6 Secrets to Designing Restaurant Loyalty Programs that Work

It’s official:  we love to eat out.  As of 2015, Americans spent an average of over $3,000 per person on dining out alone.  Whether it’s the convenience, the socializing, or the food itself we enjoy, there’s no denying that we’re spoiled for choice when it comes to restaurants, especially in the DFW metroplex.  But with all those options, it can be a challenge for restaurant owners to retain customers.

Loyalty programs have been a go-to customer retention tactic for years, but some restaurateurs might wonder if they even work, given that only 27% of customers say restaurant loyalty programs offer relevant incentives.  However, the issue is not whether people hate restaurant loyalty programs – in fact, 30% of Millennials plan on signing up for them – but whether these programs can be made more relevant and timely.


Get personalized

One way to make your loyalty program more relevant is by using data to create personalized offers.  Many restaurant loyalty programs still use a one-size-fits-all approach to offer creation and aren’t leveraging all the customer data regularly collected from things like online orders, point-of-sale systems, and website and app interactions.  In order to create a complete picture of your customers and figure out what they would find most valuable in your program, invest in a data integration and analysis platform to easily view all your data streams in one place.  You'll know whether a customer orders online, when they usually visit, and what they typically order, and can begin to offer more custom promotions geared toward these actions as part of your program.


Make it timely

There isn’t a huge amount of planning involved when deciding where to go for Taco Tuesday.  People usually determine where to eat within 3 hours of their meal, meaning that your loyalty program offers should fall within this window if possible.  If you know a particular customer comes once a week during lunch for a veggie wrap, for example, send them an email with a special offer before lunch that expires after peak lunch hours are over.  Sending your program participants offers around these times might also persuade them to choose your restaurant over others when they don’t have a set location in mind for their next meal.


Think beyond discounts

Hey, nothing against discounts (Millennials actually prefer receiving discounts most in loyalty programs), but you can think beyond these traditional offers to include more unique opportunities for program members, too.  Give members exclusive or early access to things like special recipes, events, and merch, or offer members-only dinners or reservations to add value.  Customer experiences are all about the old “surprise and delight” adage.  Wow them with something they didn’t expect and you'll have a fan for life.


Don’t wait to show value

We’ve all been there – you join a loyalty program that takes so long to rack up points that you never actually have enough for a discount.  This doesn’t typically fly with consumers, and 50% of Millennials will abandon a loyalty program if the rewards take too long to accumulate.  Think about adopting a tiered structure to your program, making it easier to accrue some smaller rewards and laddering up to larger rewards (that aren’t impossible to attain). 

To determine what types of rewards you should offer, research comes in handy.  Survey your customers and get their feedback about what types of things they’d like to see offered in your program.  You can also use purchase data collected in-store to draw conclusions about what you might discount.  All rewards should be valuable enough to patrons that they will want to sign up for and actively participate in your program.


Redeem using tech

If you have the means to do so, making your rewards redeemable via cell phone is a big draw for loyalty programs, especially to younger generations.  If you don’t have a full-blown app, you can always incorporate things like codes sent via email that are redeemable for rewards in-store.  Creating a digital portal for people to check their accumulated points and reward status is also a good idea and can be incorporated into emails for a less developer-intensive option.


Track your success

Of course, you’re not off the hook once your program is up and running.  Continually testing and refining your efforts is key.  It’s important to track KPIs including the number of active program participants, email opens, reward redemption rates, restaurant visits, and purchases to see if your offers are truly relevant.

And don't forget to utilize your physical locations to promote your rewards program.  Employees should be trained on how and when to mention it to customers, and there should be in-store signage to give patrons more information as well.