It’s hard to get customers through the door at the moment. Combine Brexit, the pandemic, and the cost of living crisis, and what do you get? The perfect storm for struggle. 🥴
For many restaurant owners, it’s a battle for attention. How do you stand out when the competition is so high and the market is so uncertain?
Prioritising customer loyalty is a good place to start. In fact, it’s quickly becoming the next big thing.
Why?
Keep reading to find out! By the end of this article, you’ll know how restaurant loyalty programs can help you succeed. Plus, we’ll walk you through how to create a rewards scheme that appeals to your diners.
What Is a Restaurant Loyalty Program — And Do You Need One?
A restaurant loyalty program encourages repeat business by rewarding diners for recurring visits. It allows you to incentivise spending by offering lower prices, deals, and even free menu items.
But is a loyalty program really necessary for a restaurant?
In the current climate, yes.
The hospitality industry is changing rapidly, and the cost-of-living crisis is hitting everyone hard. It’s no surprise that diners are pulling back on discretionary spending.
As a result, customer loyalty is becoming a bigger priority for restaurants. The 2022 Restaurant Friction Index found that 57% of restaurants offer loyalty programs — but an additional 25% plan to use them in the next three years.
Why are they becoming so popular?
Because discounts and rewards encourage customers to loosen their purse strings and keep returning for more food.
41% of diners say loyalty programs encourage them to buy from restaurants. Studies also show that loyalty members save an average of roughly 3.8%, so it’s a great way for them to save money by returning to your restaurant.
How Do I Set Up a Restaurant Loyalty Program?
Let’s walk through the steps to create an effective loyalty program for your restaurant.
1. Choose the Right Type of Loyalty Scheme
Start by comparing the different types of loyalty programs that you can offer. Then, you can choose the option that best suits your restaurant and your diners.
Here are some of the options to consider:
- Frequency-based loyalty program. Reward customers after a certain amount of visits. GAIL’s bakery, for example, offers a digital stamp on the loyalty app every time a customer visits a cafe. Collect nine stamps, and the customer gets a free drink or loaf of bread on their 10th visit.
- Subscription-based rewards program. Diners sign up for a monthly or yearly subscription to access discounts and perks, like early access to new menu items or exclusive discounts on food. Pret a Manger offers a subscription rewards program with Club Pret. Customers pay for a subscription to get up to five drinks a day and 20% off the entire menu.
- Points-based rewards program. Give customers points every time they dine with you, which they can then use to get discounts or free items. Take a look at Krispy Kreme as an example. For every £1 spent, customers get 10 points (or Smiles, as they call it). Earn 100 points, and get a free doughnut! 🍩
- Tiered rewards program. Create tiered subscriptions, offering more discounts for higher tiers (which gives diners more incentive to subscribe). Starbucks offers something similar, where customers reach a Gold-level membership at 450 points (or Stars), which provides more discounts and benefits.
- Social media engagement. Reward customers for engaging with your social media account to boost your online presence, reach a wider audience, and increase retention. For example, you could run a giveaway to encourage people to like, share, and tag friends in your posts. This Instagram competition from Josie’s is a good example.
Now, how do you decide which scheme to use?
Understanding consumer preferences is a good place to start. After all, if you don’t give them the incentives they want, why would they bother coming back?
A restaurant management platform like Nory can help you wrap your head around what your customers want.
Use our software to track sales, identify popular items on the menu, and learn more about your customer behaviour. You can also weigh up your costs, making sure that your reward scheme contributes to your overall profits! 💸
2. Personalise the Rewards
If personalisation isn’t already on your radar, it should be. 92% of customers want some form of personalisation when dining at a restaurant.
Our CEO, Conor Sheridan, also talks about the value of personalisation in a recent article:
“Customers […] seek personalised restaurant experiences for enhanced engagement, satisfaction, and convenience. This type of experience fosters deeper connections, leading to loyalty and positive reviews. In a competitive market, personalisation will set restaurants apart. Catering to individual preferences not only satisfies customers but also strengthens the restaurant’s brand and bottom line.”
The best way to personalise your rewards is to use digital platforms to manage your loyalty programs.
Why?
Because these tools make it easy to:
- Collect customer data
- Analyse spending habits to offer personalised rewards
Tools like Kangaroo and Stamp Me are both good examples. With these platforms, you can provide freebies for birthdays, offer discounts on their favourite menu items, or gamify deals so they get rewards the more often they visit.
3. Measure Performance and Success
The final step is to track and measure the performance of your loyalty scheme to see if it’s working. If it’s not, you can make changes to improve performance and boost retention. For example, if customers aren’t redeeming offers, you may need to offer something more valuable.
This is also where digital schemes come in handy. You can easily track and analyse your performance to identify what works and what needs improvement.
But how exactly do you know if your loyalty program is succeeding?
Here are some of the metrics that’ll help you measure success:
- Redemption rates. Measure how many customers redeem or use their points. This can be a good indication of how valuable customers perceive the incentive and its impact on their buying decisions.
- Retention rates. Evaluate the retention rate for customers who use your loyalty program in comparison with those who don’t. If the rate for loyalty scheme diners is similar or lower to regular customers, you may need to rethink your program.
- Sales and revenue. Keep tabs on your restaurant sales to measure the impact of your loyalty program. You’re trying to build customer loyalty to increase sales, right? If sales aren’t increasing, your loyalty scheme isn’t doing its job.
Uncover Consumer Preferences to Create the Perfect Restaurant Loyalty Program
The key to creating a successful loyalty program is understanding what your customers want. When you find out what they’re looking for, you can create a rewards scheme that keeps them coming back for more.
Use Nory to arm yourself with the knowledge and insights to boost retention, and increase restaurant sales. Track menu sales and identify top-selling items to create loyalty schemes that outshine your competition.
Don’t be shy — book a call with the team to get started 🤙
FAQs About Restaurant Loyalty Programs
What Is a Loyalty Program in the Food Industry?
A food loyalty program offers rewards (such as points, discounts, and free items) to encourage repeat business. It helps you build a strong customer base, improves the customer experience, and increases restaurant sales.
What Is the Best Example of a Loyalty Program?
The best loyalty program depends on your consumer preferences. Not all diners want the same thing, so it’s up to you to understand what they want from a rewards program and deliver the goods.
Having said that, a study from YouGov and Mando-Connect found that the most popular reward for Brits is offering discounts. 60% of respondents say they’ll join a loyalty program for this reason — something to bear in mind!
