The Basics of Restaurant Loyalty Programs
Restaurants are presented with numerous challenges in operating a successful business. These challenges often include staggering competition in saturated markets, economic uncertainty throughout the general public, and rising operating costs. A time-tested method of overcoming these challenges has often been to ensure customer loyalty in every way possible. Repeat customers have long been a driving force behind successful businesses, and the restaurant industry is no different. In fact, it may be more important to ensure that customer loyalty is a primary focus of any marketing campaign in the restaurant industry than in any other market. One of the most effective tactics in ensuring customer loyalty is the implementation of a restaurant loyalty program. Restaurant loyalty programs are a proven option in maximizing restaurants’ potential in ensuring customer loyalty.
- Challenges for restaurants often include competition, economic uncertainty, and rising operating costs
- Customer loyalty offsets many challenges inherent in the restaurant industry
- A restaurant loyalty program is the most effective means of retaining customers
- Social media engagement, brand affinity, and easy promotion are hallmarks of successful loyalty programs
Repeat customers provide restaurants with an astounding number of benefits that are hard to ignore. Repeat customers are the undisputed king of effective marketing. Positive word of mouth provides restaurants with a passive, scalable, effective, and cheap method of marketing to consumers who wouldn’t normally be within their sphere of influence. This kind of marketing is priceless as the potential for new customers is virtually limitless, thus fostering an otherwise unattainable return on investment (ROI). The numbers speak for themselves as 89 out of every 100 loyal customers will recommend their favorite restaurant to friends. Studies have shown that recommendations from personal contacts are much more effective than impersonal television or newspaper advertisements. Moreover, gathering loyal customers allows restaurants to capitalize on an estimated $956,000,000 in sales from non-repeat customers. Finally, loyal customers visit their favorite restaurants almost 400% more often than non-repeat customers. The consistent income provided by repeat customers is an excellent way to offset the costs of doing business while your restaurant continues to improve market share.
While it is easy to see how critical of a role repeat customers play in the success of many restaurants, especially those in their fledgling stages, it can often be difficult to promote customer loyalty. Statistics show that customers visit other restaurants due to various factors including cost, sampling different foods and beverages, exploring new venues, and the promise of better deals or promotions. In fact, 56% of restaurant-goers state that they regularly visit a variety of restaurants as opposed to consistently visiting the same restaurant. Fortunately, knowing what customers want is half the battle to retaining those customers. The other half of the battle is catering to specific customer needs and making your product the obvious choice. Value, promotions, and innovative food offerings, based on data mined from the target market, are key components in ensuring restaurants are meeting their customers’ needs. As customer satisfaction and perceived value increase, the likelihood of repeat customers also increases.
Loyalty programs have roots as far back as the late 1700’s. In the early days, American retailers provided consumers with copper tokens that could be used for future purchases, as a reward for brand loyalty. Over time, these programs were refined and perfected into the popular and effective systems we know today. Technological progress has made restaurant loyalty programs seamless and very cost-effective. E-commerce and mobile technology have been instrumental in allowing restaurants the ability to find exactly what their customers want and need via data analysis. This has allowed restaurants to target their market in ways that have never before been possible.
The effectiveness of restaurant loyalty programs has increased at an incredible rate in recent years. So, too has their complexity. The wide array of options can sometimes be overwhelming if you have never been involved with implementing a restaurant loyalty program. Research and preparation can be instrumental in finding the most effective program to utilize in your business.
A critical component in implementing a successful loyalty program is to ensure you know what to look for during the selection process. Restaurant loyalty programs are most effective when the program has been created with your brand specifically in mind. This has a number of benefits such as improving brand awareness and preventing your competitors from copying your program. Additionally, providing rewards and recognition for loyalty can reap huge benefits in customer loyalty. A simple offering such as a free drink has been shown to improve brand affinity and incentivizes customers to return on a consistent basis. Social media has also become increasingly important in improving customer loyalty. The use of social media allows restaurants to reach a wide variety of customers that would not have been possible before the rise of this phenomenon. Ensuring your restaurant loyalty program provides this option, can greatly improve your ROI. Finally, restaurant owners must make sure that the loyalty program is easily promoted. Customers can’t use it if they don’t know it exists! Even if they know it exists, it must carry perceived value to be effective in retaining repeat customers. Personal value is a powerful tool that can be useful in persuading customers to return. Promoting the loyalty program in a way that demonstrates why a customer NEEDS to be a part of this program, allows restaurants to capitalize on an often untapped market.
The legitimacy of restaurant loyalty programs cannot be underestimated, as evidence has demonstrated that customers will join one if it is available and known to provide value. Additionally, being involved in a favorite restaurant’s reward system can improve satisfaction with the client’s overall experience. The improved customer satisfaction further improves marketing through the all-powerful word of mouth free advertising. Reaping the benefits of having a customer loyalty program is made even more impressive when one takes into account the mountains of data that is made available to the restaurant owner. Demographics, behavioral patterns, purchases, and profitability are only the tip of the iceberg in what owners can use to better promote their products and more effectively operate their business. Tailoring these products to their customer’s needs is at the heart of what makes a restaurant successful.
Restaurant loyalty programs are here to stay. They have proven to be one of the most effective means of retaining customers and ensuring you are making use of one of the best sources of income and free advertising. All restaurant owners can benefit from implementing a loyalty program that specifically targets their market. Ensuring you have the right tools at your disposal will go a long way in your drive to be the best at what you do.