Rewards programs have become a must for quick-service and fast-casual restaurants, and with good reason: Nearly three-quarters of loyalty program participants globally say these programs make them more likely to continue buying from a company, according to Nielsen.
However, creating a loyalty program is increasingly complex. As punch cards fade away, evolving technology and consumer habits push dining rewards to new levels. Today’s consumers are savvy and unwilling to spend time on programs that are confusing or impersonal.
Here are four trends restaurant operators need to know to keep their loyalty programs relevant, popular and profitable.
Signing up, earning points and redeeming rewards should be as intuitive as possible. The fewer steps the customer has to take, the better.
Kneaders Bakery & Cafe, a 57-location chain based in Orem, Utah, uses Paytronix, a card-based loyalty platform, to offer rewards program members 5 percent cash back on every order. Every Kneaders cashier is coached on how to clearly explain the one-time card registration process to customers. The goal, according to Kneaders President and CFO David Vincent, is to make the value proposition really clear and make customers feel like a member of the Kneaders family. Vincent attributes part of Kneaders’ revenue growth between 2010 and 2015 to its robust rewards plan. “Our primary focus is on incentivizing our current consumer base to return, while we work on attracting new customers,” he says.
Kneaders’ program also lets users put their cards in digital wallets and easily track their points. The latter is especially appealing for mobile-first consumers, who already keep tabs on everything from the number of steps they walk each day to their bank account balances on their smartphones.
Call it the Google effect: Consumers are used to being followed around online by ads for products and services they’ve researched. Brick-and-mortar businesses, meanwhile, are having trouble keeping up. A survey conducted by business management consultancy Capgemini found 65 percent of shoppers are frustrated by stores’ failure to personalize discounts or promotions. And as more restaurants create tech-driven loyalty programs that are easy to join, engagement is dropping. The average U.S. consumer belongs to roughly 13 rewards programs, but participates in about half, according to research by solutions provider Bond Brand Loyalty.
“It’s gotten so easy to download an app or provide your email [to sign up] and then forget all about it,” says Darren Tristano, chief insights officer at food consultancy Technomic. “But today, more than 50 percent of restaurant occasions are unplanned and hinge very heavily on cravings or being top of mind.” To grab customers’ attention, restaurants should send them coupons or special deals to redeem at the location they visit most, he says. For example, send a “We miss you” discount to a loyalty program member who hasn’t visited the restaurant in 30 or 60 days.
If running loyalty programs seems daunting, platforms like Belly and Spring Rewards make running a rewards campaign easy.
“What’s contemporary today is the ability to track rewards through mobile ordering,” Tristano says. Smaller chains are following the example set by major players like Starbucks and Domino’s Pizza, using technology vendors that integrate rewards systems with mobile ordering apps.
Kneaders uses mobile ordering vendor Olo, which works with Paytronix so that customers can earn points when ordering online. Layering mobile ordering and rewards systems not only provides a positive customer experience, but it also gives restaurants an incredible amount of customer data. Operators can test campaigns on different geographic areas and cater rewards to individual preferences.
Consumers love cash-back points and personalized perks based on their buying history, but when it comes to creating a real connection, nothing beats a good old-fashioned surprise.
Lauren Brown, owner of Neighbor’s Mill Bakery & Café in Springfield, Missouri, learned this when she hired Repeat Returns to handle her restaurant’s loyalty program, email marketing and gift cards. In addition to offering a program through which customers get discounts based on dollars spent, Brown used her system’s database to identify her top-spending quartile of customers. When Neighbor’s Mill’s first anniversary rolled around last winter, she sent these top spenders coupons for a free cupcake. She also offers a free birthday cookie to every loyalty program-registered customer. “Our cookies cost about $1.60, so it’s not a huge amount we’re giving away,” she says. “But people get so excited, and it’s a fun way to introduce a little bit of a celebration into the everyday.”
Chicago’s Molly’s Cupcakes, which runs a rewards program through the Belly mobile app, takes another approach to exclusive experiences: The bakery gives loyal customers the opportunity to smash a cupcake in an employee’s face, according to Dan Gloede, Belly’s CEO. The reward gets a ton of attention even though it doesn’t get redeemed often. In addition, this type of experience doesn’t require much more than a cupcake and a little elbow grease to clean up afterward.
By making rewards programs easy, worthwhile and exciting for customers, QSRs and fast casuals can maintain a steady—and profitable—base of repeat visitors.