5 Elements of an Effective Customer Loyalty Program
Since the launch of the Starbucks Rewards program in 2011, large chains have led the way in restaurant loyalty program innovation. Their results show these programs have been effective at driving traffic and increasing the average check:
- Panera: In 2017, the 25 million members of the MyPanera loyalty program were responsible for 51% of the company's transactions.1
- Starbucks: Transactions made using the loyalty program represented 36% of U.S. company-operated sales in Q2 2017, with an average ticket size 3 times that of the average customer. 2
- Chipotle: Gained more than 3.1 million members in the first three months of their Chiptopia loyalty program. It accounted for 30% of all transactions within its first month.2
In addition, these programs have generated a wealth of information on patron habits, helping these chains design even better products, experiences and special offers for their most loyal (and most profitable!) customers.
What can you learn from their success?
Independents and small chains may not always be able to hire top-tier consultants to help them design loyalty programs from scratch. The good news is you don't have to.
Today there are a bevy of loyalty program solutions providers offering feature-rich, subscription-based services that can give you many of the same powerful tools that the large chains employ.
Here are 5 things you can learn from the industry leaders when planning your own program:
- Keep it digital. 61% of consumers say it's important for restaurant loyalty programs to have a digital component (70% of consumers aged 18-34).3 Can you get by with paper loyalty cards and a hole punch? Maybe, but those cards are easy to lose and don't give you a bit of insight into your customers' buying behavior. Third-party loyalty program providers can provide your customers with a downloadable smartphone app to track their progress, as well the integration with your POS system to track patron purchases, manage customer lists and communicate offers via email campaigns, text or the app.
- Go with a points-based rewards system. Collecting points that can be redeemed for rewards is a concept that customers know and understand ?and the system Millennials and younger customers prefer.4 With points, it's easy to raise the points earned to incent, say, visiting during historically slow days or times; or for purchasing a specific menu item.
- Tier your rewards so they're attainable. The #1 reason people stop engaging with a loyalty program is the time it takes to earn enough points to redeem them for a reward.5 In 2018, both Starbucks and Chick-fil-A moved to tiered rewards, helping customers earn lower-level rewards more quickly. For big spenders, Chick-fil-A has given Silver members ($100+ spending) and Red members ($500+ spending) special benefits like the ability to gift points to friends and family, or donate a meal to a nonprofit organization.
- Reward with more than just free food. Consider other reward ideas like guaranteed reservations to a special event, members-only apparel, a cooking lesson or other reward closely suited to the sensibilities of your patrons. Here is where a little creativity can help differentiate you from the pack.
- Promote it like a boss. According to a Deloitte study, the #1 reason people don't join a loyalty program at their favorite restaurant is because THEY DIDN'T KNOW ABOUT IT.5 Train your servers to offer it. Print it on your receipts. Promote it in your email marketing, your social media feeds and your traditional advertising. Deploy those counter cards and table tents. Bottom line? If they've don't know about it, they can't join.
Don't miss out on the benefits a loyalty program offers
You no longer have to be a giant to get the sales bump and customer insights that come with a successful loyalty program. There are many loyalty platforms to choose from so there's a solution that fits almost every operation. And the rewards? Worth it.
1 Loyalty360, "Panera Bread Surges Forward, Builds More Customer Loyalty Momentum," February 16, 2017
2 Aaron Allen & Associates, 2017
3 Technomic Inc., Value & Pricing Consumer Report, 2017
5 Deloitte, Second helpings: Building consumer loyalty in the fast service and casual dining restaurant sector, 2014