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 min read

Why A Loyalty Program Is A Game Changer For A Restaurant?

Loyalty programs are a great idea whether you own a single location or a restaurant chain. The game for your business can be entirely changed by a properly implemented customer loyalty program that makes use of the major developments in restaurant technology. Additionally, it increases customer retention and the return on investment of your restaurant marketing efforts.

Any business needs a loyal customer base to succeed. When customers sense a sense of familiarity and community fostered by the love for your restaurant, they are drawn to support you.

Loyalty programs can change the game by attracting repeated customers. If done carefully, it's a gratifying activity that will keep your loyal clients engaged and enthusiastic about what you have to offer.

According to Paytronix's Annual Order & Delivery Report, digital restaurant sales have increased more than three times since the pandemic began. These results are echoed in another study, which indicates that eateries are progressively differentiating themselves through technology. 

However, this isn't the only strategy restaurants may use to catch online diners' attention. According to the RR Index, the most desirable digital element is the loyalty and rewards program, which 16.1% of customers said would make them more likely to place an order.

Below we will discuss the importance of a loyalty program at a restaurant. 

Customer Loyalty Program: What Is It?

Many businesses use a loyalty program to reward customers for their overall spending. You can obtain them in the restaurant industry through various qualifying criteria. This includes the number of visits, the size of the assets, or the financial outlay.

Then, these restaurant rewards systems are monitored in a variety of ways. For instance, a system that physically stamps your business card each time you visit might be something you have. Certain loyalty programs require customers to swipe a plastic card at the point of sale in order to add items or prizes. Some programs give credits to loyal customers that they can use to buy goods and record their purchases. 

Nevertheless, there is a growing trend towards system-integrated digital consumer loyalty programs. These new kinds of loyalty or rewards programs eliminate the trouble of carrying about an object to accrue more points or prizes.

Standard benefits for a restaurant loyalty program can include free meals, discounted meals, and even access to special events and activities like cheese tastings or celebrity chefs dining at your establishment.

Since you know how they operate, let's understand why they are valuable for your business.

7 Reasons why a Loyalty Program is a game changer for a restaurant

According to Rewards Network, 2020, the COVID-19 pandemic has increased demand for loyalty programs. This increase in the use of loyalty programs might be attributed to the growing selection of rewards programs offered by the restaurant sector.

Recently, many chains have developed or upgraded their restaurant loyalty programs to increase market share, repeat business, and expenditure. Here are the top 7 factors that make a restaurant customer loyalty program revolutionary.

1. Customer retention

Restaurant operators go above and beyond to attract new clients. However, the ability of the best-performing restaurants to attract repeat business from their current customers is the key to their success.

Contrary to popular belief, you should put more effort into reducing the number of clients you lose (known as "customer churn") than into luring new ones into your business. A company with a customer retention rate of 60% loses three to four times as many customers as a restaurant with an 80% retention rate.

Why should you develop a customer retention obsession? It's because you, as a business, value your current consumers more. Regular customers are 31% more likely to spend more money and 50% more inclined to try a new item on the menu. Also, did you know that keeping an existing diner costs five times as much as luring a new one?

In light of this, it is understandable why astute restaurant owners spend so much time creating their loyalty programs to encourage those current customers to become repeat customers.

2. Repeat business

Recurring business is a positive thing. Repeat business indicates that your restaurant is performing well and that your customers are pleased with the services they receive. They will be more inclined to recommend your business to friends, relatives, or coworkers who might be interested in giving it a try.

You already have enough supporters willing to spread the word about you, so you don't need to worry about promoting yourself!

Additionally, with repeat customers, you can concentrate on developing your product's or service's main elements rather than figuring out new ways to draw them in. Restaurant owners, managers, and employees use this excellent opportunity because customers genuinely liked what they experienced on their first visit.

A committed client base will be more content than one that frequently tries out new eateries or apps, which translates into increased staff happiness. Giving discounts or freebies to your customers shows that you value their opinions and how much they enjoy visiting your restaurant. 

Also, it fosters a relationship between you and your client, making them feel free to open up to you about anything, including complaints about their cuisine and ideas for new menu items.

3. Better data and analytics

Earlier, getting to know clients required much work from business owners. Numerous educated guesses, receipt analyses, and guest interviews were necessary. Although these approaches are still used, data insights are far more helpful. 

A rewards program and a digital system generate reports and insightful analytics. This can assist business owners in learning more about their clients' purchasing preferences. Data analytics in restaurants are a vital component of profitable operations. However, you can only deduce so much information from your sales.

Customer loyalty programs give you access to the thoughts of your most lucrative clients, by which you can meet their demands and boost your revenue.

You can begin to determine which items aren't even worth having on the menu in the eyes of your target audience by gathering and evaluating data from your customer loyalty program. 

The best-performing menu items can also be up- and cross-sold using the same data. You may tailor your restaurant to the preferences of your highest-spending clients using data and analytics to increase your business.

4. Identifying top customers

It is crucial to satisfy every customer, but understanding who your best clients are can be helpful. Restaurants squander a lot of money advertising to people who don't spend much or don't visit the place frequently. Even though these people are worth marketing to, why not identify the most lucrative clients?

Determine who spends the most money using data insights, and think about creating a marketing campaign targeted to them. With this, you can ensure that the customer service is exceptional when these diners come in to eat.

It makes your clients feel valued for their dedication. It also helps save money on unneeded marketing expenses for participating eateries. Additionally, you can conduct surveys with unprofitable clients to learn what services they might require. 

This will enable you to recover services from unproductive clients without going bankrupt. Good reporting tools and information from loyalty programs have made a wide range of possibilities possible.

Loyalty and incentive programs inadvertently produce "brand advocates," people who will recommend the store to their friends, family, and followers. At least 92% of consumers believe word-of-mouth (WOM) referrals from friends or family to be more reliable than any other type of advertising.

5. Personalization

Customer retention depends on personalization. Customers want to feel appreciated, and a tailored offer is the most excellent way to satisfy their desire for exclusivity. If you send out a request, it's best not to make it generic. 

By developing more targeted advertising or emails, a tailored message will boost the effectiveness of your campaign.

You can use personalization to boost customer loyalty and repeat business. Imagine monitoring which clients spend the most money on specific days of the week or at particular year seasons, for instance (right after Christmas). You can offer coupons around such times to come to your restaurant and spend more money.

Effective reward programs offer a direct line to customers, which improves external communications. Not only can you post brand details and social media profiles, but you can also introduce a new menu item or other special deals. 

Using geo-fencing technology, you can inform customers of the position and time of various franchise sites. The establishment of trust between patrons and the business owner is another benefit of loyalty programs.

6. Marketing returns

Although customer loyalty programs are marketing activities in and of themselves, they can help you leverage traditional marketing channels to their fullest potential.

Restaurants sometimes waste hundreds, if not thousands, of dollars on marketing to potential customers who wouldn't visit their establishment even if it offered free dinners. The top restaurants ensure that every dollar spent on promotions and special deals results in more people in the dining room. 

A restaurant rewards program can help with that. You can categorize your consumers based on past purchasing patterns by looking into the analytics of your loyalty program. 

To increase sales significantly, you should instead customize offers for each group of your consumer base. For example, suppose you discover a group of consumers who always order burgers. In that case, you know that any customized special deal on a burger in their inbox would inevitably inspire them to return and spend more money with you.

The $15 you spent emailing your burger-loving customers in the coming days will probably generate hundreds of dollars in sales.

7. Improved sales

Loyalty programs encourage customers to pick your business over rivals is another crucial advantage. Once a customer joins your loyalty program and gets access to the exclusive deals and discounts you provide, they are more inclined to shop exclusively with you rather than your rivals. 

Repeat customers are more inclined to make larger purchases on their subsequent visits to your business. Loyalty program management enables companies to boost revenue in this way.

Although brands that provide more cost reductions frequently draw customers. The strategy to win the race is not always to compete on price. 

You can significantly boost your company's revenues by giving your clients something special in addition to the best pricing. Loyalty programs are one of the best ways to think creatively and provide your customers with something more intriguing than your rivals.

The effectiveness of loyalty programs can completely alter a restaurant's profitability. They increase sales, give restaurants additional ways to engage with customers, and remain at the forefront of diners' minds. 

However, the success of these programs depends on how seriously a firm takes its loyalty program.

To Sum Up

The future of restaurants is likely to depend heavily on loyalty programs. More customers are turning to loyalty programs as a defense against rising prices because inflation shows no signs of slowing down. According to a recent survey, two out of every three patrons claimed they downloaded restaurant apps to learn about discounts and benefits offered by business loyalty programs.

In 2023, restaurant loyalty programs will be a significant force in the fast food sector. The companies with the most effective loyalty programs will be able to use customer data to give their customers more individualized experiences. Doing this will encourage repeat business, boost revenues, and offer customers a lot for their money.

It is evident that restaurant loyalty programs bring in new consumers and generate a sizable amount of revenue. The issue is that they don't give their marketing any thought. Check out Yollty to find out how to advance your loyalty program in 2023.

Every business relies on its most devoted consumers because they are the ones who will frequent your establishment. Keeping your current audience is much less expensive than luring in fresh customers. 

By rewarding their loyalty, you can entice them to shop at your establishment repeatedly. Put a smile on your clients' faces by rewarding them with the Yollty digital loyalty card after every transaction.

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