T here’s no better path to business prosperity than having a group of happy, repeat customers. Implementing an effective loyalty program could be just what you need to get there. But before you dive in, it’s smart to do some prep work to ensure you’re getting the most from your efforts. We’ve got some field-tested tips on what to do—and what not to do—to help ensure that your loyalty program is as rewarding for you as it is for your customers.
While loyalty programs have been around for decades (you likely have dog-eared punch cards in your wallet or car as a reminder), the fact is restaurants have struggled to fully capitalize on the concept. The ability to collect consumer data has been particularly challenging for operators. But as digital ordering has skyrocketed, restaurant loyalty programs have grown in lockstep. This new technology has enabled operators to make data-driven decisions and increase the personalization of their offers and rewards.
In her interview with Restaurant Business’s “A Deeper Dive” podcast, Stephanie Meltzer-Paul, Executive Vice-President of global loyalty for Mastercard, shares her advice for restaurant operators looking to build an effective loyalty program. Perhaps her most sage insight is this: “Loyalty is not necessarily a program. Loyalty is an outcome, and it’s an outcome of strategy.” With this in mind, let’s take a closer look at some smart strategies to consider.
Do Recognize That One Size Does Not Fit All
Traditionally, a loyalty program is centered around points or cash back. But it can also be about exclusive deals or a higher level of access on digital platforms. Be sure to consider your particular operation when deciding what’s best for you.
Points-based systems are best for high-frequency concepts (i.e. coffee shops like Starbucks or QSRs like McDonald’s) where consumers can rack up points easily and redeem rewards often. Traffic-driving offers or exclusive benefits may be a better fit for full-service or fast-casual restaurants, as a traditional points program may pose challenges if consumers aren’t coming often enough to enjoy the benefits.
It’s also important to remember that not all benefits of a loyalty program necessarily need to be published. There’s something about an “unexpected discovery” that can make a loyal customer feel even more special. Creating allure with members-only content is a great way to achieve this effect.
Don't Design Your Loyalty Program For Everyone
It’s human nature to want to be everything to everyone. But when it comes to a loyalty program, this can actually lead to wasted efforts that challenge your profitability. Instead, it’s better to consider who your most frequent and profitable customers are—and then design your loyalty program with these individuals in mind.
Do Test, Learn and Evolve Your Loyalty Program
Building on the point above, it makes sense to start simply by having people sign up for an offer. You can then layer on richer benefits over time and evaluate how those benefits impact the behavior of your highest-frequency customers. If you’re a larger operation with multiple locations, consider testing a new program or new benefits in a single market before rolling out nationwide. In both cases, be sure to leverage social media for feedback on how it’s working and what types of benefits your customers want most.
When your program is up and running, remember to be flexible and make changes as necessary to maintain your profitability. Specifically, you’ll want to ensure that you’re striking the right balance between the cost vs. the profitability. Consumers may be resistant to change and assume they’ll be getting fewer benefits. But if you continue to focus on rewarding your most frequent customers, you’ll likely see success over time.
Don't Measure Success Solely By Membership Numbers
Many consumers sign up to obtain an initial offer. But they ultimately only stay engaged with the loyalty programs of the brands they use most often. Consequently, the total number of members in your loyalty program can be misleading. That’s why it’s better to measure what is happening on the second, third and fourth levels of engagement to get a better metric and adjust accordingly.
Do Measure Success Outside of Loyalty Transactions
This may seem contrary to the point above, but keep in mind that a customer does not have to actively engage with your loyalty program to be impacted by it. Signed-up customers can still receive other marketing efforts (like texts and emails) that drive purchase behavior.
Additionally, loyalty program members may receive a marketing communication, visit your operation and not bother registering their purchase. It’s important to track how these individuals visit and spend outside of loyalty transactions.
Don't Sacrifice Speed of Service
Reminding guests to sign up or register their loyalty membership with every transaction is naturally important for growing your program numbers. But it’s critical to evaluate the tradeoff between that additional guest touchpoint and speed of service—especially in quick service. If those extra moments increase ordering times, it may be detrimental to the overall guest experience.
To help ensure the most efficient use of time for both your staff and your guests, opt for a loyalty program that is as seamless and as easy to sign up for as possible (i.e. via a QR code scan).
Loyalty definitely has its rewards
Clearly, a loyalty program can be a powerful tool for driving sales and building a stronger relationship with your customers. Taking the necessary time up-front to define your goals and plan your strategy will help keep you on the path to success for years to come.
