11 February 2010
Restaurant Loyalty Programs
Posted by Crystal under: News; Recession Tips & Tricks .
Loyalty programs tremendously encourage consumer repeat purchases and are widely utilized by many service industries, from grocery stores to airlines. However, it is a fairly new concept for restaurants. According to National Restaurant Association, 50% of table-service customers said they are likely to increase their visits to a favorite restaurant if it offers them a reward program. Why, then, not utilize loyalty programs to entice your regular customers to dine at your restaurant more often? Read on to find out more about restaurant loyalty programs:
Service Industries. It is very common for industries with high competition and high buyer frequency to adopt loyalty programs. Many companies, such as airlines, hotels, and grocery chains, use such programs all the time. Participation rate in loyalty programs for these industries is significantly above 50%. Restaurants fit into the same category, yet they rarely capitalize on loyalty programs: the restaurants’ participation rate is only 5%.
Cost and Complexity of Implementing the Program. Cost and complexity are main reasons why so few restaurants offer loyalty programs. There is a perception among restaurant operators that upfront costs are large, that such programs are expensive and difficult to implement. It is also stressful to deal with change: restaurant operators would rather spend more on familiar projects, such as print advertising, than venture into new territory. With fast developments in technology, however, there are more products on the market each year that are affordable and do not require an IT specialist to maintain them. Web-based loyalty programs can be accessed and managed exclusively on-line, with a user-friendly interface. As these programs become progressively cheaper, one expense remains constant – your time investment. Once the restaurant acquires the loyalty program, take the time and energy necessary to make the program work. Your customers are not going to drive this program for you – you need to drive it to make it a success.
Stronger Relationships with Customers. While acquisition of new customers is a common objective of many short-term marketing campaigns, the primary purpose of loyalty programs is a long-term retention of existing customers. Through loyalty programs, two-way communication is created, engaging the diner and the restaurant. Restaurant operators, thus, discover who their customers are, track their behavior and preferences. Loyalty programs are not just discount schemes. They are aimed to increase customer frequency and spending. In fact, many programs on the market have no discounts at all, focusing only on other types of rewards, such as guaranteed reservations, preferred sitting, and so on. Such programs cost nothing, yet provide good value to both the restaurant and the customer.
Properly Designed Loyalty Program. Good loyalty program includes both in-store component and on-line component. Such program incentivizes the customer to dine at your establishment more. It builds your customer loyalty and, at the same time, builds your customer database. You can capture customer feedback and get detailed tracking and reporting. Such programs are designed with an on-line interface, so you don’t have to worry about installation or malfunction. Just like loyalty programs at major retailers, good programs provide measurable results, affordable rewards structure, analysis of profit margins, and projections of increased revenue. With customized loyalty programs, your rewards for customers can be anything you want: discounts, gift certificates, complimentary bottles of wine, or soft rewards like guaranteed reservations.
Reward your customers after they buy from you over and over. Quality restaurant loyalty programs are not just points or coupons programs, they increase restaurant’s marketing efficiency and competitive advantage. Through loyalty program, the restaurant fosters great relationships with diners, increases customer frequency, and enjoys revenue per-check increases.
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