What is a restaurant loyalty program?
A restaurant loyalty program is a system which offers customers rewards, discounts and special incentives (free menus, access to exclusive events and services, etc.) for their continuous support of your business. It’s a great way to attract and retain customers.
Loyalty programs are designed to encourage repeat visits, track spending by repeat customers, and reward loyalty with points that can be redeemed for rewards. A loyalty reward program works by registering how many times a person returns to your restaurant, and the rewards can be dealt in one of two main ways.
The first way is that once an individual has visited a certain number of times, they are rewarded with something like a menu item for free. The other way is a point-based system in which they continuously earn points and can choose to cash them in at any time for some free food.
Why is customer loyalty so important in the restaurant industry?
Although marketing your business in order to gain new customers is important, it is easier and more effective to retain customers than it is to get new customers. Plus, did you know that it costs about five times more to attract a new customer than to retain one?
Not to mention that loyal customers can actually help you reach new customers. When your business has an established base of loyal customers, you essentially have free marketing advocates walking around town. In fact, 68% of consumers are likely to recommend a company based on a good experience. If your returning customers enjoy your restaurant, word will get out and you will have new customers rushing your doors to try your delicious food.
Overall, customer loyalty is integral to the success of a restaurant business as it increases profit margins, allows for sustainable growth, and gives businesses access to key customer data (buying patterns, etc.).
Do loyalty programs drive transactions for restaurants?
Yes, loyalty programs drive transactions for restaurants. In fact, loyal customers spend 67% more on average than new customers. If a diner regularly visits a restaurant, he/she will have tried and tested the menu so he/she knows his favorite menu items and what to spend money on whereas new customers are usually more cautious. A reward program encourages customers to keep spending money so that they can earn rewards and points.
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Benefits of a loyalty program for your restaurant
Improves customer retention
If you are a business that serves great food and whose servers are kind and friendly, a loyalty scheme might just be that extra push that first-time customers need to come back. If you can generate customer retention, it will not only increase your profit margins, but will also improve the atmosphere in your establishment. A loyalty program helps restaurants build emotional commitment through repeat behavior as well as increase customer lifetime value (CLV).
Better analytics
If you make the smart choice to move beyond the traditional punch card reward program and instead opt for a digital loyalty system, you will have access to key customer insights. This will help you analyze buying patterns, help you build a better picture of your client base and allow you to personalize the customer experience. Real-time data will help you develop detailed customer profiles and understand subtleties within your target market to drive decision-making.
Increases sales
One of the most obvious benefits of a loyalty program is that it allows restaurant owners to boost their sales. If you are able to increase customer loyalty by just 5%, you can increase your overall profit anywhere between 25 and 95%. The objective of a loyalty program is to incentivize customers to regularly visit your establishment and spend money in order to benefit from exclusive rewards.
Loyal customers bring new customers in
Satisfied customers are happy to share their experience with your restaurant and recommend it to people in their entourage. They are one of the most powerful marketing tools at your reach considering that 83% of customers trust personal recommendations more than any other type of marketing action.
You can use this information to your advantage and incentivize referrals by rewarding customers who invite new people to register on your loyalty program. Referred customers are more profitable, more loyal and have lower churn rates than regular customers.
Tips to upgrade your restaurant’s loyalty program
Not only do loyal customers drive new customers through your door, but they also guarantee a continuous stream of profit. If you want to maintain your loyal customers’ interest, an effective loyalty program is essential.
To help you establish a loyal following through a successful reward program, we have created a list of expert tips to upgrade your restaurant’s loyalty program.
Go digital
Going digital comes with a lot of benefits. Firstly, it is more convenient. When you give people a card that gets stamped each time they come to your restaurant, customers often lose it and you can’t communicate special discounts or offers to them.
Thankfully, if you go digital, you can integrate your restaurant loyalty program into your mobile app or online ordering system to personalize the customer journey and access real-time data.
In addition to being able to claim loyalty points from in-store purchases, it also detects when customers make online orders and records the loyalty points they have collected through digital ordering and mobile ordering.
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Make it easy
How many times have you been asked if you want to join a mailing list to benefit from a discount on your next purchase? Most of the time, people say no because they do not want to have to stand and wait to give all their information over. In order to avoid this, you need to ensure your sign up process is as smooth as possible.
If your customers only have to provide minimal information to register on your loyalty scheme, they will be more inclined to do so. Some customers don’t feel comfortable sharing a lot of personal information. You should also have an exit option for customers if they feel like the loyalty program is not for them anymore and let them know that they are not committed to anything.
Advertise your loyalty program
Advertising your loyalty scheme is essential. Making your loyalty program a main feature of your marketing and advertising campaign is a great way to entice new customers in whilst simultaneously building your loyal customer base. This can be done on different social media platforms, on your website or app or through more traditional methods (flyers, posters, etc.).
Know your target market
Having an in-depth knowledge of your target market will allow you to personalize your reward program. There is no point in offering your customers a reward program if the rewards you are offering are not something they want. To personalize your loyalty program, it helps to leverage digital tools such as an online ordering system or mobile app in order to analyze your customers’ buying behavior.
Make it exclusive
It’s always a great idea to make customers feel special. You can therefore offer loyal customers extra perks such as VIP experiences or early access to special reservations or events. Use your imagination and make sure to let customers know all the benefits they will reap from simply signing up on your loyalty program.
