Loyal customers play a huge role in a company’s long-term success.
In fact, it’s been found that 66 percent of U.S. consumers spend more on brands to which they are loyal, and just a five percent increase in customer retention can lead to an increase in profits of between 25 percent and 95 percent.
For restaurants specifically, loyal customers can spend up to 67 percent more than new guests, and a five percent increase in your restaurant customer loyalty can produce as much as a 100 percent increase in annual profit.
That’s probably why, according to a report by Epsilon-Conversant and Informa Engage, 70 percent of restaurant owners and operators surveyed have a loyalty program.
With the opportunity to gain a significant and consistent amount of business, it’s no surprise that so many restaurants are implementing loyalty programs.
According to Accenture, loyalty members generate between 12 and 18 percent more incremental revenue yearly than non-members. At Dunkin’, for instance, the average year-over-year spend for new members of its DD Perks loyalty program has increased 40 percent since its inception in 2014.
However, many restaurant operators are unfortunately not experiencing much success with their loyalty programs.
Referring back to the Epsilon-Conversant and Informa Engage survey, only 49 percent of merchants say that their programs are moderately effective, showing that there’s a lot of room for improvement.
If your restaurant has an existing loyalty program, or you’re considering putting one in place, here are three ways to make sure that your program effectively helps you drive more visits and sales.
Make Rewards Timely
Although your enrollment rates may be high, that doesn’t automatically translate into more business. If customers have to wait more than 30 days to earn their first reward after joining a loyalty program, they are more likely to forget that they’re enrolled and not make a point of returning. Creating loyalty program settings that allow customers to earn a reward within 30 days of signing up tends to be the most successful.
Here’s an equation example that can help you determine the value needed to reward your customers in a timely manner:
Average days customers return
x (Number of stars required to earn a reward – 1)
= Time to reward
So, for instance, if a restaurant wants to reward its customers after they earn five stars, and customers typically return every 5 days, their time to earn a reward would be 20 days.
Break Down Barriers
According to digital engagement platform Thanx, customers who come in with earned loyalty program rewards typically spend 10 to 15 percent more on that transaction than their average ticket.
But imagine if a customer visits your restaurant with the intention of redeeming a reward, then learns that the reward they want can only be redeemed on a certain day of the week. The negative impact of this experience could hurt your reputation and may even mean that loyalty program customers don’t end up remaining loyal.
Another barrier is putting a cap on how customers can earn their way to a reward. This means, for instance, requiring customers to spend a certain amount on a single transaction in order to earn a star.
If restaurants limit customers’ ability to earn and redeem rewards, then they risk their loyalty programs seeming more like a chore, and less like an incentive for guests to return.
Tear Down Any Hurdles
It’s not uncommon for customers to accidentally leave their loyalty program card at home when they had every intention of using it at the restaurant.
To help make sure customers always have the ability to take advantage of your loyalty program, consider implementing a technology solution that can help your restaurant easily manage customer profiles, so that you can still add loyalty points or stars to their purchase, or redeem a reward, when a guest doesn’t have their card on them.
OneDine’s all-in-one solution for restaurant brands can help with this. In addition to making it easy for customers to enroll in your loyalty program, customers can have all their details and loyalty information stored on digital profiles that connect to your restaurant’s system. This helps to make the efforts and process of managing customers’ loyalty program earnings and redemptions a lot more seamless.
Understanding the benefits of customer loyalty is easy, but getting a loyalty program right can be a difficult task. By following these three rules and focusing on ways to add value and seamlessness, restaurants can better incentivize customers to keep coming back.