Your loyalty program can be the backbone of your data collection, your customer outreach, and your marketing efforts. When executed well, it can also be an enormous profit-driver for your restaurant.

Loyalty programs get a bad rap because they’re overwhelmingly… well, underwhelming. They exist in the form of punch cards, email clubs, and poorly-maintained apps that demand customers scan QR codes whenever they visit. At best, they have a neutral presence, not disturbing the experience enough to detract loyal customers so restaurants can collect valuable data. At worst, they actively repel customers from participating by impeding the experience, placing hurdles in front of loyal customers by asking them “sign in” or “check in” or surrender some type of personal information every single time they visit.

So why do brands still invest in loyalty? Because there’s a strong business case to back it up — every dollar invested in customer retention goes 7X as far as a dollar invested in acquiring new customers (source: Harvard Business Review). Restaurants know that this is the way to go, but they’re often stuck using outdated programs with negative — or worse, untraceable — ROI.

As we head into the new year, it’s time to start thinking critically about the failures of traditional loyalty programs, and make it a resolution to leave them in the past where they belong. Invest in bringing your restaurant technology up to speed — including your customer information database. From there, you have the foundation to build a loyalty program that identifies, engages, and retains your best customers… all while creating new banner-waving loyalists for your restaurant. Here are five steps to building a customer retention and loyalty program that drives real revenue.

 

  1. Map out a loyalty experience worthy of your customers.

Your best customers are the ones who will be using this program… what type of experience do you want them to have? How should rewards accrue, what does communication look like, what steps do they have to take in-store to earn progress towards rewards? Bad loyalty programs think about the customer experience as a means to an end (“I’m going to set up a program so people come in more!”), rather than an integral part of how customers perceive your brand (“I want the loyalty program to be easy and delightful for customers.”). Ultimately, a great experience will drive higher participation, more customer data, and more revenue for your business.

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  1. Set a goal for your program

A loyalty program should have clear, measurable goals. That way, you can understand how your program is performing against the goals you’ve set. A few great goals include:

-Increasing visit frequency

-Gathering critical feedback from guests post-transaction (which is a great way to avoid bad Yelp reviews)

-Increasing average check size

-Winning back lost, previously loyal customers

-Spreading the word of your restaurant to new guests

 

  1. Make your data do the work

Most restaurants I speak with collect customer data through their POS. However, very few restaurant operators are actually doing anything with their customer data. When accessible, customer should entirely change the way businesses interact with their customers — data should inform your business decisions, should improve your operations, and should be able to serve as proof

If the goal of your program is to win back previously loyal customers, your data should readily show you, without prompting, where those opportunities are. Bonus points if your program is fully automated and can proactively do this outreach for you.

Either way, the benefit of collecting customer data is to be able to run your business more smoothly, with more insight and greater precision.

 

  1. Do the math on the ROI.

Traditional loyalty programs, like plastic-card based ones, often cost restaurants a ridiculous amount of money in POS integrations, additional hardware, and the cost of the plastic cards themselves (those things can cost like $.50/each! If you want 10,000 people to sign up, you’ll need to print about 100,000 cards… that’s $50k right there, and you haven’t even paid for the service itself yet).

Meticulously track your ROI, especially as it relates to the goals of your program. If you want to drive additional spend for existing customers, make sure you can track incremental revenue and assign it to users. Without data visibility and full transparency, a loyalty program can be a big question mark when it comes to profitability.

 

  1. Continue to promote the program

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A loyalty program is only as good as its engaged users. Focus on maximizing these three metrics:

  1. User sign-ups
  2. User retention
  3. Customer engagement.

Get staff involved in continuing to enroll and engage customers in the program. Each additional person enrolled represents another customer with whom your brand can interact, target with personalized messaging, and ultimately retain as a customer. At Tomatina, a Thanx loyalty merchant, the waitstaff is trained to ask “do you have any rewards you’d like to redeem today?” It gets guests excited about the program, and ultimately drives what is a very successful program for Tomatina.

 

If you’d like to learn more about building a loyalty program that drives real customer retention (and real profit!), visit www.thanx.com or email us at success@thanx.com.