another option is to actually create a game as part of your restaurant’s downloadable app, where guests can earn points and prizes. There are plenty of technology solutions available that can maximize your reward strategy.
Keep in mind that in order for gamification to work, your customers need to feel as though they have a good chance of winning something. Experts recommend that the odds should never be lower than 25% even if this means making sure that your customers win a small gift every once in awhile. Without good odds, you run the risk of consumers feeling as though they’re being tricked out of rewards by a rigged system, which could damage their opinion of your brand.
Let Your Rewards System Grow
Remember, regardless of the techniques you use in your rewards system, it will grow and change over time. Adapting to new technology or using data to deliver new benefits to customers can maximize the loyalty and repeat custom of your guests.
Sometimes, an act as simple as making your system cardless can be enough to improve the experience for your guests, by eliminating the need to remember countless pieces of paper when they’re visiting restaurants or cafes. Mobile apps could provide the best solution for modern diners as it allows them to check into their account from their smartphone, and receive rewards in a simple and hassle-free manner.
What kinds of loyalty programs do you offer? Have you had success with loyalty programs in the past? Let us know in the comments.
Contact us to see how your loyalty plans can be supplemented with technology integration.