Do Restaurant Loyalty Programs Work?

Loyalty CardsCustomer loyalty programs work for some types of restaurants better than others, and only work if they are well structured. They need to offer customers clear benefits, while assuring their return business.

It is also essential that the restaurants act to protect customer anonymity and personal information. Generally, the more information required at sign up, the less the program will work. It is essential that any restaurant that decides to host a customer loyalty program do so in the right way and for the right reasons.

Why should a restaurant start a customer loyalty program?

A restaurant should start a customer loyalty program as a way to increase its returning customer base, and keep people coming back again and again. This not only creates a steady income, but also increases customer spending and improves word-of-mouth advertisement.

The goal is to help the customer become emotionally connected to the restaurant, and to feel rewarded for their loyalty. The loyalty program should help develop a cycle where clients consistently earn greater rewards for visiting, and so spend more each time they visit.

Typically, there is a core program that offers a basic discount or service. For example, the core program might promise a free entrée for every $200 a guest spends. They receive a card and collect points based on the amount of money they spend, and when they have collected 200 points, they receive a coupon for a free appetizer. This is the core offer.

Spin-off offers―sometimes called layered offers―are designed to make a loyalty program more individualized. They should send the message that the restaurant knows, and cares, about the individual customer. For example, many programs will send out a birthday celebration notice. This often includes a $5 or $10 dollar gift card in recognition of the recipient’s birthday.

Finally, there are promotions designed to encourage your guest to spend more money, above and beyond their typical bill. This includes coupons and access to limited-time-only offers.

What features should a loyalty program have?

The features that a loyalty program should have depend on the restaurant that’s building the program, and the type of business they are running. The program should be appropriate for the atmosphere that it is promoting, and should always be centered around goods or services that are regularly and routinely purchased. A restaurant owner should never offer a customer loyalty incentive for which it is hard for guests to qualify.

A good customer loyalty program also has multiple tiers. Loyal customers will get bored if they earn the exact same prize each time. They need to feel that, as their loyalty grows, so do their rewards. Set up multiple levels of success, including things like silver, gold, and platinum loyalty membership.

Set an expiration date for unused certificates or points. This is essential. Customers need to understand that rewards have a real and immediate value, or people will not use them and they will cease to motivate buyers. By creating a date on which they expire, you not only increase their perceived value, but also save money, because some certificates will not get used until it is “too late.”

A good customer program will typically offer something for free with a purchase. The goal is to increase revenue by getting returning customers to spend more money. By offering a certain amount free with another purchase, or introducing a buy one get one opportunity, the revenue generated is increased while offering guests what feels like a free item, or financially significant reward.

What restaurants are not well suited to customer loyalty programs?

Not every restaurant is equally well suited to starting and maintaining a customer loyalty program. Restaurants that are extremely high end, for example, should not offer a customer loyalty program in the traditional sense. Offering discounts or free merchandise, in this case, devalues the restaurant. If the act of using a coupon would be considered “beneath” the restaurant’s regular customer base, then a traditional loyal customer program is not appropriate.

Instead, owners and managers should work to provide one-on-one attention to customers who frequent the restaurant. Simple things, like knowing a patron and calling them by their name, as well as remembering their regular order and food preparation preferences, can go far when trying to build a loyal customer base.

Similarly, small businesses with a very personal atmosphere will not benefit from a customer loyalty program, which feels very corporate or chain-store-like in nature. Instead, businesses should encourage customer loyalty by offering a piece of pie “on the house” from time to time, or other down-home kinds of customer appreciation.

Finally, restaurants that are designed to appeal to transient or tourist traffic should not waste time and money on developing a customer loyalty program. Instead, they should invest that money on ways to brand themselves as sensational. Lambert’s Cafe, known as the home of the throwing rolls, is an excellent example. They offer something completely unique, and worth visiting again; as a result, customers return again and again, whenever they are passing through or visiting the area.

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