Loyalty Programs are extremely important for restaurants looking to grow their business, as they drive sustainable growth and create brand promoters. Part of the reason is because it costs considerably less to sell to existing customers, as compared to selling to new customers.
According to a study by Yopto, roughly 61% of customers are only loyal to 1-5 brands. While most restaurants have figured out that they need some kind of loyalty program, they run into trouble when they start thinking about how their program should work. It is extremely important to craft one which works the best for your brand and your customers.
In this post we will explore the different types of loyalty programs available, and how to choose one which will work the best for your brand.
Types of Loyalty Programs:
The main purpose of a loyalty program is to provide an incentive or reward your customers for ordering from your restaurant. There are four ways you can reward loyalty points based on your customers purchasing patterns, and they are:
Points per Item:
As the name suggests, your customers will earn a specified point amount for every item they purchase to redeem applicable offers. You will need to create a point total for each item or group of items on your menu. The more items a customer purchases, the more points they get rewarded with.
Points per Dollar:
This type of loyalty program is based upon how much your customer spend. The points are only calculated based on the check size. This does not include the number of items, or any other metric. The more your customer spends, the more points they get rewarded with.
Points per Order:
Your customers will be rewarded with a set number of points every time they order. It does not take into account the number of items they have in their order, or the amount of dollars they spent. The number of points awarded per order remains the same every time. Dominos is the best example of using this type of loyalty program, as it works the best with pizza chains.
Tier-Based Loyalty:
This is the most complex type of loyalty program. In this type of loyalty program, customers will earn loyalty points based on dollars, orders, or items. They are able to unlock offers when they reach different loyalty tiers. Though at first, this type of loyalty program seems complex, it works well for both customers and restaurants, when implemented correctly.
Which Choosing the Right Loyalty Program for your Restaurant:
Now that we’ve discussed the different types of loyalty programs out there, what is the best loyalty program out there for restaurants?
In short, that depends, from restaurant to restaurant as there is no one size fits all. However, a restaurant brand can analyze their customers’ purchase behavior and come up with an answer.
If your customers have high order frequency, it makes sense to keep your loyalty order based, which is something that Cafes do, when they give out every sixth coffee free, or pizza chains like Dominos, when you get a free pizza after five orders.
On the flip side, if your restaurant has a low purchase frequency, but a higher basket size, it makes sense for you to adopt a loyalty based on dollars spent. That incentivizes customers who spend more, and have them keep coming back.
Data continues to show that loyalty programs work, with about 45% consumers admitting that a restaurant offering mobile ordering or loyalty would encourage them to order more often. Restaurants use it to increase their customer lifetime value. Customers come back for more and spend more money. If you are unsure what program can work best for you, we would be happy to set up a call to discuss how our platform can help implement a loyalty program that works for your brand.
Once you decide on a program that will work for you, you can refer to our post on how to implement a loyalty program that works for your restaurant.
About Smooth Commerce
Smooth Commerce is a digital ordering, customer marketing and loyalty platform for restaurants. We take ordering to the next level with personalized customer engagement, making your digital storefront the cornerstone of your brand. By solving more restaurant pain points in one digital platform than anyone else, we put you back in control of the customer’s experience with your brand to promote profitable sales growth.
If you would like to learn more or talk to a representative from Smooth Commerce about how our platform can help you meet your loyalty goals, contact us at learnmore@smooth.tech.
