8
Nov

With Mobile, Restaurant Loyalty Has Many Flavors

Everyone loves the perks of great loyalty programs but gets bogged down carrying (and losing) countless punch cards. Thanks to smart phones, any restaurant brand can launch a mobile loyalty program, and engage more customers than they ever could did with traditional punch cards.

Not all loyalty programs are created equal – what works one brand or a specific customer segment doesn’t work as well for another brand or another customer segment.

With Punchh, customizing loyalty programs for specific brands and customer segments is simple, fast, and easy.

Here are a few types of loyalty programs:

Visits-based programs:

Objective:  To drive customer frequency.

What:  Customers get a reward after a certain number of visits – the exact number of visits before a user earns a reward.

What type of brands: For concepts where simplicity of the rewards program is key.  Typically used by QSR brands (incl. Pizza), habit-forming purchases (e.g., coffee).

Best practices:

  • Getting the number of visits for reward eligibility right is key, so that customers feel that the reward is well within reach e.g., 7-8 visits vs 12. Even if the target is 12, the brand can “gift” punches based on other actions such as registering via Facebook etc so that the customer feels that the reward is well within reach.
  • Keeping the number of visits for reward eligibility too low, can result in lower Return on Investment (ROI)
  • Having a minimum spend (e.g., close to the average check size) to be eligible for a punch can also be useful, to prevent very low spenders from getting the same rewards as higher spenders e.g., customers who only order a soft drink

Visit-Based Restaurant Loyalty ProgramsVisit-Based Restaurant Loyalty Programs

Spend-based programs:

Objective:  To drive customer spend

What:  Customers get a reward after a certain amount of spend – e.g,, 5 points for every $100 spend.

What type of brands: For concepts where the menu item pricing varies a lot. Typically used by fast casual and casual dining brands.

Best practices:

  • Tuning the total spend amount for reward eligibility so that it is not so high that it discourages customer participation
  • Keeping the total spend for reward eligibility too low, can result in lower Return on Investment (ROI).
  • Flexibility to redeem different rewards based on the number of points that are redeemed e.g., rewards for 25 points for an appetizer, 50 points for a memorabilia, or 75 points for an entrée etc., versus just having a single reward type after earning. Customers value different things
  • Rewarding only specific day parts or specific menu items can build customer loyalty for less-busy periods

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Spend-based restaurant loyalty programs

Tiered-spend based program:

Objective:  To drive customer spend and to reward customers, based on tiers of spend levels (time- and total- based)

What:  Customers get a reward after a certain amount of spend – e.g,, 5 points for every $100 spend and additional rewards for spending a given amount within a specific time period – e.g., 20% higher points for customers who spend $150 within a 3-month period or well above the average check size in a single visit.

What type of brands: For concepts where customer spend-levels vary significantly and customers seek to display status and/or seek exclusivity , e.g., group dining, business customers etc. Outside the restaurant industry, airlines and luxury hotel brands have tiered-spend loyalty programs.

Best practices:

  • Big delta in total spend required to be promoted to higher tiers
  • Exclusive rewards for higher tiers as well as exclusive menus/items for purchase
  • Recognition of customers who are in higher tiers (e.g., American Express Black)
  • Transferability of rewards to other exclusive third-party brandstier_based

Tiered-spend based restaurant loyalty programs

Special loyalty programs:

With Punchh’s mobile CRM platform brands can also implement other types of loyalty rewards, such as Surprise and Delight and rewards for other actions such as putting a heavy premium on referrals, reviews,  likes, shares, gaming, online ordering, pre-pay, and surveys.

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