17 May 2021

A Look Forward at 2021 Loyalty Trends in the Restaurant Industry

By: Brittany Maroney

Inspiration

If nothing else, this year proved that the restaurant industry is adaptable, unshakeable and always ready to re-invent itself. During a period where it was rocked by a devastating pandemic, labor issues, and product shortages, it rose from the ashes and made 2020 one of its most transformational years ever. It’s a credit to the resilience and fortitude of an industry used to struggling, surviving on tight margins and high turnover. One that will prove to make it stronger in coming years. 

So what were the opportunities coming out of 2020, and what are we continuing to discover as we navigate the murky waters of the last half of 2021? Here are some of the hot button issues and key learnings we are continuing to see the industry navigate:

THE RISE OF RESTAURANT TECH

In March of 2020, businesses nationally were forced to shut their doors, generating an explosion in online ordering and food delivery. Takeout and 3rd party partners became a critical part of consumers’ routines, with 68% of customers saying they were more likely to purchase takeout from a restaurant than before the pandemic and 53% saying that takeout and delivery is essential moving forward. While the industry struggled to keep up with this new channel of demand, what became abundantly clear was that outdated and antiquated restaurant systems were not set up to expand with the business. Restaurants that were forced to close permanently were those unable to quickly pivot with their technology. 

However, for many restaurants, the pandemic enabled them to adapt the platforms they had currently and, where necessary, evaluate new technology options quickly. They leaned into online ordering options, 3rd party delivery integrations and new loyalty programs to continue to provide customers the personalized experience no longer available within the four walls of their restaurant. The winners of 2020 were the organizations that embraced a new wave of digital innovation through personalized mobile apps, online ordering platforms, and the latest in loyalty technologies to ensure a contactless guest experience that is truly seamless, convenient, and memorable.

OMNICHANNEL IS MORE THAN A BUZZWORD

The restaurant business has and always will be based on the simple concept of hospitality, but with the new contactless reality, new definitions had to be embraced by operators. At its fundamental core, a good customer experience comes down to a seamless, positive, and rewarding interaction at every touchpoint with a brand. Where once this was confined to the four walls, now guests are expecting the same level of service off of their digital devices, apps, in their social media feeds, and in their loyalty programs.

Thanks to 2020, the restaurant industry is currently in the wake of moving towards adopting an omnichannel loyalty approach that delivers convenience, relevance, and value the customer craves from all channels. And while consumers are slowly starting to dine out once more, insights say that the trend towards digital engagement will continue to be part of the restaurant industry’s DNA. In fact,  64% of delivery customers prefer to order directly from the restaurant, and 18% prefer to order through a third-party service. Restaurants will need to have a streamlined system in place that allows them to process the order virtually, place it in a queue, package it, and consider how the pick-up or delivery experience will reflect on the seamless encounter a guest expects. They also will need to connect with these “on the go” consumers in a unique way, personalizing their engagement and offering loyalty options customized to their lifestyle. With time being a factor, those that quickly find an integrated solution that resolves these experiential touchpoints will be the brands that thrive amid their competitive space.

LOYALTY AS A NON-NEGOTIABLE

Prior to 2020, most traditional loyalty programs were card-based, coupon-focused, and single channel. They often rewarded for spend over engagement and typically did not award for behaviors that lead to accruable purchases, nor were they real-time. Sound familiar? It did to the industry as a whole, and in 2021, over 42% of restaurants announced that they planned to invest in customer loyalty programs. 

In this new reality, many brands are shifting to AI-powered cross-channel loyalty, maximizing the consumer’s preferences to interact with the brand in new ways. With the rise of Amazon, Netflix and Starbucks came a desire from the population for personalization and messaging relevant to them. Consumers are open to sharing their information with brands they love, as long as the concept is willing to invest the time in providing that personalized experience. Also shifting is the industry’s reliance on single campaign offerings to a more holistic, series of campaigns delivered in real-time. With a loyalty member 6 to 10 times more likely to frequent the brand, gone are the days where a restaurant concept could just rely on a single channel eClub. Bottom line, if you are not investing in being top of mind to your customer base, you won’t be able to keep up with the 42% that is. 

CURATED EXPERIENCES WILL TOP DISCOUNTING

Tight margins and a continually shifting competitive landscape have kept many restaurant marketers chained to the same offers, seasonal LTO’s, and outdated campaigns. While once these tactics had proved tried and true, in today’s climate, brands need to learn to be more nimble. By gathering data points from more channels, concepts are able to shift from the traditional cookie-cutter archetypes to actually plucking out individual customers and rewarding them in real-time. To truly offer relevant experiences across all of your channels, you need to understand your customer’s lifestyle, as well as their behaviors, by capturing large amounts of customer data. Simultaneously, this opens the door to segmenting your customer base by trends while personalizing their offer and purchasing journey. 

One way that data can drive a curated experience is by rewarding during special occasions that elicit a positive brand connection from the guest. While the traditional routes of bonus points on Mother’s Day, free dessert on birthdays, or a discounted appetizer on a program join anniversary still works, you also can consider upselling products on future visits or loyalty milestones to your top 10% of Loyalists. A loyalty strategy that uniquely integrates your brand into the day-to-day of a customer while providing an enticing and actionable offer, naturally builds loyalty. 

Designing a purchasing journey is also allowing brands to take a step back from just typical couponing. Consumers overwhelmingly have grown away from offers like “a free item for every ten purchased”. Instead, they would rather have access to special rewards that “money can’t buy” like customized swag, secret menu items, and exclusive dining experiences. You also can map their purchasing behaviors and expose them to new dayparts, merchandising options, or LTO offerings that match their profile. This is the future of your loyalty program, unique, consumer-focused, and engaging. 

As dining rooms continue to open this summer and a return to a “new normal’ on the horizon, many restaurant marketers are on the precipice of a new age of loyalty in the industry. Competitors continue to get creative, and customers are evolving their behaviors at an even more rapid pace, leaving many marketers looking to innovate to win. What this means for your concept, only time will tell. One thing is for sure; there’s no going back now. 

Contact us today to learn more about the Punchh Loyalty, Offers, and Engagement platform.