Suppose it is a weekend and you are planning to go out with your friends and dear ones. You have many options to choose from: watch a movie, a long drive, or dining at a restaurant. Suddenly you realize that a restaurant has a special offer where you can get discounts on menu items. As a loyalty program member, you can avail of the perks offered in the restaurant loyalty program.
The nebulous question ‘How should we spend the evening?’ changes to an assertive statement ‘Let’s meet at the restaurant at 8.’
The restaurant loyalty program has influenced your choice. As a result, you are at the restaurant along with five other friends, who decide to catch up after a hectic weekend. Since customer experience is great, all of them spend way more than they usually do.
Everyone is satisfied and decides to make it a hangout space in the future. The hook brought the loyal customer, and he brought more customers. Apparently, new customers will bring more people to the restaurant with word-of-mouth.
Apart from the example above, there are countless loyalty program ideas for restaurants where loyalty can influence decisions.
Being a restaurant owner, you can calculate how a loyalty program has noticeably increased your business. Customers earn reward points for spending money on every item. Earning points leads customers to order more. The number of points earned serves as a motivation for customers to visit the restaurant again.
That’s how a restaurant loyalty program works. As a business owner, you must consider scenarios and patterns which bring customers to the restaurant. Based on that information, build a restaurant loyalty program that can grow your restaurant business leaps and bounds.
According to a Customer Engagement Technology Study, 45% of diners said that they will choose a restaurant if they have a loyalty program.
Building a good loyalty program focused on customer behavior calls for data organization. However, that is a challenge that many restaurants face. They are caught in the curse of data overload. Too much information leads to decision paralysis.
The majority of QSRs today are gathering customer data in various ways. Restaurants are interested in knowing the food and dining habits of the customer. This assists them to create strategies to target and retarget their potential customers. The organization of data into a singular format can help restaurants make informed decisions to track customers.
A program that executes campaigns based on customer behavioral loyalty is the most successful one.
Before designing a restaurant loyalty program, we must understand the science behind it. Basically, any reward program operates on standard rules – rewards and persuasion.
The law of cause and effect ensures that good experience is chased. A reward causes persuasion which encourages further actions. The consequences of a pleasant experience are repeated behaviors, which in turn is followed the same experience.
Once a consumer is rewarded for performing an action, you invoke a feel-good experience. This is a desirable cause which results in more engagement. This principle works for any loyalty program and that’s why you see big corporations invest heavily in loyalty programs.
According to the National Restaurant Association, the restaurant industry lost around $240 billion due to the stay-at-home orders across the globe. As the pandemic eases out and people have started coming out again, the industry is gradually gathering steam.
Traditionally, loyalty programs have been proven to increase the bottom lines of the company. As a result, there is competition among restaurant businesses to create successful loyalty programs. The tips for loyalty remain the same as ever:
The regular structure of the loyalty program is earning rewards for every order and redeeming after a sufficient number of points. The reward points system is the most popular tactic for building a successful loyalty program.
A group of restaurant or associate partners can come together and form a network. Every time a customer visits or purchases from the ecosystem of loyalty, the reward points can be earned. This ensures that the customer is engaged even when he is not directly visiting you.
Many quick-serves offer free deliveries and takeaways at a predefined milestone. McDonald’s is a champion in offering free takeaways and rewards as a part of its loyalty. For example, customers can get a free McCafe, its popular coffee-based drink, after every five purchases through the mobile app.
Everyone loves to eat the forbidden fruit. Many restaurants have a members-only menu for its premium customers, which is not known to the regular customers. Here is a combination of reverse psychology and rarity, which makes your loyal customers feel special.
The exclusive menu can be unlocked only after a certain number of reward points. This accelerates customer spending in order to reach the minimum number of points for unlocking the secret menu.
A high-tiered member can avail of premier benefits that promote exclusive rewards like premium seating, first access, and excellent perks. The whole idea is to treat the customer like VIP, which enhances the customer experience at the restaurant.
Though there are many more tips for restaurant loyalty programs, a combination of the above can work pretty well. Some other perks include birthday rewards, punch cards, invite-only events, holiday specials, referral rewards, user-generated content benefits, and more.
Companies such as Starbucks and Tim Hortons have successfully leveraged loyalty programs and used for their business growth. Let’s have a look at their rewards program.
As per a QSR report, Starbucks increased its revenue by 4.6% primarily because of its ‘Starbucks Rewards‘ program. There are 16 million members in its loyalty program which contributes about 40% of Starbucks’ US sales. It has led to increased revenue of $2.65 billion.
One of the significant aspects of a successful loyalty program is no barriers to get started. To join the Starbucks loyalty membership, customers need to create an account and add a little money to it. They collect stars every time they visit and drink coffee at Starbucks.
The customer incentive system at Starbucks is pretty straightforward. The more stars earned leads to greater rewards. Anyone can get started by joining the program and registering a Starbucks Card. That is the reason for the success of Starbucks Rewards.
Tim Rewards is the loyalty program from the Canadian coffee giant Tim Hortons. According to the parent company Restaurants Brands International (RBI), the loyalty program was termed as a success because a fifth of the Canadian population has a membership in the Tim Rewards program.
Joining the loyalty reward program is again very simple. There are four steps:
Download the mobile application
Join the program after signing up with an email
If the customer has the physical card, it can be linked
The reward level can be chosen to bank or spend the points
As we see the examples, both companies have a pretty similar scheme structure. Most of the QSR companies including Starbucks, Tim Hortons, Dunkin Donuts, Burger King, McDonald’s have designed restaurant loyalty programs on the same operating strategy.
The strategy includes offering easy sign-up, rewarding members for every visit, and creating a larger loyalty cycle. Some companies offer bonus points for user-generated content on social media because it optimizes loyalty for digital markets and influences online ordering.
Most successful loyalty programs operate on points-based POS systems. The formula for its success is simplicity. If you are a quick-server restaurant, a customer-centric approach while designing a restaurant loyalty program will bring in desired results.
Get help from an expert loyalty partner for the execution of marketing campaigns and drive customer loyalty in a competitive restaurant scene. Annex Cloud has been a champion of customer loyalty and has designed notable programs for the QSR industry. Feel free to connect to restaurant loyalty professionals for more information.