Building customer loyalty can be a challenge, but if your goal is to motivate guests to visit more often and spend more when they do, then creating a restaurant loyalty program that works for your brand is essential. Because guests aren’t all the same, the ways they want to interact with your brand will vary. Before you start creating a loyalty program to boost incremental visits and revenue, there are four key areas to address:
- Determine which loyalty program will best engage your guests.
- Discover the type of program that best aligns with your brand concept.
- Decide what kind of program your staff can effectively execute.
- Establish which program will help you best achieve your restaurant’s financial goals.
First, you will want to arrive at the type of rewards program that will resonate with your guests. This is unique to each restaurant and will be influenced by brand concept, menu, server interactions, and business needs. Keeping those factors in mind, you can then start to create your customer loyalty program, which consists of these three main elements:
- Core Program: This is the heart of your loyalty program and defines the rewards as well as how they are earned and redeemed. Successful core programs will motivate guests to visit more often and spend more of their dining-out budget with you. The format of your core program can be one that automatically rewards guests for accumulating a set amount of points or one that rewards them after reaching a certain number of visits. This is where picking the program that best aligns with your brand and your business objectives is crucial to your success.
- Layered Programs: These are additional benefits that run concurrently with the core program. Examples include rewarding guests on their birthday and donating a portion of an individual’s spend to a selected charity. These layered programs can differentiate a brand and strengthen your guests’ connection with it.
- Promotions: These are targeted offers sent to boost traffic during slow periods, increase guest spend, or even win back lapsed guests. A means of influencing buying behavior, promotions can be fun one-off interactions that create urgency and drive sales.
By giving careful consideration to each of these three elements, you will be able to structure your loyalty program in a way that appeals to your guests. A fast-casual restaurant wanting to increase visits may choose a core program of visit frequency that includes birthday rewards and promotions like double points and visit challenges. Meanwhile, a restaurant looking to build relationships may opt for a core program of bankable points layered with limited-time offers and surprise-and-delight rewards. Aligning your program with your business goals and your customers’ behavior will provide the best results.
To learn more about the various types of loyalty programs, download the article “Choosing a Loyalty Program That’s Right for You.”
Are your numbers for loyalty penetration and new member enrollment declining? Is there evidence that you are over-discounting customers? Does your program conflict with your corporate strategic objectives? If you answered “yes” to any of these questions, it may be time to consider a program redesign.
Product offerings change, concepts evolve, and priorities shift. To get the most from your loyalty program, make sure that it always aligns with your corporate strategic objectives. If your program doesn’t reflect what your brand represents, it isn’t benefiting the organization as well as it should.
J.P. Licks, a 17-unit Boston-based ice cream concept, came to the realization that its loyalty program no longer fit its price structure and corporate priorities. Before the redesign, members were required to accumulate 50 points to earn $5 off. Among the benefits was getting a free sundae on their birthday and on the anniversary of joining. The company also wanted to promote its fresh-roasted coffee at the time of the program launch, so registration included a free coffee.
After a while, it became apparent that the program was vulnerable to fraud. People were opening new accounts to receive free coffee because no stipulations were in place to prevent it. Cards were being activated and then never used, leading to a skewed view of membership and member activity. Additionally, price increases over time meant that members were achieving rewards much faster than was originally intended.
Deciding that it was time for a change, J.P. Licks shifted its program to a three-tiered structure. At registration, members now start with 10 bonus points instead of a free coffee. They get $2 off after earning 30 points and need to visit three times before being eligible for a free birthday reward.
Under the new tiered structure, members are incentivized to advance to higher tiers because the size of the birthday reward increases and there are opportunities to earn bonus points on certain days. Meanwhile, the anniversary sundae has been replaced by other events throughout the year. By rewarding members based on which level they are at, J.P. Licks has been better able to determine whether a reward is simply viewed as a thank-you or could be used to motivate behavior.
Just over one year into the new program, J.P. Licks has been able to significantly reduce the number of inactive memberships. It has also increased the overall level of interaction, including reengaging lapsed members and getting them excited about the loyalty program.
To learn more about this program redesign, check out J.P. Licks marketing manager Rachel Klein in our on-demand webinar, “Spotlight Series: Revamping Your Program.”
Visit challenges are a great way to boost sales and increase customer engagement while motivating guests to dine more frequently. With the help of machine learning, this marketing technique has evolved from using the same challenge for all guests or even segments of guests to fine-tuning both the number of visits required and the timeline for completion. The approach has been shown to engage more customers without increasing discounts or cannibalizing sales.
HuHot Mongolian Grill, a 65-unit all-you-can-eat stir fry concept, had run simpler versions of visit challenges in the past. The members of its loyalty program were assigned different visit requirements based on the bands they belonged to, and the promotion would last for two weeks. But the results left considerable room for improvement.
One-to-one visit challenges enabled HuHot to vary two different parameters. Backed by computer algorithms, the company determined the proper time frame and number of visits to use for each guest. Some were given less time to complete the challenge, such as visiting twice within a week, while others needed to make six visits in a month. Considering visit history is often key in motivating guests to make that one additional visit.
The results of the one-to-one visit challenges exceeded expectations. Compared to the simplified version, HuHot saw a 69% increase in overall lift. It can be difficult to motivate more visits from those who are already frequent guests, but HuHot realized a 22% sales lift and a 21% visit lift for guests in the platinum band alone. Since sales had been flat for this group in previous visit challenges, the one-to-one approach proved capable of moving the needle for even high-frequency guests.
To hear more about the success that HuHot Mongolian Grill has had with its one-to-one visit challenges, check out senior director of digital Monica Minford in this on-demand webinar, “Spotlight Series: One-to-One Visit Challenges.”
Convenience stores have been an American staple for close to 100 years, serving an important function for the average consumer. But with technology changing so rapidly and major retailers like Amazon making moves that threaten the market, will c-stores continue to be relevant to the next generation?
It’s necessary to answer this question because Gen Z (the next generation with purchasing power) constitutes nearly 27% of the entire U.S. population and is on track to be the largest generation of consumers. However, its shopping habits are substantially different from other groups. If convenience stores can’t capture the interest of this generation now, they’ll struggle to stay relevant … and stay in business.
Here are six trends that conveniences stores need to be aware of – and capitalize on – to create loyal shoppers among Gen Z.
- They are technology natives. Gen Z is the first true digital generation, and its members are accustomed to being able to use mobile phones, apps, and the Internet to do anything they need to do. That means, of course, that a c-store must incorporate technology into its interactions with customers, whether it be apps, mobile ordering, paying via mobile, or some combination of them.
- They expect diversity in their food. We already know that this is a “foodie” generation – perhaps even more so than others. But Gen Z has wider access to a variety of cuisines from cultures around the world, which makes it incumbent upon convenience stores to offer many different types and flavors of foods.
- They expect a mobile presence. Beyond a fondness for technology in general, the members of Gen Z are especially attached to their mobile devices. They expect the businesses they frequent to cater to them in the form of a mobile-optimized site, an app, a mobile loyalty program, and/or SMS messaging.
- They use online reviews to guide choices. More than any other generation, Gen Z makes buying choices based on online reviews. Studies have shown than a one-star increase for a business on Yelp leads to a 5-9% increase in revenue. C-stores need to constantly monitor their online reviews, as well as encourage happy customers to write them.
- They have an expectation of immediacy. Members of this digital generation are accustomed to being able to access what they want when they want it. Convenience stores, therefore, need to implement ways for Gen Z customers to get items as quickly as possible, including offering NFC Loyalty and mobile payment.
- They regularly order online. There has never been a time when Gen Z couldn’t place orders for things online. Just a few years ago, two-day shipping was a revelation, and now people can have a reasonable expectation of getting a delivery in less than an hour. A c-store that wants to stay competitive in the marketplace needs to offer store delivery, curbside pickup, or both.
Digital guest engagement programs are the key to making Gen Z (and all generations) feel as valued as possible. They enable c-stores to gather data and use it to deliver promotions, discounts, and messaging that is relevant on an individual level. These programs can include and/or integrate with an app, mobile payment, delivery options, and any number of other digital touchpoints.
Because the promotions are personally meaningful, customers partake in them and visit the c-store location more frequently. And encouraging those habits when Gen Z is young helps create loyalty for life.
Engaging Gen Z customers requires a comprehensive plan. To learn more about attracting this generation to your stores, check out our on-demand webinar, “Does Gen Z Have a Need for Convenience Stores?”