Loyalty programs are one of the most tried and tested methods of customer retention. Though its widely popular only a handful of companies manage to execute it perfectly. Restaurant loyalty programs are no different. Over the years only a few have cracked the art of loyalty program. Starbucks is one of them. So today lets dive into how you can create a simple yet effective loyalty program for your restaurant.
Why do you need a loyalty program?
The restaurant industry is highly competitive. To master this business you need to retain your customers. Loyalty programs help you connect with your customers on multiple levels. It gives your customers a reason to visit your restaurant again if done correctly. The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20% – Marketing Metrics. Remember the Pareto Principle: 80% of your revenue comes from 20% of your customers. As a restaurant owner, you should always thrive to get new diners. But retaining that 20% of customers will keep your business running in the long-run. And what better way to do so than by rewarding them! In fact, Bain & Company found that a five per cent increase in customer retention can increase profitability by 75 per cent.
Keeping It Simple
The common mistake restaurants make is to complicate things to the point where the customers don’t understand how the program works. This results in negative reviews and customers avoiding enrollment due to the complexity of the program. Ensure the process is user-friendly and minimal for anyone to understand. Don’t bring out too many terms and conditions. Signing up for the loyalty program shouldn’t take more than a minute. So, avoid asking for unnecessary information and collect only what’s needed.
Create the essence of a community amongst your customers with your loyalty program. Your customers can turn into brand ambassadors for your restaurants. Provide them with lucrative rewards for every new customer signing up for the program through them. Also, don’t forget to provide a small discount or a complimentary side dish or drink for the new ones when they sign up. Providing your loyalty members with exclusive apparels is one way to do it.
The most crucial element of a loyalty program is the value it brings to the customer. Roughly 60– 80% of customers do not return to do business, including customers who had a positive first experience (Bain & Company). Recognition and reward are important. But what’s more important is that it should be granted instantly. Customers are not interested in rewards they will be able to redeem after 3 months. The value proposition doesn’t need to be monetary always as restaurants run on a very small profit margin. You can reward your customers in different ways such as giving them exclusive access to new cuisines or no prior reservations needed to get a table.
Another important element is to keep it personal. Know your customers and provide them with personalised rewards. don’t forget to provide that extra discount or an appetizer or two on special occasions or events like birthdays and valentine’s day.
Digital vs Card-Based
The verdict is out and digital is the way to go. Why? Because the restaurant industry is dominated by Millenials and Generation Z. 56% of Millennials prefer using mobile apps for restaurant loyalty programs, and 50% of Gen Xers agreed, states a report by Oracle Hospitality, 2017. While designing a restaurant loyalty app can be a significant investment it surely is worth it. Again, keep the design and layout of the app minimal and easy to use. Also, be certain to engage your customers on the app on a regular basis. This can be done by sending push-notifications about the exclusive promotions or by running a contest of some sort.
Consistency & Feedback
Consistency and feedback are crucial to growing your business. The problem is customers won’t tell you about a positive experience but they sure will tell you about the negatives. Taking feedback helps you understand what’s working in your restaurant and what needs to be changed or improved so you can design your loyalty program in a better way. Asking feedback on a mobile application on personalized reviews can also help you understand your customer. Lastly, being consistent in your message across all platforms is important to avoid confusions and disappointments on the part of the customer.