As a restaurant owner, you know how razor-thin the profit margins can be in the food and beverage industry. Customers who walk through your doors, fill tables, and place orders for pickup and delivery are what keep you in business. But over the course of the past year, it has been harder and harder for restaurant owners to pull their bottom lines out of the red, financially speaking.
The success of your restaurant will always boil down to securing customer loyalty. Without loyal customers patronizing your business, you cannot maintain a net profit and stay in the black, which is why it's time for you to implement a customer loyalty rewards program at your restaurant.
A 5% increase in customer retention can grow your restaurant's profitability by as much as 75%.
At its most basic level, a restaurant customer loyalty rewards program is an effective marketing tool that encourages enrolled members to patronize your business by placing dine-in and takeout orders, because the more they eat with you, the more money they save.
Loyalty programs that incentivize spending are mutually beneficial to both the restaurant and the enrolled customers so long as the customers experience rewards that they believe are fair. Just as restaurant owners want to see a return on their investment after implementing a loyalty program, restaurant customers also want to see their ROI increase as they continue to frequent your business.
Properly executed and maintained customer loyalty rewards programs can benefit your restaurant by increasing sales, transactions, and shopping frequency, which will result in growing:
- Customer lifetime value
- Items per transaction of enrolled members
- Customer retention rates
Thanks to the recent shift towards "touchless" shopping, customer loyalty rewards programs have become digital and app-based. As we delve into the specifics of how you as a restaurant owner can successfully build a rewards program, we'll take a look at how digital technologies are taking over the loyalty arena and why integrating an app into your rewards program is a must.
THE BASICS OF BUILDING LOYALTY
Whether you're considering launching a customer loyalty rewards program at your restaurant or you've already invested in one that you're still trying to get your customers to sign up for, the most important rule of thumb to bear in mind is: keep it simple.
45% of surveyed customers say they choose restaurants with attainable loyalty rewards over those with no programs at all.
Establish Your Goals
The first place to start prior to designing your rewards systems is to analyze all the revenue streams of your restaurant and establish goals for your business. If you offer indoor dining, curbside pickup, and takeout delivery, identify which of these revenue streams are successful and which are struggling. Ask yourself, is indoor dining suffering and can you create loyalty rewards incentives to get diners into your restaurant? Perhaps curbside pickup has been popular so you would like to use its popularity to grow your loyal customer base. Once you pinpoint your business goals, you can tailor your loyalty program to support the success of those goals.
Present a Straightforward Program
Your restaurant loyalty rewards program will provide you with a two-pronged strategy to engage customers. One strategy will be aimed at converting first-time and sometimes customers into enrolled members. And the other strategy will be aimed at incentivizing enrolled members to patronize your business more frequently. For both of these areas, you must present the program and rewards systems straightforwardly. Convincing customers to enroll can be as simple as offering an incentive such as a free appetizer or dessert. Incentivizing enrolled members to return can be as straightforward as sending them a focused promotional campaign that offers extra points or discounts on brand-new menu items. Just make sure the offers are easy to understand and come with no hidden strings attached.
Offer Points-Based Rewards
In the spirit of keeping your loyalty program simple, we recommend that your primary rewards system be points-based. Points-based loyalty rewards typically allot a predetermined amount of rewards points for every dollar spent or for every item purchased. This rewards system is considered the easiest to understand (and also for your staff to explain) because members can see the value of acting on the points-based promotions that are being offered. For example, every tenth cup of coffee served at your restaurant could be free, or for every dollar spent on appetizers your members could earn 1 point in such a way that 100 points will earn them a free entree.
Include Tiered Rewards
In addition to offering a points-based rewards system to your loyalty customers, you can also include a tiered rewards system to help foster a sense of brand loyalty and strengthen the relationships you have with your patrons. A tiered rewards system is slightly more complex than a points-based system, but it can trigger members into deepening their investment in your restaurant. Just be sure to clearly lay out how customers can reach each tier, and it never hurts to give the tiers clever names. For example, if you offer three tiers, members who spend $25 per month can be given access to the first tier called Perks; members who spend $50 per month reach the second tier called Snacks; and members who spend $75 per month reach the second tier called Meals. With each tier, you can offer exclusive redemption items, which will motivate members to strive to reach the next tier.
Use Data to Target Personalized Offers
Collecting customer data and leveraging it to target highly personalized rewards incentives to your loyalty members is the greatest benefit of having a rewards program in place at your restaurant. Compiling data, however, isn't possible unless your rewards program is digital. Ideally, you want your program to come with a mobile app. For each digital customer profile, the rewards app will record the customer's purchase history, earned points, redeemed points, item favorites, frequency of visits, type of visit (indoor dining, curbside pickup, or takeout delivery), and amount spent per visit. With this information, you can target your members with custom promotions and offers that they won't be able to resist.
Train Your Employees
Effectively promoting your loyalty program with the aim of attracting new enrollees will require the help of your employees. This is where designing simple and straightforward rewards systems come into play. If your rewards systems are too complicated, then your wait staff and managers won't be able to communicate the benefits of the program to customers in a few short sentences. Your employees interact the most with customers, whether inside of your restaurant or over the phone, so you'll need to train them properly on how to tell customers about the program, how to help customers download the app, and also how to assist already-enrolled members in terms of getting the most rewards points out of every visit. The latter will involve educating your wait staff and managers about upselling and cross-selling opportunities.
RESTAURANT LOYALTY IDEAS
There are loyalty programs for retailers in every industry, but not every industry offers what the food and beverage industry does. Tailor your loyalty rewards so that the program is unique to your restaurant with these fun ideas.
Loyal diners that continue to support your restaurant will spend 67% more over time than first-time guests.
Refillable Beverages & Bottomless Dishes
In order to keep your rewards program fresh and attractive to members, consider periodically offering redemption opportunities that are unique to your restaurant. It doesn't cost much to offer select loyalty members refillable coffee mugs between the hours of 6am and 10am on Mondays, for instance. Bottomless dishes are another fun way to motivate members to burn points, if, for example, this particular reward is only available once a month.
Another fun way to reward your loyalty members is by giving them rewards points just for walking through the door. This type of visit-based incentive falls in the "surprise and delight" category, which customers always appreciate. When offering visit-based rewards, it's really the thought that counts, so you don't have to allocate a high number of points. You can tailor this "surprise and delight" reward in such a way that every 10th visit, for instance, will earn the customer enough points to get a free beverage or dessert. Just be sure to send them an email, SMS text, or push notification as a thank you message that includes the points they earned by visiting, the total balance of points in their account, and suggested items they can apply their points towards.
When restaurant owners offer daily and weekly incentives as part of their loyalty rewards program, they generate revenue while creating fun experiences for enrolled members that produce buzz. Once you figure out your slower times of day and days of the week, you can focus on promoting those time slots with opportunities for your members to earn points. Your weekly promotions might include:
- Monday: 30% discount on Happy Hour cocktails (earn 5 points per drink) between 4pm and 7pm
- Tuesday: BOGO (buy one get one free) appetizers (earn 8 points per)
- Wednesday: All entrees will earn 25 points
- Thursdays: 15% discount for lunch items (earn 10 points per item)
- Friday: Discounted add-ons such as $1 muffin with any large coffee (earn 2 points per)
DIGITAL LOYALTY PROGRAM TECHNOLOGY
Plastic scan cards and paper punch cards are outmoded, impersonal, and easy to forget or lose. Consumers have spoken and convenience is key. In 2021 and beyond, what is digital is convenient, which means that you'll want to integrate these technologies into your loyalty program.
The average consumer belongs to 14 loyalty programs but is only active in 6 of them.
Launch a Loyalty App
Apps aren't just for millennials. In 2021, over 90% of everyone who owns a cell phone has a smartphone, and the majority of smartphone activity occurs within apps. Given the sudden rise in touchless technology in the retail space, apps have exploded since April of 2020 due to COVID-19-driven restrictions. It's never been more important for restaurants to hop on the app bandwagon to help abide by restrictions while still offering great customer service. By launching a loyalty rewards program app, you can provide your customers with in-app reservations and ordering, suggestions for new menu items, earned points balance statements, and Swag Shop merchandise rewards in addition to discounts and perks.
Include a Digital Wallet
The future is now, and digital wallets are here. No longer a futuristic concept, digital wallets have been swiftly taking over as the preferred method of payment across the restaurant and retail industries. A digital wallet is an electronic, online service that allows users to store funds, make transactions, and track their digital purchase history. When restaurants include digital wallet capabilities within their loyalty program app, they provide members with a fast "tap and earn" purchasing method.
Offer Blockchain-Based Rewards Currency
As part of your loyalty program digital wallet, you can offer your patrons blockchain-based rewards currency. Blockchain is a digital record-keeping database technology that has proven itself to be safer and more secure than any other kind of database. When the cryptocurrency of your customers' digital wallets are secured with blockchain technology, the risks of fraud and theft are virtually impossible. It's necessary nowadays to secure your members' rewards points with blockchain technology, because hackers have been known to target loyalty programs that are unsecure.
Employ Artificial Intelligence
Hands-down the most forward-thinking technology to implement as part of your loyalty program, artificial intelligence can bring your targeted promotional campaigns to the next level of customer-centric personalization. Artificial intelligence technology can help you understand your customers so well that you're able to predict their future behavior. A.I. uses machine learning, collects customer data, and then analyzes that data for you so that you can apply it towards your marketing and advertising efforts.
Watch your restaurant evolve into a customer-attracting machine with a fully branded loyalty program that rewards your patrons for purchases, visit frequency, and whatever else you choose when you implement a customer loyalty rewards program at your restaurant.
Loyal~n~Save, the customer loyalty rewards program designed with the restaurant industry in mind, comes with a fully integrated mobile app that includes all of the technologies outlined in this article. With Loyal~n~Save, you can incentivize specific behaviors with personalized campaigns based on restaurant location (if you own multiple), new menu items, and customer habits. If you'd like to learn more about how our loyalty program can convert customers into loyalty members and grow your overall business, Contact Us now.
This article was written by Loyal-n-Save, an omni-channel customer loyalty solution for retailers looking to increase customer retention and new customer acquisition.