Loyalty Programs for Restaurants

Updated September 5th 2013

It is currently being said that it is 7 to 9 times more expensive to find a new customer than to convince an existing customer to come back again. This has been noticed across many industries and I strongly believe that it counts especially for the hospitality industry. Customers who are satisfied with the services you offer at your restaurant, will always come back for more. Such loyal customers will also recommend your restaurant to friends and family. Given the stiff competition in the hotel industry, restaurant loyalty programs have become more valuable in attracting, engaging and retaining customers.

Loyalty programs are very effective on customers who already enjoy the food and services you offer. Even though development of new tactics to attract new customers is good for business, it’s always important to ensure that you also cater for the needs of your regular customers. All customers are not the same and as the restaurant operator you need to pay more attention to the existing customer base. Always remember that a loyalty program is a unique way of rewarding loyal customers and a way of ensuring they continue their relationship with your restaurant.

Tools for Loyalty Programs

When implemented correctly, Loyalty programs will guarantee repeat business. As such they have to be timely, relevant and respectful of your customers. The best programs should be tech savvy, convenient and employ less cumbersome tools. Try to avoid outdated tools that involve carrying cards and check-ins. Modern technological advancements have brought about better and more convenient tools for loyalty programs.

Outdated tools like Punch and Loyalty cards introduced effective principles for loyalty programs, but they tend to inconvenience the restaurant owner as well as the customer. Use a phone number or Email address as your loyalty program ID and you gain at the same time a simple way to reach out for an efficient communication tool. For the customer, his phone number or Email address stands then for benefits and a tool that allows him to stay updated of a positive situation while it enables you the cheapest opportunity to target your marketing messages.

Believe me, no customer would like to carry around a card which he/she has to produce whenever they visit their favourite restaurant. I have 800 cards and cannot physically carry them around with me, so either I would be organized every morning in such a way to know exactly what cards I need or I just go to the location that does not really ask for the card.

For some restaurateurs it may appear to represent an additional cost if you think about investing into a new record keeping system but many can be updated and automated. At worst, even having a traditional filing system for storing customer’s punch cards or loyalty cards is maybe less convenient but for a traditional bar and grill or Italian restaurant some old ways just seem more appropriate. If that is the case, then make sure that people can talk about it. I know a little Chinese restaurant in Paris where the owner has a little red book where he notes the incoming clients and accordingly offers food or beverage for free to try or to simply say “Thank You.” Everyone knows this little red book. But again customers prefer less cumbersome methods like the automatic reward systems where they don’t have to carry cards or even sign up for any program. The restaurant owner simply installs a software that tracks all the purchases of given customers. Once a customer spends a certain amount or achieves a certain number of points the system will notify you to reward them. You can then surprise the customer with a free gift and encourage them to come back soon.

Newer programs depend on mobile applications, the web, and email to deliver alerts, offers, and allow customers to redeem their points electronically. These programs are more convenient to the restaurant owner as they can automatically keep track of customer visits, preferences, and also get feedback on the quality of products and services they offer. This makes it easy to give the appropriate rewards and also market the restaurant. The best examples applying these practices is the mainly luxury hotel chains where customer loyalty members have even their preferences from pillows to foods available in the system and accessible to all properties.

Points to Remember in Your Customer Loyalty Program

For your program to be successful it has to be easy, reachable and offer rewards that are meaningful to the customers. The reward should motivate the customer to visit as often as he/she can. The most successful reward options for restaurants include;

• Randomly given rewards: Rather than following a routine reward system, you can spice it up by occasionally introducing new rewards. You can simply decide to reward a regular customer with a free meal or drink on any given day, or after they have spent a given amount at your restaurant. To ensure that the reward brings out the desired effect make it a surprise to the customer. You should also avoid making the customer singled out or embarrassed when offering the reward as it could lead to negative consequences. Also try to not be too strict with the rule. Some customers calculate out and will go more often to your restaurant knowing they are coming closer to getting rewarded but at the same time stay away after the reward. Make it a nice thank you gesture and not an obvious fast food chain promotion.
• Special Occasion gifts: You can also choose to reward your loyal customers on important days like their birthdays and anniversaries. A few weeks before the date, use their contact details to send them an invitation with special conditions and services like limousine services or further club or lounge table reservations in other highlight venues as part of the program. You are not only showing that you think about your customer but also maybe introducing your exceptional relationship to new potential clients that do not get such deals elsewhere. Ensure that you also send out congratulatory messages during special holidays. This way they will always remember your restaurant and the special experiences they had during that period.
• Partnership rewards: You can decide to partner with other local businesses by offering their gift certificates or vouchers. They may sell their gift certificates at a discount if you purchase them in bulk. The major advantage that this rewarding system has over the direct discount and coupon program is that customers will enjoy the gift without perceiving a lower value at your restaurant.
• You have to place a number of factors into consideration when taking into account the rewards that you plan to offer customers in your loyalty program. The reward should be beneficial to both you and your customer. It must be meaningful to the customer and not affect your profits. The best rewards for your customers should be customer-specific and attainable. No customer would visit your restaurant over 100 times in order to win a minor reward like a t-shirt.
• Always avoid offering general discounts on products as they will affect your profits in the long run. Discounts will not encourage repeat customers and they will view your products to be of lower quality and not worth the full price. To avoid this, reward customers based on points rather than dollars. The reward should not appear as a discount on a given purchase but a gift for attaining a given number of points.
• The loyalty program should at all times seek to boost business. As such it should offer rewards that match with the restaurant concept; whether formal or a quick-service establishment. The best rewards should involve the restaurant (a service or product of the restaurant) as this will also help market your restaurant. Offer extra points during the slow times or days to attract more customers.

 

In conclusion, Loyalty programs can be very beneficial to restaurants especially if the tools and reward systems are selected and applied properly. The guidelines above are only a few important tips that would go a long way in ensuring your loyalty program succeeds. Remember that a well-constructed and applied loyalty program encourages repeat business as well as new customers which is beneficial to your company.

Written by Daniel Grossmann