Loyalty Programs for Restaurants
It's fair to say that restaurants and cafes have had to endure harder times than most businesses recently. That's why it's vital that they can immediately start turning returning guests into regulars.
Customers, who have also been locked down for substantial periods, are starting to venture out more often - and when they do, it’s imperative that you have a strategy in place for helping to ensure every first-visit becomes a return-visit.
Ultimately, every aspect of your restaurant contributes to the likelihood of customers returning, from food quality, to service, to prices, to little touches like handwritten notes - however there is one action that has a much bigger impact than all of these combined… investing in a loyalty program.
This blog is going to examine the value of loyalty programs for restaurants - all the way from incentives, to data to marketing.
Why customer loyalty is more important than ever before
The restaurant business has always been one of the toughest businesses to succeed in. Not only do you have to produce food and drinks that your customers want, but you need to keep costs down, keep staff morale up, deal with difficult customers, manage unfair reviews, create impactful marketing programs - as well as a hundred other things.
Fortunately, new technology is also providing a few welcome solutions to some of these problems.
Which delivery platform should we order from tonight?
With restaurants closed, delivery platforms have thrived. And while this has helped bring more business to some restaurants, and created the development of ghost kitchens - there is always a price to be paid.
Everybody in the industry is aware of how delivery platforms have increased orders, at the same time they have also pushed up prices, and squeezed margins. However there is another aspect to delivery platforms that threatens to be even more insidious.
Instead of choosing a type of food, or a specific restaurant, people are now first choosing which delivery platform to visit. Then the type of food, then the restaurant. This is an ominous step for individual restaurants, because they are losing direct contact with their customers.
Would you like a side of loyalty with your meal?
So, the big question for restaurants becomes - how can we encourage customers to order from us directly - rather than going to a delivery platform?
The answer, for most restaurants, is increasingly going to be launching a digital loyalty program. That way customers collect points with every purchase, which they can then redeem for a range of rewards, direct from the restaurant - however ONLY when the customer orders from them directly.
The great thing about a solution like this is that starting a loyalty program also brings a huge range of other benefits to the business.
Welcome back. Nice to see you again.
The ultimate goal, of course, is to create more return customers. Return customers are the lifeblood of almost all modern businesses. Not only do they increase sales, by making numerous orders over the course of the year - but they have other welcome attributes too.
Return customers tend to spend more, on average, with each purchase. They are also more likely to become advocates for your restaurant. Telling friends and family how much they enjoy your food - and therefore helping to acquire more new customers. Another positive aspect is that return customers are also more likely to leave positive reviews.
In short, you’re probably going to need loyal customers - and to do that you need to have a direct communication channel.
Ways to build loyalty in the restaurant industry
The whole concept of customer loyalty is simply the final outcome of a lot of small, crucial factors. On their own, these factors are all important - however when you combine them it creates a total overview which represents how your customers see your business.
Food and service
These are the two most obvious factors when it comes to any restaurant. Obviously all restaurants have different audiences, price-points, locations and emphases - however if people don’t like the food, or weren’t impressed by the service, they are unlikely to return.
Therefore, throughout the rest of the blog, we’re going to presume that the customers we’re referring to do, in fact, like what you serve and the way you serve it. If they don’t then all of the other suggestions we make here aren’t going to help.
The more you tell, the more you sell
Story-telling is not a new technique when it comes to the restaurant industry. In fact, it’s got to the point where elaborate stories describing where a particular ingredient comes from has become a popular form of humour - but that doesn’t mean you should stop doing it.
People like stories. They like to know that their tuna was line-caught by an indigenous fisherman, rather than being one of thousands of fish that accidentally got caught in a net. Your customers will like the idea of free-range chickens pecking on grains outside a barn - as opposed to being factory farmed in a concrete bunker.
Loyalty can also be built through the stories you tell. Make sure that it shows that your restaurant values the lives of the animals consumed - and just as importantly helps to support small-scale, local suppliers. Yes, it may cost more, but by displaying your values, there’s a chance they will resonate with your customers - and when that happens relationships can be formed.
Catering for all of your customers
Another, occasionally overlooked, technique for building loyalty is to go out of your way to ensure all of your customers have an enjoyable time.
There are many, many examples of this. From offering reading glasses to elderly customers, to providing water bowls to thirsty dogs, or calling taxis for customers who have over-indulged in your wine-list.
Exactly how you provide these little extras will depend on your restaurant and your audience, but even by simply offering these extra touches, will result in a general increase in the affection your customers show you.
Of course, there’s one other, extremely powerful way to create loyalty - and we’re going to spend the rest of this article examining it - starting a loyalty program.
Developing your own loyalty program
In the same way that all restaurants are different, all loyalty programs have differences too.
Sure, the goal is the same - to persuade customers to visit more often, and spend more when they do - but there are a number of different structures you can look at.
There are tiered-programs, which provide better perks to customers who reach certain milestones of spending. There are cash-back programs, discount programs and membership programs - however the most popular, by far, is the points program.
Points programs are usually very simple - members get points when they make purchases, and they can then redeem these points for rewards.
Choosing the right rewards for your restaurant
When it comes to selecting rewards for your loyalty program, we recommend changing the list from time-to-time and making decisions based on customer feedback. That said, here are a few other aspects you might want to keep in mind:
Select a wide range of rewards
Everybody is different, so offering a range of different rewards means you are more likely to include something for everyone. Some customers like to redeem their points often, and receive a range of low-cost rewards.
Other customers like to save up all of their points for a single high-value reward. There is no right or wrong way to do it, however it’s best to avoid discounts as much as possible. Discounts sound great on paper, but it means customers don’t actually get something. Only that they pay less, which is quickly forgotten.
Another thing to consider when creating your reward list, is to offer a couple of very low-value rewards that customers can redeem after their first or second visit. This helps get customers into the program, and gives them a taste of how it feels to receive rewards.
Experiential and money-can’t-buy rewards
If you want to take your rewards to the next level, instead of offering products or services, you can start offering experiences. For a restaurant, it could be a chef’s table, which gives your customers a special view of how the food is cooked. Or perhaps a wine-tasting or cheese-tasting evening, hosted by a local expert?
These experiences tend to perform really well, and if you make the experience for 4-6 people, it gives your customers the chance to invite their friends and family - thereby introducing new people to your restaurant, and your loyalty program.
Another more advanced technique is offering money-can’t-buy rewards. These are often experiential in nature, but they provide your best customers with a special reward that they will hopefully remember and cherish for a long-time to come. Some examples of money-can’t-buy rewards could be:
A tour of a local farm, or produce supplier
A home-cooked meal from a professional chef
A special limited-edition type of wine, cheese or meat
Whatever rewards you choose to offer, they will act as incentives for loyal customers to spend more - and each and every one of these transactions will create data...
Creating a customer database and building a mailing list
As the world becomes more and more digital, data is becoming increasingly valuable to all types of companies. Which is all well and good, but the really important question here is how is data valuable to your restaurant?
The answer is that by collecting data, it can help you make better decisions, going forward. The collection of data allows you to start making data-based decisions, such as when you open, when different dishes sell better - and whether changing the price impacts sales.
Even if you don’t like the idea of making decisions based on data, at the very least you can use data to justify your decisions. It’s a great way of adding some solid foundation to your hunches and observations.
Data also provides a huge number of marketing opportunities...
Using your loyalty program as a marketing tool
One of the biggest strengths of modern marketing platforms is that they give you the chance to develop much stronger marketing initiatives.
Again, there are different approaches you can take - but there is one technique that is preferred by 90% of small businesses - email marketing.
Email marketing has developed a bad reputation over the last couple of decades, thanks to spam and misuse - however it’s also increasingly looking like it will become the most important marketing channel in the near future.
This is because unlike social media, your mailing list is something that your business owns. It’s a list of customers who know your business and will therefore be more receptive to your marketing messages.
Building a mailing list
One of the most important elements of any email marketing program is the mailing list. At its most basic form, it’s a list of plain addresses - however with a database, it’s possible to add other fields to each email address - which allows you to send out segmented advertising - where you target specific groups with messages that are relevant to them.
Ideally you want people who join your loyalty program to be automatically signed up to your mailing list. Then you also want to give people other ways to sign-up. This could be by leaving their business cards at your reception desk - or signing up online, through a widget on your website.
Once you have a solid mailing list, you can then start sending emails - and there are a few different ways to do this...
The most common form of email marketing is sending sales emails. These could be in the form of a limited-time discount (50% discount this week), or a promotion based on a specific product (All chicken dishes 25% off). It could also be a type of festival (celebrate summer with 50% of cold finks), or related to the time of the year (New Years Eve special meal).
Sales emails can be effective - but only if they are sent sparsely. If you start sending sales emails too often, people will simply stop opening them.
Monthly newsletters are a great way to stay top-of-mind with your customers - because they are usually informative, rather than persuasive.
When writing your newsletter, try to avoid sales or asking the customer to do something - instead, use it as a platform to present your readers with interesting information, such as:
Restaurant news, such as new ingredients or new recipes
Announce the arrival of new staff members
Sharing relevant news stories from the local community
Sharing relevant stories from around the world
Adding a ‘recipe of the month’ that people can try at home
Automatic emails are one of the most powerful techniques that loyalty programs can provide. They can take up to an hour to create - but once set-up, you can forget all about them as they increase sales, reduce churn and more - for years to come. Here are a few examples:
Happy Birthday greetings. Program an automatic email to be sent to customers a few days before their birthdays - and include a special gift. Not only are you showing your customers that they're special, but you might also get a very lucrative birthday booking.
Review requests. Create an automatic email that is sent when customers visit for the 4th/5th time. The fact they keep returning means that they are likely to leave a positive review, and you can even link directly to your preferred review platform.
Welcome back email. If a customer doesn’t visit for 6 months, invite them to come back, perhaps with a small discount as an incentive? Sometimes it just takes a small nudge to keep a valuable customer relationship on track.
How to get started with a loyalty program
There are many different ways to start a loyalty program for your restaurant - and we recommend looking into all of them.
It might also be worth considering approaching a customer acquisition specialist like The Fully Bookers, who can help generate booking and reservations - and then looking into customer retention or loyalty specialist.
At Piggy, we offer what is known as an open-loop loyalty platform. This has two main benefits:
Businesses can join the platform and get their own loyalty program up-and-running with just a small monthly subscription.
Customers only require a single card (or app) to collect points with your restaurant and thousands of other companies.
You can find many other options online, but if you’d like to speak to a real person, book a demo with one of our loyalty experts by clicking here.