Loyalty programs are an extremely popular way for restaurants to stay connected with their customers and keep them coming back. However, developing a sustainable, successful loyalty program for restaurants is no easy task. In fact, only 30% of restaurants offer some type of loyalty program. And for those that do offer a loyalty program, many restaurants and franchisees have no way of knowing whether their programs are effective in terms of retaining customers and providing value.

But diners are receptive to them. Loyalty regulars spend 67% more at restaurants than new guests do. New technologies and the ability to capture and manage customer data makes the possibility of implementing a restaurant loyalty program much more feasible.

So whether you’re building a new program from scratch or looking to revamp an existing one, here are three best practices for designing a loyalty program that customers want to participate in and that ensure franchisees are part of the equation for success.

  • Define the right loyalty value proposition

It’s important to create a value proposition that further engages your customers and aligns with your restaurant brand goals and objectives. Marketers often develop a proposition that is generic, and it’s time to shift from this mindset. We recommend developing a balance of compelling “hard benefits” and “soft benefits” for a successful program. The hard benefits provide your diners with the rational value and leaves them thinking “I’ve gotten my money’s worth.” This includes tactics like tangible instant rewards or promotional currency. The soft benefits, on the other hand, reflect the emotional value and reiterates the “I know I’m important” feeling for the diner. These are intangible benefits, such as status, appreciation, experiences and exclusive access.

  • Enable an engaging loyalty program that is customer driven, not capabilities driven

Understanding the customer lifecycle will help you create a customer-focused loyalty program that’s centered around your diner’s wants and needs. It’s important to consider the lifecycle stages and create awareness, engagement, growth and loyalty to retain your best customers. Think about how you can further nurture your diner relationships at each stage to create lifetime loyalty. This includes all aspects of the customer experience such as easy sign-up, the enablement of 1:1 marketing, optimal promotions, a flawless system for reward redemption, encouraging referrals and unlocking member benefits.

  • Maximize your technology investment with the right loyalty design strategy

Technology should enable your strategic vision. Create a strategy that’s unique to your program needs and then focus on the technology implementation. As you’re creating your strategy, consider incorporating these four components to validate that the program is the best fit for your brand: a competitive analysis; a thorough segmentation analysis to understand the value, attrition and potential of your customers (for example, you could apply Epsilon’s VAP™ Segmentation); and a detailed program design. Then, as you’re preparing the technology infrastructure for implementation, create a detailed roadmap.

It’s important to ensure all stakeholders see the value of your program and are on board with your strategic vision. Gaining executive buy-in up front and sharing “proof points” along the way will help fund your program needs as they evolve over time. You need to be unified in one voice, and “this voice” needs to resonate with your diners, leading to emotional connections and long-term loyalty.

Topics: restaurants, blog post, Loyalty, Customer Experience

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