Key Ingredients of a Successful Restaurant Loyalty Program

Mar 18, 2015

Successful Restaurant Loyalty Program - smallA well-designed loyalty program is a source of competitive differentiation and profit to the restaurant brand. Loyalty programs help restaurants identify and engage loyalty patrons, drive purchase behavior such as increased ticket size, and strengthen the relationship with their existing customer base. By evaluating transactional data from the loyalty program, restaurants can segment users for offers and promotions tailored to a customer’s preferences, thus encouraging more profitable behaviors.

What sets apart the very best restaurant loyalty programs? Simplified, personalized customer experiences that deliver convenience.

Loyalty programs should also positively impact customer lifetime value. For example, in one client program we found:

  • Members spent an average of 10% more than non-members, with a 1% increase upward per year.
  • Projected customer lifetime value as a result of loyalty revenue was $500 million over a three-year span. We were able to calculate this using our lifetime value methodologies and other proprietary algorithms.

Loyalty Program Benefits for Restaurant Patrons

Guests benefit from the enhanced or customized experience that a loyalty program enables before, during and after the visit and across channels and devices. For example, one of our clients leverages their members’ profile and preference data to enhance the overall customer experience, starting with the moment they walk up to the hostess stand. Some restaurants award currency (such as points or badges) for social interactions. Mobile apps or location proximity devices are being leveraged in fun ways that enhance the customer experience.

A loyalty program is also a great source of ongoing engagement between the restaurant and members. As a reward member you may receive additional perks like members-only offers and coupons, recipes via social media interactions, a special invite to a chef demonstration, or advance access to new menu items or seasonal items before they are available to the public.

Restaurant Loyalty Innovations: What’s Working

Effective loyalty programs provide lots of ongoing engagement with members and create an omnichannel experience by serving a consistent message across multiple channels.

Some of the most effective innovations we’ve seen in restaurant loyalty in the last several years include:

  1. Integrating the program across multiple touch points, such as tablets, mobile phones and kiosks. This type of integration enhances the experience and engages members while lifting revenue.
  2. Encouraging social behavior, such as checking-in via Facebook, writing a Yelp review or posting an Instagram photo. Some brands do this by rewarding certain social behaviors with award currency, like badges or points.
  3. Using mobile integration at the POS to speed up the payment process, collect feedback, deliver coupons, etc.
  4. Leveraging digital channels to tell the brand story, encourage repeat visits, and test out new menu items.

The Future of Restaurant Loyalty

In the future we’ll see restaurant brands become even more hyper-focused on enhancing the customer experience. New and existing technology will enable more personalized experiences even before the member walks through the front door.

Restaurants will engender loyalty and encourage repeat business by:

  • Allowing new patrons to get a sense of the ambience before entering the establishment
  • Reducing wait times before and after the meal (pre-order or post-meal checkout via mobile phone)
  • Offering customized ordering or options
  • Helping members discover new menu items
  • Catering to a member’s dining or seating preferences
  • Offering branded activities tailored to families
  • Providing more information about the food: whether it was sourced (locally) and sustainably, how it was prepared, and the nutritional content
  • Placing orders through tablet-enabled service
  • Delivering even more relevant offers
  • Engaging the member in discussion or in creating menu items

The experience and consistency with which the program is delivered coupled with all the ways a brand can engage with members is the best way to incentivize members and keep them coming back for years to come.