Serving a Successful Loyalty Strategy for Restaurants

Dining out is a cherished experience for many, and as consumers emerge from a lingering pandemic, we are seeing tremendous growth in restaurant spending. In fact, consumers spent 25% more at restaurants between January and August of 2022 compared to the same timeframe in 2021. [1] With competition coming from all corners, customer retention is crucial for fast casual and quick service restaurants. Not only do these businesses need to focus on retaining current customers, but also must drive more engagement with each customer. Tactics and strategies should focus on two things:

  1. Motivating customers to purchase more frequently
  2. Incentivizing customers to purchase more each time they visit

 

It’s easy enough on paper, but in reality, it can be difficult to do. Consumers have too many options today. They can visit their favorite spot for lunch, go to the competitor across the street, bring in leftovers from their dinner last night, pick up a pre-made meal at the local grocery store, throw a frozen meal delivered to their doorstep in the microwave, or pick from a variety of options through one of the countless third-party delivery services.

These options make it difficult for any restaurant to retain loyal diners and drive engagement with them.

However, don’t throw out all of the retention and engagement ingredients just yet. There are many strategies and tactics that can reduce customer churn, transform light customers into more frequent ones, and turn regular customers into powerful brand advocates.

 

Build a Loyalty Program to Understand Customers

Much has been made about the inability for loyalty and rewards programs to distinguish themselves from their peers across a number of industries. According to Forrester, in 2021 only 54% of US online adults who belong to loyalty programs agreed that they make them feel more connected to a brand.

Simply having a rewards program in place won’t magically lead to success, but it will provide a perfect vehicle to get to know customers.

 

Utilize Loyalty Profiles to Incite Action with Gamified Promotions 

To move the needle, restaurants need to unlock the power of customer profiles. Marketing to all customers may have some impact, but personalized experiences lead to better performance. Customers are all different, live in different places, like different things, and purchase from you for different reasons. Leverage profiles to engage with different customer segments.

Restaurants can leverage technologies and analytical tools to dish up a quicker, more personalized experience:

  • Dynamic menu boards and point-of-purchase recommendations enable restaurants to drive larger checks and quicker service using personalized recommendations.
  • License plate recognition (LPR) has been around for a while in restaurant drive-thrus, but recent advancements with artificial intelligence-enabled features have allowed for quicker experience.
  • Voice-ordering technology increases order accuracy and accelerates order fulfillment.
  • Transaction analytics can provide aggregated spending insights, like average size and frequency, which can help enhance the customer experience through menu modifications and personalized promotions.
  • These innovative tools can allow for a more accurate and personalized experience for current customers and future ones as well.

 

Create a Seamless Customer Experience

Retain customers by reducing friction and providing them with convenience. People don’t like waiting in lines; they want to be able to pick up their order and be on their way as fast as possible. Making each customer’s life easier should be at the heart of any digital transformation. Ordering ahead enables customers to quickly pick up their order and be on their way.

Follow these five steps to deliver a best-in-class loyalty program:

  1. Refine the value proposition – consider actions and behaviors registered customers can be rewarded for and design innovative strategies to reward them
  2. Design a simple experience – bring the program to life with an engaging experience across all channels, including a mobile app
  3. Incentivize registration – communicate the perks effectively by using A/B testing, and simplify registration with progressive profiling
  4. Understand the customer – create profiles with purchase history, such as favorite orders and non-purchase information, such as app engagement
  5. Personalize promotions – use dynamic segmentations and behaviorally triggered campaigns to deliver the right offer, at the right time, through the right channel

 

Restaurants need to evolve their digital strategy to meet these consumer expectations. Create convenience for customers, reward them for their loyalty, and interact with them in a personalized fashion. The secret ingredient to all this is the customer profile – made possible by cutting-edge technology, robust analytics and engaging loyalty programs can enhance the experience for consumers and improve speed and efficiency for your restaurant chain.

[1]   Economics Institute Shifting Wallets: New consumer spending habits, September 2022