Restaurants: How to Turn Your Loyalty Program into a Sales Weapon

By Bijan Shahrokhi in Mobile Loyalty

Mobile has made things so much easier for marketers today. The rise of mobile usage, coupled with the impressive amount of information marketers can glean about their customers is creating a greater surge in the mobile loyalty space.

For restaurants and retailers, the possibilities of retaining your most valued customers is not only possible, it’s more likely given the advancements in mobile solutions.

Remember those Archaic Loyalty Programs?

For restaurants, collecting information on customer purchases wasn’t easy. For QSRs, in particular, being able to target promotions specifically to customers who frequented your restaurant was difficult unless you had access to their contact information. Yes, rudimentary methods were used to retrieve this information but it was largely ineffective. For years, the local franchise owner was relegated to using local flyers or papers to promote their business.

Enter the Physical Loyalty Card

One way to encourage customers to come back was the introduction of the loyalty card. Coffee shops use this to encourage repeat visits: “Purchase 10 and get the 11th Free”. However, the card was not tied to the customer so while the restaurant received the benefit of repeat business, they didn’t know from whom.

When Starbucks introduced their pre-loaded loyalty card, this was even more painful. I remember an incident when the Starbucks staff wasn’t able to read the card into the system and was prompted to enter the 18+ unique digits from the card instead. After the third failed attempt, the customer was so annoyed he said he’d just pay cash.

These days it has gotten so much simpler….

The Promise of Data

We had posted this blog recently: Evolution Retail: 3 Technology Trends that Keep the Customer Coming Back Here we indicated,

In order to meet the growing customer expectations and further enrich their experiences, data becomes the focal point. Understanding past purchases, channel preferences, and purchase patterns becomes critical.

Never before has the restaurant owner been able to have access to detailed customer transactions, let alone identify its best customers at the store level. HQ had the benefit of this information but have been unable, til now, capitalize and build a customer experience that’s relevant and drives repeat visits. Now mobile payments technology, integrated with POS and CRM data capabilities allows retailers to truly build a one-to-one relationship.

What this allows is the ability for a restaurant owner to understand customer behaviour, more importantly, surface the information about its most profitable customer to provide them relevant messaging for strong retention campaigns.

For any restaurant business there are two objectives:

  1. Develop strong customer satisfaction
  2. Increase revenue per customer

Now, with access to customer data, the business has the ability to understand more about their customer experiences, and optimize the service and products based on this information. As well, with access to customer information including frequency of purchase, products purchase, and size of purchase the business has a predictive ability to generate relevant promotions directly to their customers.

Developing loyalty programs can NOW be implemented locally

I remember when we developed loyalty campaigns on a quarterly basis. At HQ we controlled the data so we typically had someone analyze the information, segment our customers based on purchase, frequency, recency etc. Then they would provide us the final file and we’d develop the campaign. This was not available to the individual franchise owners.

Today, local franchises have access to their local customer information. In our Evolution Retail post, we stated,

At Virtual Next, we arm the retailer with the customer information. Our solution allows retailers to know their customers: how often they shop, their recent visits, and more importantly, what they’ve purchased. We know that the increasingly mobile customer will expect more. The experience in store is vital, but increasingly the relevant communications to the customer becomes just as important.

With immediate access to this information, the local restaurant owner has, at his disposal, customer information that allows effective campaign targeting opportunities.

The Future of Loyalty Means No Apps

We posted this infographic, QSR and Retail: Branded Apps vs. Digital Wallets. Who will win the Customer Mindshare? prior to Apple’s announcement of their integration with NFC (Near Field Communications) as a payments vehicle that will sit with Passbook.

We’ve alluded to the fact that with the deluge of mobile applications, the actual activity rate of one mobile application has a tendency to be low. Customers expect a much more seamless experience when it comes to loyalty and payments. They do not wan to have to scroll through their applications to find the right app for the restaurant, where they’re going to eat. Wouldn’t it be much easier if this already integrated into the digital wallet?

This is the beauty of Apple Pay’s integration into Passbook. You don’t have to find the loyalty application amongst the plethora of apps already in your phone. By integrating payment and loyalty into the existing smartphone wallet, there is only one place the customer needs to go for both. As per the infographic, this increases the likelihood of coupon redemptions by almost 17% over mobile loyalty applications.

The Best Customers will Drive More Business to your Door

These days it’s about a two-way value between brand and customer. By focusing on your best customers, you have insight into what they love about your products and services so you can improve their experience. By also acknowledging their value beyond just rewards, your best customers will keep coming back.  Some of the best loyalty programs:

  • Give customers relevant offers at the right time and right place.
  • Acknowledge and celebrate their best customers e.g. Birthday offers or other milestones.
  • Surprise and delight their customers when they least expect it. e.g. Let them have a sneak peak at new menu items or give them exclusive offers to events.
  • Encourage their customers to give them feedback and reward them for it.
  • Feature their fans in content (within the store, on social media) and let them know how much they’re appreciated.

Recap: Here are the Elements to Ensure a Successful Loyalty Program

  • The App-free angle is important. Consumers are much savvier these days and they want simplicity and convenience. With the impending addition of payments, this will be much more important than ever before.
  • Know Your Customers. Make it a point of understanding your customer buying habits so you can send the right message that has the best chance of response.
  • Scale Customer Adoption. The more relevant the messages, the higher the response rate, the stronger the profitability per customer. It’s important, in the process, to find “like” customers who are more than willing to bring business to your door.
  • Track and measure your campaigns, then optimize for response. Testing will always yield you the best results in the long run.

By paying attention to these key pillars you will be able to lead with much stronger campaigns that produce more meaningful results. When you’re ready you’ll be able to :

  • Build a better understanding of messaging based on frequency, timeliness, and relevancy
  • Apply the most meaningful key performance indicators: purchases, recency, frequency, revenue per purchase against your campaigns.
  • Continue to learn more from your customers outside of just transaction behaviour ie interests, needs. These will continue to shape even better loyalty tactics for your program.

It’s clear that mobile has brought loyalty to a whole new level. With the rising expectations of consumers, now restaurants are not only armed with both technology and information to improve customer retention, but also increase sales in the process.

Image source: Equipment care

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