Customer Loyalty Programs: Do They Work?

By Amy Nichol Smith

As a restaurateur, you make sure everything is in place. You have a business plan that’s structured to keep your business going for a year or more, deliveries are scheduled, your menu is on point, and everyone, from the chef to the host, is ready to make every guest who walks through your door feel like they are the VIPs.

While all of that might be enough to keep them happy for one visit, how do you get those customers to keep coming back? One option is a loyalty program. In a recent study by a Colloquy Loyalty census, American families hold, on average, 29 memberships to various loyalty programs, but only earn or redeem points on about 12 of them.

If you’re considering adding a loyalty program for your restaurant to entice customers to return, you need to choose the right one. The programs that are most effective offer big incentives with every dollar a customer spends.

Value of Reward

Turning visitors into loyal customers requires you to offer programs that meet certain criteria. Customers understand the value of a reward compared to what it costs them to earn those rewards. It’s important to offer a reward that’s worthy of a customer’s loyalty. The reward you offer should be enticing. It’s also a good idea to offer more than one reward. Instead of offering 10 percent off of the bill, which isn’t a great value to a customer, offer a higher percentage, and give your customer options. Allow customers to choose between a percentage off, dollars off or a free appetizer. This lets customers feel as though they’re in control of their rewards, and they decide which is the better deal.

Programs That Don’t Work

A program that requires customers to earn points can work, but not if the points needed to redeem a reward take too long to acquire. Make sure your loyalty program is balanced. If a customer feels like it’s not possible to earn enough points in a short amount of time to reach the reward, they may give up on the program.

Reward programs that offer deals like “Buy 10 meals, get the 11th for free” usually don’t work to build brand loyalty, because the customer is only looking toward that free meal. Brand loyalty is earned when a customer receives an unexpected reward.

Finding the Right Loyalty Program for Your Restaurant

You can offer a loyalty card or track social media check-ins by a customer and reward that customer after a certain number of visits. For example, if a customer comes to your restaurant regularly and checks in on Facebook (which you can see on your own social media page), after a fourth check-in, you can offer that customer a free dessert.

The Benefit of Loyal Programs Beyond the Obvious

Loyal customers do more than just spend money regularly at your restaurant. If they’re happy with each experience, they will pass that praise to their friends and family, which increases your customer base. Also, loyal customers are less concerned with price increases because they are paying for a quality product and experience.

A good loyalty program can help you turn new customers into returning customers and keep repeat business coming back for more.

Image from Rawpixel/Shutterstock

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