An effective loyalty program can mean the difference between a fickle or strong customer base. As we’ve discussed before, a review of your POS database will likely reveal that the top 5% of your best customers bring in close to 20% of your revenue. Those customers are critical to your ongoing cash flow—and represent your best opportunity for growth, if you can encourage add-on sales and more frequent orders through a rewards program.
In fact, according to Paytronix, customers increase their spending by 27.3% after joining a loyalty program. The difficult part is designing the right rewards program. Here are some important tips to help you through it:
Understand your goals.
Loyalty programs have many benefits, including brand loyalty, increased guest frequency, and larger order sizes. What’s most important to you?
Many large chains are using loyalty programs to collect guest information, and personalize the experience.
Loyalty in itself doesn't drive visits, it doesn't drive comp. What drives it is the actual data behind it, and how companies are using the data to incentivize use. For example, Starbucks is probably the best that exists in terms of the loyalty program. Not because the actual loyalty program, but because they know that I usually order iced coffee. So if you order a cold brew, which is more expensive, we'll give you an extra 15 points. So they personalize it and they have thousands of cohorts that they'll put you in, and then everything's around personalization at this point.
- Lauren Silberman, Senior Analyst with Credit Suisse in 6 Strategies Big Pizza Brands Are Using to Steal Your Customers
A fun and unique spin on a simple loyalty program will draw your customers’ interest. In a “no-tech” alternative to punch loyalty cards, Mozzarella di Bufala hands out pizza-slice-shaped magnets with every order over $18.00. To receive a discount, customers simply bring their completed pizza (ten pizza slice magnets) to the pizzeria.
Create a loyalty program that keeps you informed.
Connecting your loyalty program with your POS makes it easier to enroll customers, track in-store and online orders, and measure the program’s success. A loyalty platform such as Paytronix or Punchh captures specific customer activities at all your locations, allowing you to track the purchase and visit behavior of your members.
Keep it simple.
If your points system is too complicated, your customers won’t be encouraged to use it. Keep your loyalty program simple. A SpeedLine-integrated solution, Woldpay StoreCard, delivers gift + rewards + mobile payment in a stored value card and simple mobile app.
Move it mobile.
Consider a loyalty program that can ties in with your web and mobile ordering sites, and engages customers on their mobile devices. Technology Advice found that 59% of customers were more likely to participate in loyalty programs they could interact with on their phones.
Define your reward levels.
If your goal is to increase sales, offering too much can cut into margins. Find the sweet spot to offer enticing rewards that are still profitable.
There are many options for rewards, from free food, to discounts or special invitations to events. Select a reward that fits your restaurant brand.
A few ideas include:
- A free pizza
- A gift certificate or freebie from... (possibly from a partner’s business)
- A free dessert or drink
- Cash back on purchases
- The option to gift points or rewards, or donate to a local charity
Once you’ve determined the reward, decide how customers will earn it. Will they earn a free pizza after 10 visits? Will they collect points with each dollar spent, and be able to redeem them after 200 points are collected? Consider the cost of the reward in your calculations.
Choose a loyalty provider that matches your vision.
There are many loyalty providers who can walk you through setting up a program based on your restaurant’s brand and goals. Choose a provider that meets your current needs and future plans.
Posted on Thu, Feb 01, 2018 @ 11:02 AM.
Updated on February 25, 2021 @ 7:38 PM PST.
Elizabeth is the Marketing Specialist for SpeedLine Solutions. When she's not performing her duties as the Managing Editor for On Point: The Restaurant Technology Blog, she's galavanting through the woods with her dog.