Creating a Strong Loyalty Program for You and Your Customers

Loyalty programs have long been a staple of restaurant marketing. From physical punch cards to tiered benefit programs and complex rewards systems, the end goal is the same: increase order frequency and drive loyalty through a strong brand-customer relationship. The strategy is an essential way of keeping consumers interested and coming back for more. As we enter a period of economic uncertainty in 2023, loyalty programs are at the forefront as restaurant operators look for ways to keep repeat customers interested in their offerings while maximizing profits.

Moreover, new research shows that despite inflation, demand for dining out isn’t going anywhere. 58% of consumers in 2022 shared they ate restaurant food more often than in the previous year. While they continue to dine out, they are getting more particular as to where they spend their money. In a time when consumers may be more price-conscious than ever, loyalty programs are a great way to keep customers interested while getting them to spend more per transaction. Below, I will be diving into how restaurant operators can optimize loyalty programs and show value to consumers using customer data.

Trust is the Foundation of Loyalty

As we face a period of economic uncertainty, some businesses may be shaking up loyalty strategies a bit too much – causing a backlash from consumers clinging to previous deals. In October, Dunkin Donuts overhauled its DD Perks program and replaced it with Dunkin’ Rewards. Under the new program, it cost more to earn the points needed for a free drink, and the conversion rate was different for popular drinks such as lattes and cold brew. In the previous program, 200 points was the equivalent to $40 spent, which was more than enough for a free drink of choice, with the new program 200 points results in a cup of tea. Consumers were outraged, with many of them taking to social media to express their anger and threatening to boycott Dunkin until the program was changed back, showcasing how much customers value loyalty programs.

Similarly, Starbucks recently announced its own program overhaul, the biggest in two years. While some rewards like packaged coffee can now be redeemed with fewer points, many popular items such as hot coffee, tea, bakery items, and snacks require twice the amount of stars than under the old program.

These moves can come across as greedy attempts to recoup revenue amidst a impending recession and could damage revenue by souring the bond your restaurant has with its most loyal fans. There are other ways to gain value from your loyalty program that steer clear of testing your customers’ brand loyalty. The key is to build a program that benefits the needs and behaviors of your customers. Keep it simple and customer focused.

Personalization Can Help

Developing and maintaining a loyal customer base is essential to success, and repeat customers are at the core. In fact, Gartner reports that 80% of future profits will come from just 20% of existing customers. Loyalty programs are a great way to get customers hooked – and can be taken even further with personalization.

Personalization has been shown to drive profits for brands as it is the crux of the customer experience. In Q3 of 2022, Starbucks reported its highest-ever quarterly revenues and chalked it up to customers modifying orders, thereby increasing the overall price per order. A primary benefit of a loyalty program is the additional data that allows restaurants to enrich each customer’s experience. Restaurants can give personalized offers, customized suggested add-ons, preferred rewards and even surprise birthday gifts. Knowing how to position coupons, rewards and promotions to each customer’s liking based on data is an effective way of building a loyal customer base.

Individualized offers improves the overall customer-restaurant relationship, while restaurants value increased order frequency, the customer values customization. Unique offers are much more effective than general offers and can help establish a deeper and more unique connection with the customer, making them feel appreciated. Once implemented, the data collected from loyalty programs can serve as a competitive advantage while boosting customer satisfaction and restaurant profits.

Enticing Customers With Coupons

Besides enhanced personalization, there are other ways to get consumers hooked on your restaurant and brand. Combining coupons with your loyalty program can be a tried-and-true way to get customers excited. Offering double points days or better rewards deals on specific dates or items can allow you target your loyal customers with unique offers. And it can help ensure your restaurant is top of mind during peak times by giving you reason to message your customers with valuable offers when competition is strong and consumer decision making is quick.

Rewards driven offers drive loyalty over attracting coupon collectors. Mere limited-time price reductions like KFC’s $5 chicken pot pie can often miss the value mark and potential for loyalty and rewards. When the offer ends, consumers can often find themselves looking for a better deal elsewhere or be unwilling to pay the usual cost after becoming accustomed to the original price of the deal. Offering a tangible offer can increase the value to modern, cost-conscious consumers and adds a level of scarcity to the offer. Moreover, it can help restaurants drive more traffic to its rewards program with the promise of more savings, driving brand loyalty with additional rewards that encourage diners to make repeat purchases.

Overall, loyalty rewards programs are an essential part of modern restaurant strategies. A strong loyalty program can help consumers find new ways to connect with your restaurant, drive communication on promotions and special offers, ease personalization and customization, and encourage repeat orders. Coupons are a great way to get consumers hooked on your brand and provide a simple stepping stone from a great deal to a loyal customer, without sacrificing revenue. By investing in a solid rewards program, any customer can become a customer for life.

About the Author

Shannon Chirone runs HungerRush’s B2B Product Marketing team where she is responsible for the go-to-market strategy across product launches and features. She has more than 15 years of experience developing and taking products to market that delight and deliver value to customers. Prior to HungerRush she worked across various verticals including entertainment, finance, social media and technology.