Dec 22, 2014 | Customer Retention Strategies That Work

3 Ways To Improve A Restaurant Loyalty Program

Kane Russell — Marketing at Thanx by  Kane Russell — Marketing at Thanx

Every restaurant loyalty program needs to evolve. These easy-to-implement tactics will increase revenue from existing customers right away. 

restaurant-loyalty-program

There's no better time than now for restaurants to take stock of what's working and what's not. As technology evolves, and personalization becomes more and more important, restaurants need ways to make sure customers keep coming back. Here are three ideas to do just that. 

1) Determine whether visits or check size has a bigger impact on revenue

No matter which way you cut it, there are two ways that a restaurant can increase revenue from existing customers: 

  • Increase the number of times customers visit
  • Increase the amount customers spend

That's it. Simplicity is one nice perk of restaurant loyalty marketing. What's challenging, however, is figuring out where to focus. Brand value, resource constraints, and customer attention spans make focusing on both in the same campaign ineffective.

To decide, restaurant marketers should analyze what tactic will produce the most value for their specific business. Start by investigating three metrics: 

  • Top 10% customer spend vs. average customer: If VIPs spend 100% more than the average customer, focus a loyalty program on increasing average check. Conversely, if VIPs and average customers spend roughly the same, make visit frequency a priority. Logic here being that essentially you're figuring out what makes a VIP (to be clear, loyalty programs convert customers who feel no connection to a brand into those who feel a deep one. Understanding the nature of this "deep connection" is the first step toward developing a program that actually achieves this goal).
  • Spend across locations: for restaurants with multiple locations, the same logic applies. If spending across locations is flat, focus on increasing customer visit frequency. If one location outperforms others, find out what's being done differently and apply those best practices to other stores. 
  • Average visits per month: if some months have consistently more customer visits than others, focus on increasing visit frequency. If visits remain flat month-to-month, then make increasing customer spend a priority. Logic here being that high variability shows an opportunity to change customer behavior that's actually changeable.

After starting with these three metrics, next mix and match comparison criteria. By evaluating how much customers spend and visit comapred to other customers, other locations, and other times of the year, resturants can find that sweet spot that will produce the most value for their business. 

2) Simplify customer experience

Churn is enemy #1 for any restaurant loyalty program, and with good reason. 65% of all loyaly memberships remain unused within one year of activation. 

Loyalty memberships go unused because of a poor customer experience. Take plastic cards for example. In a case study of one SF restaurant that spent $10K+ on printing plastic loyalty cards, 74% remained unregistered, 44% unused, and only 18% of customers still used their card six months after receipt. Counting friction points, we have (1) customer had to take a card during a visit, (2) go online to register, (3) bring the card with them every time they entered the store, and (4) remember to actually use the card at the point of sale.

To improve your own restaurant's program, count points of friction and just start chopping. Have customers link their loyalty card to their payment card so that they don't need two pieces of plastic to pay. Give customers the opportunity to register a card in-store via their phone. Better yet, put the loyalty card on their phone altogether. Less friction produces better results. 

3) Improve customer awareness

recent study of loyalty and restaurants revealed a major opportunity for marketers: 

  • Among consumers who don't belong to any restaurant loyalty programs, 48% said this is because they have no information about the loyalty programs offered, 42% said the restaurants they visit don't offer loyalty programs, and 19% said they don't belong because they see no value in such programs.
  • Among those who do belong to at least one restaurant loyalty program, 74% indicated that they don't participate in their favorite restaurant’s program, either because such a program is not offered or they are not sure whether one is available – more than a third of all respondents didn't know if their favorite restaurant offers such a program.
  • Among the 26% who indicated that their favorite restaurant does offer a loyalty program, 87% said they are members.

All three stats point to a clear last mile problem. Yes, evaluating customer loyalty programs takes work. But no program will succeed – no matter how well done –  unless it's actively marketed to customers. Simply having something in place unfortunately doesn't produce results.

Fortunately, driving success is as simple as E.S.P. (wait – did I just make up "ESP for awareness marketing?" Yes. Why? Well, it actually nicely explains how to market a loyalty program and maximize awareness):

  • Electronic: anywhere there's an electronic customer touchpoint, include communication about the loyalty program. Put a sign-up widget on the web. Remind customers via email. Create a mobile-optimized sign-up page. Include a sign-up widget within the online reservation flow.
  • Storesame goes for in-store. Put a sign on the door. Hand out paper cards explaining how to enroll. Place a call to action on the cash register. Include a notification on the tables in store (just make sure to work with a design expert to develop collateral that looks professional and on-brand).
  • Person*: the hardest and most important one of all – train employees to remind customers about the loyalty program. Only one word to the wise: avoid the generic "Have you joined our loyalty program?" (resulting customer conversion will be low). Instead, insert the loyalty program into actual conversation. For example: 
    • Customer: "I absolutely love the service here – I feel like I don't have to ask for anything." 
    • Employee: "Awesome. Glad to hear it - it would be great if you could leave those comments via our customer loyalty program – it helps me communicate to management how to provide better service every time you visit." 

Note that the employee gives a reason to participate in the loyalty program that has to do with what's best for the customer. And that's key with all the call to actions – whether E, S, or P: value for customers that makes the restaurant more successful.

 

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