Loyalty Programs For Restaurants: How To Implement An Effective Rewards Program For Your Customers

How many times have you held on to a flimsy piece of card stock in your wallet because you just needed to buy seven more soft pretzels to earn a free dipping sauce? How many times have you turned in 10 separate cards, all with one stamp each, because you kept forgetting to bring them to your favorite local coffee shop? These are universal experiences because we, as consumers, love to be rewarded. There’s a sense of satisfaction in finally cashing in a punch card that has survived multiple trips through the washing machine — even if it’s just for a free sandwich from a place you don’t even enjoy that much in the first place.

And, if you’re a business owner, you can use the consumer’s lust for gamification and free stuff to your advantage. While old-fashioned punch cards can still be an effective tool to lure in repeat customers, there are now far more sophisticated loyalty programs at your disposal. Loyalty programs have become a business unto themselves, and the added competition in the marketplace is good news for small business owners; these useful tools have only become more affordable.

While you can still set up your own simple rewards program, you’ll want to see if your preferred point of sale system already offers a loyalty function or if it integrates with third-party companies. While often not free, a creative and well-marketed loyalty program can quickly make up for the cost of a monthly fee or add-on. These programs are innovative, help expand your brand, and store analytics on customer spending habits to help with marketing. All of these things can mean a significant uptick in sales and can encourage repeat and new customers.

Why Your Business Needs A Restaurant Reward Program

It’s no secret that, if implemented correctly, loyalty programs can be a boon for businesses and for restaurants in particular. According to a poll conducted by Binage, nearly half of customers surveyed said they were likely to spend more money at a restaurant because of its loyalty program. And 83% of those same people reported that a good loyalty program made them more likely to frequent a restaurant with their return business. In a different study, researchers found customers spent an average of $2.14 more when they were enrolled in a loyalty program.

Customers are also starting to expect their favorite retailers and restaurants to offer some form of loyalty or rewards for return patronage. According to an extensive report done by Forrester Research, 72% of people surveyed said they were enrolled in at least one loyalty program with the average individual claiming to be signed up for rewards from nine businesses. Less than a quarter answered that they felt they were enrolled in too many of those programs.

The good news for restaurant owners is that it’s easier than ever to implement a loyalty program. Some POS companies even include it in their basic services or charge a small monthly fee to add it. Others integrate with companies that specifically provide loyalty services, generally for a monthly fee. But just because it’s simple to get your program up and running doesn’t mean that you can’t make mistakes along the way. You’ll need to keep some things in mind when figuring out what type of program is right for you and how to most effectively and efficiently offer rewards to your customer base.

Types Of Restaurant Loyalty Programs

Loyalty programs have come a long way over the years, but you can still implement whatever type of system you’d like, from the rudimentary yet effective punchcard to programs that operate entirely online and give your customers more of a sense of ownership in their rewards. Here’s a brief overview of a few types of loyalty programs you might consider.

• Punchcards: If you’re a veteran of loyalty programs, there’s a good chance that one of the first ones you ever signed up for came with a punch card. Quite simply, these are cards either given to customers or stored at the restaurant establishment that generally give customers a free item once they have purchased a certain number of menu items or spent a certain amount of money. They’re simple, easily recognizable, give customers a sense of accomplishment, and give you a chance to spread your brand by personalizing the cards. However, there is a cost to print them and cards can be easily misplaced or forgotten.
• Plastic Swipe Cards: These function similarly to traditional punchcards, allowing customers to swipe a card that immediately records how much they’ve spent or what they’ve purchased. They are more durable than paper cards but have some of the same drawbacks (and, frankly, are a bit outdated).
• Built-In Loyalty Apps: As mentioned, many POS companies offer some form of built-in loyalty. These vary in cost and in how extensive the features are. Some simply store customer information and spending habits within the system, giving customers rewards automatically once they reach certain spending levels or a certain number of visits. This can be valuable when setting up marketing campaigns, however, as you can create and send out tailor-made offers to customers via text or email and encourage repeat visits and additional spending. More elaborate programs will allow customers to access their loyalty information online or via the phone, giving them more ownership of the process.
• Third-Party Loyalty Apps: With these apps — and there are literally hundreds of options out there –, you can really get creative with your loyalty program in ways that entice your customers to return again and again. Just expect to pay a bit of a premium for it. You can reward your customers in a variety of ways, offering free items or discounts. You may even have the ability to offer promotions, like rewards on a customer’s birthday. Many of these apps also come with some built-in reporting as well to analyze customer spending and gauge how effective the program is.

Why You Should Consider A Restaurant Loyalty Program That Links To Your POS

If you are currently using a point of sale system, it may already have a built-in or integrated loyalty program that you could fully implement in a matter of minutes. Many of the top companies come with some form of loyalty or sync seamlessly to a third-party company that provides this service. In some cases (depending on the tier you are subscribing to with your POS), you may not even have to pay extra for this feature, though often it comes as an add-on or as a separate monthly charge. But having built-in loyalty can save you a lot of headaches since the program is obviously built to run seamlessly with your POS software. It also allows you to operate completely digitally, doing away with outdated punch cards or gift cards (although many programs offer you to make physical gift cards too, if you like.)

Perhaps the most beneficial part of using a program that operates through your POS is that it allows you to build a customer database. This can provide you with important information, including trends and spending habits, that can help you set up marketing campaigns down the road and increase repeat visits. The information can help you target customers, giving them incentives to buy favorite items or take advantage of special, limited-time discounts. Each program will have its own set of features available to you, and options and capabilities will vary from company to company. Some of the more common features are listed below:

• Point-Based Programs: A point-based program has a lot of value and flexibility. You can use a point-based system to offer different point values for different products or services, and offer bonus or promotional points to encourage specific actions.
• Tiered Programs: Using a tiered system for rewarding your customers does two things: First, it adds an element of gamification which gives your customers something to reach for, and second, it allows you to differentiate between customers and offer rewards based on their profitability.
• Social Sharing: From Facebook and Twitter posts to email incentives, social sharing is a great tool to advertise your business and special promotions. Most programs have incentivized social sharing (a coupon reward or X number of bonus points) but some provide it without the need for incentives.
• Campaigns & Promotions: In addition to managing your loyalty program, some companies offer the ability to manage short term or targeted campaigns and promotions via email, mobile app notifications, or SMS texting. These features often come with tracking capabilities so you can determine whether a promotion should be repeated in the future, or tossed in the scrap pile.
• Mobile Check-in: This feature generally requires a customer to download a specific app on their smartphone. Mobile scanners like the one used by Belly make a customer’s phone their loyalty card which can be scanned at the point of purchase. The iBeacon technology used by Perka automates the process through your customer’s Bluetooth capability.
• Omnichannel Features: Omnichannel refers to a company’s ability to offer a seamless experience across multiple platforms. (i.e., starting my shopping experience on amazon.com and finishing it with my mobile phone). The number of loyalty programs with omnichannel technology is still fairly small, but some companies do provide omnichannel development for their clients.

7 Tips To Run Successful Loyalty Programs For Restaurants

Picking the right program may seem like a daunting task. Whether you’re a brick-and-mortar merchant or work strictly in eCommerce markets, there are myriad options available. Before you choose a program, there are some preliminary steps you should take to help you make the right decision.

• Define Your Objectives: Knowing what you want is half the battle in choosing anything, particularly loyalty programs. Of the functions listed, which is most important to you in a loyalty program? What do you want your program to accomplish? Once you’ve written down what you want, begin defining how you want to manage it. Some programs allow you to make changes at any time to the program, while others are more restrictive. How much detail do you need in reports? Are you looking for simplicity or impressive customization options? Be as honest and as thorough as your busy schedule allows.
• Define Your Demographics: Most likely you’ve already defined some, if not all of these areas, in some capacity. Your target market (the customers you want to bring in), customer base (the customers you already have) and your competition (those who sell similar products in the same area or space) are the areas that warrant the most investigation. Get as much feedback as you can from customers about things they like. This will help you determine which platform will work best for your business, as well as help you create meaningful rewards for your customers.
• Train Your Staff: Unless you’re the only employee, the odds are your staff will have varying responses to your new program. Let everyone know upfront what’s expected of them, and be sure to have very clear guidelines to follow in case something goes wrong (i.e., do we redeem rewards if the system crashes?). Some companies offer training via tutorials or webinars for your employees, so be sure to take advantage of those things as well.
• Ask Questions: Especially in the beginning, and at various intervals throughout the year, get some feedback from your employees — as well as your customers — on what they think about the program. Based on your responses, you may need to make some adjustments or retrain staff.
• Use Every Opportunity: Whether it’s a complaint, concern, or compliment, use every opportunity to engage your customers in a positive way. Flexibility and courtesy go a long way in improving customer relations.
• Put Your Data To Work: Most loyalty programs come with a useful method of data accumulation. Some data reports are more extensive than others, offering in-depth analysis and actionable insights, while others merely provide raw data to be used at your will. The data capabilities of a loyalty program are some of the most valuable, because the insights drawn from that data can be used to improve your business in other areas. My advice? Use whatever you’ve got to make better choices about your program and business.
• Promote: Before you roll out your program, and for a while afterward, promote it. If you have a mailing list, let your customer base know the details of the program in advance. Many programs offer marketing kits to decorate your doors and cash registers (or nifty buttons for eCommerce merchants). Use the tools you have to let people know about your program. In any correspondence, your customers should be informed on how to join, how to earn rewards, and how to redeem them. If you haven’t already, ask your customers what kind of rewards they’d like to see, or use the information you have already to create enticing rewards for your customers. Depending on the loyalty program you choose, you might be able to get additional assistance with this from your marketing rep or software tools. Rewards should be enticing enough to encourage return visits, but not too costly.

Take The First Step Toward Building A Loyal Customer Base

The advantages of loyalty programs are clear. They can be a fun way to keep customers incentivized to continue patronizing your restaurant, tapping into a consumer’s natural competitiveness while expanding your brand and gaining key customer information for future marketing.

Having a loyalty program doesn’t guarantee your business will succeed, but the potential of a successful program can’t be ignored. Loyalty programs boost sales and profits in a significant way. Start by choosing a loyalty program that’s the right fit for your business. Then create meaningful rewards. Cultivating the relationship between your business and your customers will pave the way to future success. Be sure to check out our loyalty reviews to get started with a small business loyalty program, and if you have additional questions, feel free to leave a comment or reach out to us!