Increasing customer loyalty by even five percent can boost profits by 25-95%. This is why it pays to invest in an effective restaurant loyalty program that uses data gathered from your POS system.
Loyalty programs can help restaurants upsell and cross-sell, such as offering an extra menu item with a purchase or discounts on products that customers often order.
Boosting Customer Loyalty
A loyalty program encourages repeat visits by rewarding guests for their business. This incentive is a great way to keep guests engaged with your establishment and drive traffic.
A restaurant customer loyalty program can help you track your guest data, a valuable tool for marketing and menu improvements. For example, if a specific group of customers always orders the same item, you can offer them a special deal to entice them to visit again.
Some loyalty programs reward guests after a certain amount of purchases, while others may give them an experience or merchandise exclusive to the loyalty program. For example, a loyalty rewards program might offer a VIP brewery tour or a cooking class with your chef to encourage subscribers to remain loyal to the brand.
Research shows that restaurants with loyalty programs make more money than those without. This is because loyalty programs can increase upsell and cross-sell sales. For example, if a guest is racking up points for ordering a combo meal, they are likely to order extra sides and drinks in addition to their main dish. The gamification of these rewards programs can make them feel fun and engaging for your guests, increasing the likelihood that they will return to dine with you again.
Boosting Customer Retention
A loyalty program is a great way to increase customer retention. By encouraging repeat purchases and generating more loyal customers, you’ll have a steady stream of revenue that can help offset costs. Plus, it’s a powerful branding tool for your restaurant. Customers who visit regularly will see your brand name when scrolling through their phones or watching TV, reminding them to come in for dinner and drinks.
Loyalty programs also offer a way for restaurants to upsell and cross-sell. For example, if you have a rewards program that offers a free delivery code for specific points, it will encourage your loyal online customers to dine with you in person as well. You can even provide bonus rewards for those who refer friends to your restaurant.
By gamifying your loyalty program and allowing guests to earn rewards for their patronage, you can make people feel like they’re part of an exclusive club. They’ll want to rack up those points fast and become more likely to visit your restaurant to do so. Providing them with rewards that are only available to members, such as exclusive merchandise or an experience like a brewery tour or a private cooking class, will add to the value of your program and make it hard for your regulars to pass up.
Boosting Customer Engagement
A loyalty program is an opportunity to get to know your customers, which leads to deeper engagement. For example, you can offer targeted or personalized bonus rewards for desired purchase outcomes. This helps the customer recognize that you understand them and their business, which builds trust and drives greater appreciation and loyalty.
One of the most common approaches to loyalty is the earn & burn model, wherein customers are awarded points on every transaction and redeem those points for discounts, free products, or other rewards. These programs are fast to implement and relatively easy for customers to grasp. They also drive higher engagement rates because the reward options are highly desirable, and customers feel they’re getting a great deal on their spending.
Tiered programs, wherein customers can earn incremental benefits by moving up a status level, are another effective way to build loyalty. They motivate customer spending by increasing the value of a reward while creating the sense that exclusive perks are available only to the highest-spending customers.
To encourage participation, marketing teams can promote the loyalty program in thank-you emails or during customer onboarding and add a link to it on your website. Success measurements, like retention and revenue reporting, can reveal the program’s strengths and weaknesses so CX teams can make necessary adjustments.
Boosting Customer Spending
A loyalty program can increase the average ticket and customer lifetime value in an industry that relies on repeat customers to thrive. The cost of acquiring new customers is six times as high as the retention costs, so restaurant operators should focus on rewarding and encouraging loyal customers.
Incentives are essential to creating a successful rewards program, but restaurants should carefully consider what will work best for their specific business models. Some restaurant brands may successfully use a point system or reward guests with complimentary meals. In contrast, others will find that targeting special occasions with exclusive offers is more effective.
The way you communicate with loyal members can also make a big difference. For example, a restaurant can easily capture guest data on digital receipts and email newsletters and then use it to enroll them into a loyalty program automatically. This will save time and reduce the friction for guests who would otherwise have to opt in independently.
A well-executed loyalty program will allow a brand to communicate more often and efficiently with customers. In addition, a loyalty program can provide critical customer engagement metrics such as program participation and repeat visit rates. This will help a restaurant gain valuable insights into customer shopping behaviors and trends to predict better and support future growth.