Food & Beverage

The pros and cons of restaurant loyalty programmes

Thursday, March 1, 2018

In any business customer loyalty is worth its weight in gold. In fact, the average value of a returning purchaser is three times more than a first time customer. This could have something to do with the fact that engaged customers visit their favourite restaurants 56% more each month. So, the key is to create a way to keep your customers loyal and to keep them engaged – loyalty programmes are one simple way that you can do it.

The pros of loyalty programmes

Boosts customer retention. It’s six times more expensive to acquire a new customer than it is to hold on to an existing one, so it makes a lot of sense financially to generate loyalty. If you offer the kind of rewards and incentives, such as loyalty cards, that speak to your audience then they will keep coming back.
Insight into customer data. Finding out who your customers are is key to keeping them – and attracting others with the same needs and outlook. A loyalty programme can provide you with a whole range of information about your customers, from age and address through to preferences and dietary choices.
Brand awareness and communication. Loyalty programmes open up channels of communication with a customer base that you can use to communicate brand values, news and ideas. With a mix of incentives and information you can use the loyalty programme not just to increase the frequency of visits from return customers, but also to turn them into brand ambassadors for your business too.

The cons of loyalty programmes

Standing out in a saturated market. There are a lot of loyalty programmes being offered by various restaurants, cafes and bars. If you’re going to invest in a loyalty scheme then it’s important to create something that is distinctive – which stands out from the crowd – and which is also true to the brand you’ve created.

The cost. There are various costs involved in loyalty programmes and these can be off-putting for those businesses not fully invested in them. You may need to pay to administer the programme itself, whether that’s a third party to handle the scheme or a piece of software. Then there’s the cost of incentives – offers, discounts and freebies all need to be factored into the restaurant’s bottom line.
Customer data needs to be carefully collected. Both from the point of view of data protection compliance and what you read into loyalty scheme data, a measure of care is necessary. It’s not always straightforward to understand what causes customers to be loyal so data obtained from loyalty schemes needs to be analysed alongside business data from other sources.
Interested in other ways to help retain your customers? Here are 7 ways to turn your customers into repeat customers.Customer loyalty is the secret to success for any business and this is especially true in the restaurant trade. Creating a firm base of repeat customers will see you through less busy times and provide firm foundations on which to begin to grow. So, how do you do it?

1. If you don’t have repeat customers, find out why

Create an online survey, monitor social media comments about your business, or carry out an assessment of experience as if you were the customer. Identify the issues your business has and then solve them. Bad customer service, poor quality food and an unpleasant or unclean environment are three of the most common customer concerns.

2. Offer an incentive

Loyalty programmes, special offers, discounts for returning customers – all these things provide people with a reason to return to become repeat customers, rather than trying somewhere new. Loyalty programmes can use simple mechanics, loyalty stickers for example, meaning you don’t have to rely on technology to try a one out with your customers. However, be careful not to reward customers for things they would do anyway!

3. Focus on a unique and compelling menu

If customers feel they have tried what they wanted on their first, visit why would they return? Anenticing menu that offers something unique - whether that’s the food and drink pairings, the way the food is served or the different tastes - is far more likely to create return customer. Steer clear of gimmicky though – most diners won’t want to do that more than once in a blue moon.

4. Join in with your local community

Many restaurants underestimate just how powerful a local community is in establishing a customer base. These are the people who will pop in for dinner on the way home from work, or for brunch at the weekend, so they are worth pursuing. Investigate whether you can buy produce locally, take part in events and markets, and consider whether you could bring in local musicians instead of recorded music.

5. Create a happy team

Your staff are your public face and if they’re badly trained, undisciplined and rude they will put customers off returning. Invest time in finding the right people for your business and then look after them, from making sure they know how to do the job, to giving them time off and helping them move forward in their careers. According to a study from the University of Warwick, happy people have been shown to be 12% more productive too.

6. Add value online

Social media provides a straightforward way to stay in touch with customers. Create an engaging digital presence and use it to post enticing food images and to let people know about offers and events.

7. Keep it simple

Don’t overcomplicate your menu, concept or the experience that you offer. If customers understand what you’re doing, and why, they will remember you and recommend you. Make it very clear why loyalty to your restaurant will benefit them - don’t include the kind of hidden clauses in offers or loyalty schemes that lead to disappointment. Be authentic, honest and serve awesome food and your customers will become repeat customers in no time at all.