Think of a factor that keeps customers coming back to a specific restaurant. Is it the food? Maybe it’s the atmosphere? Chances are that it could be the loyalty program that the restaurant offers, too.
Customer loyalty programs are popular amongst restaurants, clothing stores, grocery stores, and practically every other business you can think of. Such programs are also difficult to avoid as a consumer because many cashiers ask customers if they have a loyalty card during checkout.
The real question is, why would anyone want to avoid a loyalty program? You can earn free goods or save money with these programs. These perks are benefits that not many people will turn down.
It’s possible for a business owner to include a restaurant loyalty program that they want to implement in their initial restaurant business plan. It’s a common DTC marketing strategy for a restaurant business to utilize in order to attract repeat customers.
Such programs lead to an increase in customer interaction with the business. It also helps to create deeper customer connections and increases business revenue and one’s restaurant profit margin.
Overall, there is no reason for a restaurant to not have some kind of loyalty program for its customers. So let’s break things down starting with the loyalty program meaning, going over the benefits, and five loyalty program ideas.
What Is a Customer Loyalty Program?
A customer loyalty program is a system that offers repeat customers rewards including discounts and incentives for their continuous support. Such incentives include access to exclusive events, types of menus, and services.
Loyalty programs are a way for businesses to attract and retain customers. They’re designed to encourage repeat customer visits and purchases, reward loyalty with points that they can redeem for rewards, and track customer spending. It's possible to advertise such loyalty programs and use O2O marketing efforts to bring customers into your establishment.
Similar to a restaurant QR code or UPC number, customers receive a code that is significant to them. They present this code to the cashier of the restaurant establishment to scan and accumulate points.
The points are often based on their spending, the types of items they purchase, and the number of visits. Once the customer has accumulated a certain amount of points, they’ll be rewarded with a discount or incentive.
Benefits of a Restaurant Loyalty Program
Establishments that don’t have loyalty rewards sometimes appear as if they don’t value their customers. Implementing a restaurant loyalty program gives customers another reason to come back. It allows them to go out to eat and earn rewards while doing so.
Restaurant loyalty programs are ideal for entrepreneurs that are opening a business for the first time. This includes opening a restaurant, opening a coffee shop, opening a bakery, opening a food truck, opening a grocery store, or ghost kitchen. It’s a way to attract customers upon launch and keep them coming back.
Here are four benefits of loyalty programs:
1. Improves Customer Retention
According to HubSpot, restaurants that generate customer retention are more likely to increase their restaurant profit margin. The loyalty program will act as an additional push for first-time customers to come back. This is especially true if the establishment already has great food and friendly staff.
2. Loyal Customers Attract New Customers
Most satisfied customers are willing to share their positive experiences with others. This includes the experience they have at your restaurant. Word of mouth marketing is a powerful tool to reach and attract new customers. In fact, according to Thrive My Way, it’s common for people to trust personal recommendations when compared to other marketing methods such as B2B marketing efforts or eCommerce marketing.
Customer retention is crucial for any business. Loyalty programs allow companies to reward customers and turn them into loyal customers that keep coming back. This may be done through loyalty points.
3. Increases Sales
A restaurant loyalty program provides owners with a chance to increase their sales. According to a Harvard Business School study, Increasing customer loyalty by a small percentage can result in a 25-95% increase in profit. The goal of a loyalty program is to provide an incentive to your customers for regularly visiting and spending money. By doing so, they receive exclusive benefits and rewards such as free shipping.
4. Improves Analytics
A digital loyalty program for your restaurant can be increasingly beneficial to your business compared to the traditional punch card rewards system. A digital program allows you to access key customer insights, too, similar to restaurant management software.
These insights provide you with analytics and data that you can use for future marketing efforts, menu improvements, and product offerings. The data will allow you to analyze customer buying patterns, understand your client base and niche market, and provide you with the opportunity to personalize the customer experience.
The real-time data that your program provides allows a restaurant manager to develop customer profiles and improve their decision-making strategies. This comes in handy when customizing the incentives for the program.
Modern restaurant technology and software may keep track of how much a customer spends, even when they use cash or a credit card. In turn, they earn rewards for their spending.
5 Customer Loyalty Program Ideas for Restaurants
Each loyalty program can differ based on the business and type of establishment. It’s likely that a fine dining restaurant will have a different program than a fast food restaurant.
Here are five customer loyalty program ideas for restaurants:
- Item-Based Rewards
An item-based loyalty rewards program is similar to the traditional punch card system. This system rewards loyal customers when they purchase an item a certain amount of times by giving them a free item the next time. For instance, purchase four donuts, and get the fifth one for free.
Another approach to this loyalty program is to have a points-based system. This is where customers can accumulate points and trade them in for a specific item. For instance, offer a free cup of coffee for every 100 points earned.
- Promotional Rewards
With promotional rewards, customers get rewards that have an expiration date. This adds a sense of urgency to use the rewards by dining in or using the restaurant’s online ordering platform.
These rewards don’t have to be connected to a certain kind of spending behavior. Instead, it’s possible to give them as surprise rewards for their birthday or to boost business during slow seasons.
- Subscription Rewards
This approach allows subscribers to receive rewards when they reach different milestones. For instance, your business could sell the best coffee subscription box. You may also offer custom subscription boxes to customers for a specific price as a reward for being long-term loyalty members. Different subscription boxes include produce subscription boxes, a meat subscription box, a coffee bean subscription, and a baking subscription box.
- Online Rewards
It’s important to acknowledge customers that order online, especially for restaurants with online ordering options. Through online rewards programs, customers are able to earn points and rewards for their online orders.
This kind of loyalty rewards program can be implemented through online ordering apps for the restaurant and their own website. Potential reward offerings include free menu items or exclusive promotions.
- Points-Based Rewards
A points-based rewards system allows customers to earn points for each dollar they spend at your establishment. They can also accumulate points by simply visiting your location.
Once they accumulate a certain amount of points, customers can redeem them for food items, merchandise, or restaurant credit at various value points. For instance, for 100 points, customers get to choose between a free side dish or a $10 dine-in credit.
Frequently Asked Questions About Customer Loyalty Programs
What Is Loyalty In a Restaurant?
Loyalty in a restaurant refers to a customer loyalty program that offers customer rewards, incentives, and discounts for their continuous support. Such rewards and incentives include free menu items, merchandise, and restaurant perks. These loyalty programs are a way for businesses to attract and retain customers long-term.
Modern loyalty programs are integrated with the POS system and are restaurant technologies that improve business efficiency as efficient business systems. Look into the ERP meaning to see how ERP systems are similar to POS systems.
What Is an Example of a Loyalty Program at a Restaurant?
An example of a loyalty program at a restaurant is a burger restaurant allowing customers to accumulate points for each visit and redeeming them for a free entrée once they’ve accumulated a certain amount. This program builds relationships with customers and satisfies their needs by giving them what they want without restricting them.
What Are 5 Types of Customer Loyalty Programs?
Five types of customer loyalty programs include:
- Item-based rewards
- Promotional rewards
- Subscription rewards
- Online rewards
- Points-based rewards
Having a loyalty program is one of the key ways to have restaurant success. It keeps business coming in. To build customer loyalty, consider offering free trial options, early access to events and menus, offering a point system, and utilizing social media. When customers join the program, they'll be able to keep track of their repeat purchases.