You may have already heard of the benefits of starting a loyalty program at your restaurant. You’ll have a hand in driving customer behavior with well-designed promos, encouraging more spending and return visits with a points system. You’ll be able to reward your best customers while providing an incentive for new ones to check out your offerings. And you’ll finally have the data you need to understand what your patrons want and need.
If you’re planning on implementing a loyalty program, chances are you’re aware of some big names in this space. But does it make sense to join one or to create a native loyalty program, one that works in conjunction with your ordering platform? And if your restaurant is doing well, do you need to have one at all?
Loyalty Programs, By the Numbers
There are some great reasons to start a loyalty program. The following stats might sway your thinking if you’re not quite sold.
According to one recent poll, 43% of restaurant customers participate in one or more restaurant loyalty programs. For those who don’t, they say it’s primarily because their favorite eatery doesn’t offer one. And if you’re not convinced it translates into more and higher value transactions, consider this: a loyalty program is the main reason customers spend more in restaurants, with over 38% citing this as a primary factor.
Almost every restaurant could benefit from increased retention, higher sales and stronger spend, all areas that could be improved with a well-designed loyalty program. It can give you an edge over your competitors in a tough industry. And if your competitors already use a loyalty program? It’s all the more reason to adopt one as well.
Third-party loyalty programs fall short
A third-party loyalty program has some advantages, but not necessarily ones that benefit your business. For one, there may be a fairly simple onboarding process for new brands, so you’ll be up and running quickly. And it’s likely that your savviest customers are already participating with the biggest players in this space, so it’ll be a friction-free experience to start earning rewards with you—they’ll be able to accumulate points at other shops they can use at your locations. But the opposite is also true—the points they earn with you are not exclusive to your banner. In other words, a third-party loyalty program can create loyalty to itself, not necessarily to your restaurant. And despite this, costs can be significant—third party programs are often known for their steep fees.
A third-party loyalty program takes a generalist approach. Its approach and offerings has to appeal to a host of different brands that sometimes aren’t even in the same industry. In many cases, you’ll be limited when it comes to customization, which can keep restaurant owners from designing a better, more usable system tailored to their clients. And because third-party programs own the data they collect, you may not be able to access the numbers needed to give you in-depth insight into your restaurant’s performance.
Native loyalty programs: custom-designed for a perfect fit
A native loyalty program, on the other hand, is one that’s driven by you, the restaurant operator or decision maker. Some brands will never seriously consider adopting a native loyalty program. They assume the upfront costs will be way too high, the planning and creation process will take too long, and the ongoing maintenance will require additional staff resources.
In reality, choosing a native loyalty option doesn’t mean you have to start from scratch, hire coding engineers and create an app. In fact, the right platform can integrate your ordering, marketing, and loyalty programs seamlessly, allowing you to zoom out and observe your restaurant metrics as a whole, rather than in siloed categories.
With a third party, you’re forced to make the best of the data they collect and give you. With your own, you can choose what info to collect, creating a loyalty program that best fits both your goals and your customers’ preferences. And as you’re no doubt aware, third-party apps can cost you! Many of the most popular third-party ordering apps take a significant bite of your revenue in fees and surcharges. White most restaurants need to maintain a presence on the biggest ordering platforms, you can encourage your most loyal customers to move towards a native app—with incentives, bonuses, and rewards.
If you decide to go the native route, you’ll need to consider how to structure your rewards system. While the specifics might vary, here are some points to keep in mind when building your ideal loyalty program.
1. Firstly, you’ll need to firm up your goals for your loyalty program. Whether you want to increase your reach, increase your customer’s average spend, or simply retain your customers, it’s essential to define your objectives before getting started. Your goals will impact how your program is designed.
The good news is, with a native program, you can refine and revise these goals at any time and tweak your approach accordingly.
2. Set up a rewards system that’s consistent with your brand. Most loyalty systems are points based. For restaurants with high order frequency but lower overall spend, like fast food, coffee shops or lunch locations, consider offering points per dollar.
Conversely, for restaurants where total spend is higher, with sit-in service, points per dollar spent may be a better approach. A higher-end banner might opt for complimentary service upgrades instead of a points to dollar approach.
3. Prioritize the user experience. Customers have short attention spans and limited bandwidth. Make sure signup is fast and easy, with a QR code at checkout or a signup promo to encourage app downloads. The app itself should be integrated with your ordering system to keep it simple and fun to use!
Patrons also love personalized rewards and promos. By offering them deals and opportunities to use their points on their favorite menu items or value-adds, you’ll give them a reason to stop by or make an extra unplanned visit to treat themselves. This helps generate more repeat business, upping customer loyalty.
4. Monitor and adjust the execution of your program as needed. Since you’re in the driver’s seat with a native system, the ins and outs of managing your loyalty program is up to you! As you gather data and stats on your customers’ behavior, you can use it to refine operations, inventory, and the program itself, to help improve your restaurant’s efficiency.
5. Once you’ve set up the program, be consistent! Customers are often turned off by frequent updates to a loyalty plan, especially if the tweaks make it more difficult to earn rewards, or devalue the points they already have. While major changes may be inevitable at some point, try to create a sustainable loyalty program, one that can stay consistent for the long run.
For most restaurant concepts, understanding customer behavior is key to maintaining a competitive advantage. This insight can be used to influence spending patterns, create staff schedules and maintain inventory. A native loyalty program that’s linked to your ordering platform can help you separate the signal from the noise and react accordingly to trends and patterns.
Whatever your objectives are, a native option is a better choice that gives you:
- More control over the design and operation of your program.
- Seamless integration options with your marketing efforts and ordering technology.
- The information you need to make your restaurants a success.
By tracking and analyzing your customers’ actions, you’ll be able to use this data to inform the decisions you make in real-time, aligning the program with your eatery’s goals and objectives.