Digital loyalty: A guide to the latest trend in loyalty programs

Published November 13, 2021

The concept of reward punch cards dates back to the 1700s, when trade merchants would issue stamps to their customers that could be redeemed for catalogue purchases. These merchants realized that positive reinforcement tactics could spur desired behavior. The concept was simple: make a purchase and get a reward you can use toward a future purchase.

This model is just as effective today. It not only secures future orders, but also establishes long-term loyalty because consumers tend to select purchase options that contribute to future gain. Reward programs have evolved since the 18^th century, as they’ve proven reliable in establishing and growing customer loyalty.

Today, many businesses—specifically restaurants—are looking to leverage digital platforms to help build customer loyalty. There are many benefits to leveraging a digital loyalty platform, including the convenience of not having to rely on physical loyalty cards.

Many of us can remember the countless, half-finished loyalty program cards that never seemed to be on hand when we needed them in the checkout line. Digital loyalty programs remove the inconvenience of having to keep track of physical cards, making it easy for customers to collect and cash in on their rewards.

What’s a digital loyalty program?

In addition to being more convenient than paper punch cards, digital loyalty programs allow restaurant brands to implement many different reward systems and offers. This can include value-adds that aren’t tied to discounts and promotions—like exclusive access to try new menu items, chef tastings and other experiences. Thus, customer retention increases as guests are encouraged to return to restaurants, building loyalty among new and existing customers.

What are the benefits of using a digital platform to support a customer loyalty program?

Perhaps the most obvious benefit of a digital loyalty program for restaurants is increased customer traffic over time, which translates to increased sales revenue.

In addition to increased revenues, using a digital loyalty program gives you specific insights into customer behavior. Because loyalty technologies can be integrated directly with your point-of-sale, you can review customer data to identify order trends, see purchasing history and understand the peak times of the day, week or year customers are frequenting your restaurant.

These insights into order history and frequency can inform your inventory management and improve your staffing model. Additionally, understanding customer behavior can help you develop new menu items or offer special promotions that will boost customer traffic.

Creating a loyalty strategy that eliminates the need for paper punch cards and can be accessed via smartphone positions your restaurant as a socially responsible business and can foster goodwill with your most loyal customers. By leveraging digital cards, your restaurant will have the data and tools it needs to effectively reach its target market segment and drive customer retention.

How can you successfully implement digital punch cards at your restaurant?

To successfully launch a digitally supported customer rewards program at your restaurant, you may want to consider a few things.

First, it’s important to select the right digital platform for your customers. What does “right” mean? High user adoption is key to any successful mobile application, so you’ll want to choose an option with features that drive this. For example, apps that use phone numbers generally have higher adoption rates. Think about your target customer and identify features that will resonate well with them.

Next, consider a system that lets you customize rewards using customer data. You might find that rewarding users based on the amount they’ve spent at your restaurant is more effective than rewarding them on a per-visit basis. Why? Because it more accurately recognizes high-volume and high-impact customers.

To tap into these customer insights, you’ll want to select a platform with a robust marketing suite—one that tracks and allows you access to valuable segmentation information.

Once you’ve selected the right supporting platform or loyalty-card app, deciding on the reward structure, designing the interface and promoting your rewards program will help drive a successful launch.

Keep in mind that it’s important your reward offerings match your brand. For example, if you’re running a fast-casual café, a free coffee every 10 visits might make sense. On the other hand, if you have a multi-unit restaurant organization, a discount based on the amount a customer spends may be a better option.

Reward customers with incentives that feel true to your business, and don’t overthink the perks—people love free stuff, so it's hard to go wrong. After curating a visual interface that aligns with your restaurant’s aesthetic, it’s time to market your digital punch cards to your customers!

Leveraging digital punch cards for a customer loyalty program unlocks possibilities to better understand customer behavior at your restaurant. This ultimately strengthens long-term customer loyalty.

“With the pandemic, our to-go orders went up and every time you order on our app, it counts your loyalty, so it's pretty seamless for people,” said Alex Brounstein from Grindhouse Killer Burgers. “You can even scan your barcode at our register—people think it’s pretty straightforward. Ten visits and you get a free burger.”

Gone are the days of paper loyalty cards. Digital platforms make it easy for customers to earn rewards and for you, the restaurant manager, to gain insights into what’s important to them.

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