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5 Steps to Start a Loyalty Program for Your Restaurant

Tuesday, May 1, 2018
Shyam Rao

Restaurateurs roll out loyalty programs because they know two things:

  • Acquiring new guests can be more expensive than retaining frequent visitors, and
  • Loyal guests can drive higher revenues than random guests.

Although there can be many other reasons to justify the need of loyalty program, but the bottom line is to retain more guests, increase guests’ visit frequency and gain incremental revenue. The success and effectiveness of a loyalty program, however, can be greatly dependent on how you conceptualize and configure it, what platform you choose to enable it, and how you advertise it to engage more guests. These five simple steps should help you design and implement a loyalty program for your restaurants: blog-header-5-steps

  1. Scope and define the requirements for your loyalty program.

First, study the buying behavior, demographics, and preferences of your guests. To be able to do this effectively, you should have a customer data management solution in place that allows for the automated collection of guest data. With sufficient data, you can easily profile your guests and design a loyalty program that suits their behavior and demands. Second, identify your specific objectives for rolling out a loyalty program by answering questions such as: Who are the target guests? Should they be VIPs only or all guests? What are the participating branches? What is the min-max number of guests to target for positive ROI? How much of the budget will be allocated for this? What is the best-fit platform to enable it? etc. Based on these analyses, you will be able to conceptualize a loyalty program that can best cater to the guests’ requirements and expectations.  

  1. Select a loyalty platform provider.

This step is crucial because the quality of the platform and the industry expertise of the provider can greatly affect the success of your loyalty program. Elizabeth Skipor, a Senior Analyst at Source One Management Services, advises restaurants to consider the technical capabilities and industry expertise of the provider. “The provider should have the ability to deliver an easy-to-use customer interface via Web and mobile and real-time data updates for business employees to be able to view and address any account management questions via your consumers,” writes Skipor in her article. Skipor also suggests partnering with a provider with a robust reporting and analytics tool for loyalty programs so restaurants can effectively gauge the success of the program. She also recommends getting assistance from a provider that can grow with your business and support different types of loyalty programs.  

  1. Select a type of loyalty program.

The different types of Loyalty programs used by the restaurants include points-based rewards program, visits-based rewards program, tiered membership programs, and surprise and delight. Here is a blog post on the different types of loyalty programs that can help the restaurants in choosing the right loyalty program. The decision on the loyalty program should primarily be based on the guests’ expectations and requirements.  

  1. Define and configure the program and rewards.

Tailor the program and reward system with respect to your target guests, business objectives, and chosen type of loyalty program. The restaurant should pay special attention to the preferences of today’s Millennial guests because they are the most valuable segment for your restaurant to target with loyalty programs. Surveys reveal that today’s Millennial guests join loyalty programs that offer a variety of rewards that accrue quickly. They sign up for rewards that are based on their purchase history and offer higher discounts and better value. They also prefer automated rewards signup and redemption via their smart devices, prepaid debit and gift cards.  

  1. Advertise and get signups.

Choose a platform that puts mobile engagement at the heart of your loyalty program. It can be very effective for advertising and increasing signups because today’s guests prefer to engage using their mobile devices. The platform should also allow for immediate and automated notifications and feedback to keep your guests engaged. Loyalty programs are a great way to enhance guest loyalty and thereby increase sales while minimizing costs. To roll out a loyalty program for your restaurant that truly converts, strategically craft your program using a platform purposefully designed by experts in the restaurant industry.   For more information, please visit https://punchh.com. Schedule a demo with us at https://punchh.com/contact-us.

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