What is a restaurant loyalty program? | ResDiary

Restaurant loyalty programs are a widely used but often misunderstood strategy. Many venues will make the effort to implement such initiatives. However, the approach can sometimes fall short if not executed correctly. Enhancing the approach to ensure a loyalty program's full potential is realised from the get-go is key.

This guide will take you through the core components of restaurant loyalty programs. It will cover the benefits of such programs, and the various options on offer.

Once you've read our guide, your mind is sure to be buzzing with great ideas to utilise in your venue.

What is a restaurant loyalty program?

Restaurant loyalty programs are marketing strategies that encourage repeat visits and greater spending.  They can take on many forms. But they must in some way offer benefits like discounts or free products to customers. In turn, your restaurant can enjoy improved customer engagement and an increase in profits.

A common type of restaurant loyalty program involves giving customers points for money spent. These points are later redeemed for free items.

Programs may also offer free items after loyalty members have purchased a particular amount of a singular product, such as coffee. Either way, the customer is rewarded for providing repeat business.

Benefits of restaurant loyalty programs

Some of the key benefits of restaurant customer loyalty programs are:

1. Increased customer retention

Loyalty programs are a highly effective method of customer retention. A survey by Deloitte found that 47% of restaurant customer loyalty program members use their membership several times a month. 32% use them several times a week.

High levels of customer retention are a brilliant way to ensure more foot traffic in your venue. As you would expect, this equates to higher revenue.

2. Increased sales

Why is customer retention so important? One reason is that returning customers spend up to 67% more. 

A returning customer has already been convinced that your venue is worth their time. This means they will be more happy to spend greater sums for a better experience.

3. Word-of-mouth marketing

Loyalty programs can also be excellent additions to your venue's marketing efforts. Customers are often keen to share the perks of loyalty programs with their peers.

When you see a friend filling out their 10 coffees in search of a free drink, it places that café front and centre in your mind. This is the power of loyalty programs for a hospitality venue's marketing efforts.

4. More valuable customer data

Loyalty programs can be a valuable way to collect information about your customers. They can be especially effective in this regard if you rely on a digital rewards program.

Rewards programs can help you build a better understanding of your customers and which demographics your venue is appealing to. In turn, this helps you to identify some target markets you may be missing.

This data can be used to build customer profiles for more targeted advertising, such as ResDiary marketing integrations like email marketing. This is an effective way to drive more diners to your venue and promote your loyalty program. 

You can also gain simpler insights. These may include which dishes are especially popular or which are often bought in the same transaction.

Ideas for restaurant loyalty programs

Now that you understand the benefits loyalty programs can offer your restaurant. But which specific concepts should you implement?

Here are some of the top choices for you to consider.

1. Points program

These programs give points to customers for spending money in restaurants. These points can then be spent to get free products.

Here's an example of points program in action:

• A customer spends $200 dollars across a number of visits to your restaurant.
• As a result, they receive 2000 points with a value of $20.
• They cash in these points to receive a free meal the next time they visit.

Points programs incentivise customers to return to your restaurant time and again. They also encourage them to spend more money in order to receive more points.

“Games” with clear goals and rewards have a powerful impact on customers. Points programs take advantage of this and increase positive associations with your restaurant as a result.

Some of the most prominent loyalty programs in the world fall into this category. They have been used to great effect by the likes of Starbucks and Pizza Hut.

2. Tiered loyalty program

Tiered restaurant loyalty programs go beyond simply racking up more and more points. They feature various bands customers can ascend into as they spend more money.

Allowing customers to work towards specific reward tiers is uniquely impactful. It gives them something more tangible to focus on, rather than accumulating points.

You can split apart your tiers based on customer spend, offering unique rewards for the various tiers. Alternatively, you can offer various membership tiers with different dollar-to-point ratios.

Chick-fil-A utilises this system. Customers can ascend to higher tiers and earn 13 points per dollar spent, rather than 10. Higher tiers also offer a range of unique rewards.

3. Birthday and special occasion rewards

Who doesn't love getting spoiled on their birthday? Offering rewards for customers on their birthdays is a great way to develop a relationship with your diners.

It also helps to ensure that they visit your venue on this special day. Any restaurateur knows that birthday parties are big spenders.

You can also go deeper than birthdays. Why not record your customers' wedding anniversaries to ensure they make the trip to your venue on this day?

Offering rewards for special occasions is a brilliant way to build emotional resonance with them. It also entices them to visit your venue on days when they are likely to fork out more cash for a special dining experience.

Examples of restaurants that offer these rewards include Grill'd and Hog's Breath Cafe.

4. Online rewards

Implementing an online ordering system in your venue is no mean feat. Once you have gone to all this effort, you want to ensure that your customers actually use it.

Loyalty programs that reward customers for using your online ordering are a great way to do just that. Advertising that customers can get a free menu item or bonus points with online orders is sure to drive them to use your newfound system.

From there, you can enjoy all the benefits that go along with online ordering, such as:

• Incentivising customers to place orders at times when they don't feel like visiting your venue.
• Making your restaurant more inclusive by providing a more accessible way for particular customers to place orders.
• Providing another avenue for upselling.

Online rewards aren't just for upstart restaurants promoting a new online ordering system. In the USA, Domino's has combined an online rewards system with points-based rewards to encourage customers to place online orders.

5. Item-based loyalty program

This program incentivises the purchase of particular items. One very common example of an item-based loyalty program is using a punch card to track the number of times a customer has purchased a particular item, such as coffee.

Once the customer has purchased the requisite number of items, they receive some kind of reward. This might be a free coffee or a free pastry.

These programs are especially effective for daily purchases made by customers. For example, millions of people drink coffee on a daily basis.

Imagine a customer tossing up whether to go to your cafe or to a competitor. If they have had 9 of the 10 required drinks for a free cup, why wouldn't they choose your venue?

This can also be an excellent way to promote a new item in your venue. For a cafe, this might be a new pastry. By effectively offering free samples, you are allowing customers to try it and develop a taste for it.

Item-based loyalty programs can also be part of larger programs. For example, you may offer bonus loyalty points for the purchase of particular items. Again, this allows you to drive customers to purchase particular items.

6. Gift vouchers

Gift vouchers can play a major role in your loyalty program efforts. They are an excellent reward to offer as part of a larger program.

Selling gift vouchers offers your loyal diners the chance to share their favourite restaurant. Friends and family of your loyal customers may also purchase vouchers to give them.

Gift vouchers are an excellent way to start building out a loyalty program. ResDiary makes it easy to offer vouchers to your customers with the ability to customise their appearance. You can also easily generate voucher codes and send triggered emails.

Read more in our full guide to ResDiary gift vouchers.

How to implement a restaurant loyalty program

Now you understand the various choices on offer when building a restaurant loyalty program. Here are some additional tips for creating a program that is right for your business.

1. Choose the right program

Different restaurant loyalty programs work well for different businesses. For instance, item-based loyalty programs can be hugely successful for cafes. They're less likely to provide a big boost to fine dining restaurants.

Carefully selecting the perfect program for your business is instrumental. Take the time to go through the pros and cons of each program with the relevant stakeholders.

2. Run the numbers

In order to find the right program for your business, you need a clear financial picture. Consider the costs and potential rewards associated with each program.

Conduct a thorough financial analysis of each option. Be sure to factor in a wide range of outcomes.

For example, programs might be sustainable only up to a certain point. If your program will begin losing your venue money if it becomes too popular, you need to be aware of this.

Does this mean you should pull the plug on that program idea? Not necessarily. This analysis means you will know the point at which the program should be terminated, allowing you to act accordingly.

3. Get the word out

Promotion is critical to a successful program. Customers won't join your loyalty program if they don't know about its existence.

Your loyalty program will boost your overall marketing efforts. "Free" is often considered the most powerful word in marketing. Letting customers know about free offerings is essential to making the most of your loyalty programs.

Your program is also a great selling point that differentiates you from your competition. Lean into this in your marketing.

4. Make it easy to join

You need to understand the journey a customer will go on to join your program. Unintentional barriers and hurdles can prevent customers from becoming members and must be avoided at all costs.

If it is too complex or requires too many steps, they are unlikely to join it. This means all of the time spent developing the program has been wasted.

Ensure your staff are well-trained with regard to helping customers to join..

5. Jump on the digital bandwagon

Utilising a digital loyalty program offers many benefits compared to traditional alternatives. Here are a few benefits of stepping into the digital world:

• Customer data: It's been said that data is the new oil. It is a tremendously valuable commodity when refined. Digital loyalty programs offer a wealth of opportunities to gather customer data. From customer emails to demographics, this data can be useful for your marketing efforts.
• Accessibility: The vast majority of customers carry their smartphones with them every day. This removes the risk of them leaving their punch cards at home. It also means your app can sit on their home screen as a constant reminder of your business. You can bolster this effect with push notifications.
• Integration with online ordering: A digital loyalty program can be easily integrated with other digital functions of your business such as your online ordering system. This can lead to a more streamlined customer experience. It can also help to promote your other offerings.

Build restaurant loyalty with ResDiary

ResDiary has a range of features to create more loyal customers. This includes prepaid gift vouchers to allow customers to share the dining experience they love.

UK customers can also enjoy access to Dish Cult Rewards, a points-based loyalty program with 2.8 million account members. It's a loyalty and marketing program all in one, with minimal effort compared to bespoke solutions.

Of course, loyalty programs are just one part of the journey to building customer retention. ResDiary is a restaurant reservation system with over 60 integrations to deliver brilliant hospitality to your diners. Book a demo today and see how ResDiary can help you please your diners.