Does restaurant loyalty programs actually work

Short Description
83 percent of consumers pick a dining location within three hours of a meal, and 57 percent make the decision within an hour.
  • Sakshi Singh
Loyalty Restaurant

How do restaurants measure customer loyalty? Or, perhaps more importantly, how do they create it? With new players continuously entering the market, quick-serves are always on the hunt for ways to engage with consumers not just to get them into the restaurant initially, but also to keep them coming back.

In today’s competitive market, technology solutions are a key investment to remain relevant and drive revenue. The average consumer spends more than three hours per day in mobile apps alone, creating ample opportunity for marketers to gather leverage data from various channels to target them better. The problem? Restaurants struggle with organizing and leveraging that data in a meaningful way.

Loyalty programs gaining traction

Recently, an international restaurant association found that 30 percent of restaurants were offering a loyalty program for their customers. The same report said that more than 40 percent of all restaurant categories (family dining, casual dining, fine dining, quick service, and fast-casual) found that their loyalty programs were more popular than two years earlier. Loyalty cards additionally also get customers in the door, according to Loyalogy study. 

Consider, for example, the following statistics: 83 percent of consumers pick a dining location within three hours of a meal, and 57 percent make the decision within an hour. And when they’re picking a location to eat, 60 percent of consumers only use their mobile device to help with their decision. With the ability to set up promotions through text notifications, in-app notifications or email campaigns based on past purchases, timing, behaviour, loyalty status or points, there is a significant edge to be gained when it comes to retarget, as well as up sell and cross-sell.

Targeting the tech route

“Most restaurants measure already collect client information through a spread of sources, everything from social programs, online ordering, mobile billfold payments, a restaurant-specific app, and even the brick-and-mortar POS system. The challenge comes once attempting to make one read of the client that is important to changing those insights into selections, actions and targeted campaigns and offers. Restaurants with the foremost effective loyalty programs will quickly organize their information into a singular read to start to trace client behaviour and build abreast of selections,” Sarvesh Chaubey, Co-Founder & Chairman of The Biryani House feel who have outlets across cities.

Taking cues from some of the international QSR chains that have proven a successful loyalty program, My Starbucks Rewards at Starbucks is lauded as one of the best mobile experiences out there and now consists of more than 13 million active members. The key for Starbucks is that its loyalty program is simple, easy and convenient.  At Dunkin’ Donuts, fifty-two percent of millennials participate in loyalty programs offered by the chain, and the brand had captured more than eight million of them as active members of its DD Perks rewards program.

Making loyal customers feel loyal

“How will a restaurant reward its customers who visit their outlets regularly, order from them and even suggest the same to their friends and family? They are the true advocates and most effective brand promoters. So, I would say a Yes, that customer loyalty programs do work because this makes the customer feel belonged and that they matter. Customers feel appreciated and when they do, they keep on acting as promoters for your brand. It also makes the customers visit the outlet again and again,” Ron Ramirez, Mixologist at The Finch commented who have been studying the market well. But for a loyalty programme to work and be successful, any two of the following things are very important for a restaurant to have, (i) Great Food; (ii) Great Service, (iii) Great Location. 

The ability to produce targeted offers, like distinctive content or customized product recommendation delivered once the client is within the eating place, at the instant of impact is another important element for increasing engagement and loyalty.

“Significantly once it involves ‘Super serious Users’ a brand’s most loyal customers, there is a chance for extra revenue which will be forgotten in the pursuit of attracting new customers. Restaurants with leading loyalty programs measure setting out to leverage machine learning algorithms to require historical purchase information and calculate ensuing best provide, or possibly to buy the product for his or her pre-existing customers,” Chaubey added.

Third-party loyalty programs providers

Seeing the consumer’s inclination, many loyalty and rewards programme providers in India are coming up with restaurant loyalty programs. InterMiles recently announced the launch of their new Dine platform, allowing members Miles earning and redemption opportunities directly on the InterMiles mobile app while eating out at restaurants.

This sentiment is echoed by Dineout which has observed an 80 percent increase in digital payments usage by consumers for settling them in-restaurant dining bills. Having a finger on the consumers’ pulse and identifying an opportunity to elevate existing dining benefits offered to members, InterMiles has introduced its dedicated, industry-first Dine platform, powered by Dineout, which can be accessed exclusively via the InterMiles app and website.

“As our members resume stepping out and transition back to the new normal, we identified an opportunity to reward them with new, elevated benefits each time they dine out,” Vikas Chandak, SVP & Head – Strategic Businesses, Financial Products, Partnerships & Alliances, InterMiles had commented.

The road-blocks

Despite a restaurant's best efforts, there are times when the loyalty programs fail. While a good percentage of customers may not actively participate in the loyalty program simply out of a lack of interest, sometimes it's the restaurant that sabotages their own loyalty card program.

If a restaurant isn't consistent with its implementation of the program, it not only hurts its business, but it gives the impression that the restaurant might not be consistent with other elements of its business or doesn't take the customer seriously.

Additionally, it also creates a problem if a loyalty card program is too strict. Starbucks also received comments about how they changed the qualifications for ‘star levels’ of their cards because the program was too strict. In terms of restaurants, if a customer is required to make a $30 or more purchase each visit to be qualified for a future reward, they may view that as too strict for every visit, and could actually feel like they aren't getting a benefit from visiting the restaurant.

Some restaurant loyalty card programs may have a limited pool of rewards that a customer isn't going to be interested in obtaining.

But with a sophisticated approach to loyalty marketing, there’s a real opportunity to meaningfully increase customer lifetime value. By taking a fresh look at the experiences customers are getting from those restaurants leading the pack, there’s a clear path forward for brands willing to nurture relationships with their customers.

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