Beyond a delicious dish: building restaurant loyalty with your guests

Published August 14, 2020

A hotel stay that ends in a free night. A cookbook that comes with a related playlist. A subscription box full of fun, surprising goodies. Anytime consumers are spending, whether that’s on clothes, virtual cooking classes or music, they’re expecting more from their experience. More than just the basics. This puts a lot of pressure on industries that have traditionally relied solely on the quality of their products to make people happy—like the restaurant industry.

At 4% of U.S. GDP in 2019, the restaurant industry is a significant part of the economy. The problem is that people are always behaving in new ways. Adopting technology and digital communication has been a big part of a restaurant operator’s strategy to engage them, but with limited resources, upfront costs and thin margins, it can be hard to choose the right approach to keep them.

That’s where loyalty and rewards programs come in. They help businesses attract and keep the attention of customers who have more and more choices every day. But expectations for those programs are changing, too. Especially in today’s climate, there are many reasons to add a loyalty and rewards programs to your restaurant business. The primary reason? Consumers are seeking personalized, 1:1 interactions, especially from their favorite brands. And delivering on them is key to success.

Several factors have influenced this change:

  • Industry trends - External conditions and dynamics are creating an urgency for operators to adapt their customer engagement model.
  • Technology - Cutting edge companies are investing in algorithms and data collection methods for more precise marketing to their customers.
  • Consumer behavior shifts – People want products tailored to their personal tastes. This helps them sift through the noise from all the advertising and messages that are coming at them every day.
  • Competitive pressures - Practices across all industries are compelling operators to use tactics that differentiate their business from all the traditional and disruptive competitors in the industry.

Marketers spend a lot of time trudging through data forests trying to find insights into their customer’s lifecycle.  Some spend more time analyzing spreadsheets than connecting with their guests. To compete, restaurant operators must cut through the noise and expose actionable information from their raw data—they have to understand what they’re looking at and how to use it to create personalized experiences that deliver value to consumers and results to the business.

 

How to create a successful, results-oriented loyalty program

For restaurants, the food is just the beginning. Turning your guests into loyal fans so you can continue to engage with them beyond their visit is key to growing lifetime value.

Below, Kate Atty, VP of Marketing at Clutch, a leading customer data and digital marketing platform, and partner of NCR, discusses how to create a successful loyalty program that drives results for your restaurant. 

 

What types of loyalty/rewards programs are available to restaurants today?

They can take the shape of basic points + punches or earn and burn programs, cashback as well as real time checkout discounts, VIP programs and experiential program. They can also include those designed to trigger specific behaviors, like visits during slower traffic times, online reviews, increased order values, buying new products, capturing new business through referrals and more.

Many restaurants are interested in trying mobile or SMS to engage customers on the go or when they’re near a specific location. We can trigger or automate communications via SMS, as well as email or direct mail to coincide with a member’s engagement in the program, also using segmentation to further personalize the experience for the customer.

 

In your opinion, what’s the key to a great loyalty/rewards program?

The best loyalty or rewards programs do two things well: 1) they give the business a better understanding of their customers and 2) they can use that information to motivate future desired behaviors.

Of course, a good program must be easy to understand, simple to sign up for and the incentives must be easily remembered and redeemed. They also have to feature compelling benefits aligned with what customers want. This sounds simple, but oftentimes businesses rely on standard earn and burn reward structures that don’t necessarily impact customer behavior.

For example, a program that offers the 10th coffee for free after 9 purchases might sound like it’s working to get that customer coming back to earn that reward, but the reality is they’d likely come in for that 10th visit anyway because they regularly drink coffee—not because of the incentive.

A better option might be to offer two free coffees to someone who gets their friend to sign up for the loyalty program, or one that offers an incentive for someone who tries three new products like bakery items, an espresso drink or a smoothie. These support new customer acquisition, increase revenue and provide data on the preferences of existing customers. Want more people to add a croissant to their daily coffee order? Give one away first!

 

What can restaurants do to better implement their loyalty/rewards programs?

Having a simple sign-up process and clear rewards are key, as well as educating front of house staff on the program. Mobile is an excellent channel to promote signing up for the program, as everyone has their phone and can text to opt in and receive timely messages via SMS.

For implementation, automating simple processes like welcome emails or messages, birthday rewards and reminders about points expiration or available rewards are important, both for the business and the customers. Most restaurants have small marketing teams and limited resources, so a platform that can support automated engagement and the ability to set up everything at the start with minimal ongoing support alleviates some stress and frees up time.

Another benefit of automating some key communications is program engagement. The average customer is a member of 14 loyalty programs. So, getting them to remember how and when to use rewards is a big part of getting them to use the program.

 

Have you noticed any recent trends with loyalty/rewards programs (specifically for restaurants)?

Restaurants are serving people who are more digitally enabled than ever before. So customers expect digital food ordering choices and on-demand options, compelling incentives and services that cater to their lifestyle.

As a result, we are seeing restaurants trying to reclaim their own unique customer base, engaging them on a personal level and appealing to that core demographic of customers who represent their highest value audience.

Loyalty is a great way to do this because it gives the restaurant the ability to identify those customers and communicate with them directly, in a way that makes them feel appreciated and special. They can re-establish a direct connection through communication channels and learn what will keep them coming back—instead of going to a competitor.

 

Kate Atty, VP of Marketing, Clutch

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