Top 3 Reasons Your Loyalty Program Isn’t Working

By: Melissa Canellis


Brands implement loyalty programs to attract and retain loyal customers. Over the past couple of years, the changing landscape of the restaurant industry has brands competing on a variety of strategies to cultivate highly sought-after customer loyalty. Because customers have plenty of options when choosing a dining experience, restaurants need a loyalty program to keep them relevant to guests’ current preferences.

Restaurant concepts need to deliver on three key points:

  • Quality Food & Value – Customers are interested in authentic entrees, with healthy options that provide a well-rounded transparency message, including sourcing details – all at a fair price.
  • Personalized Experiences – Provide an interactive ordering and/or dining experience with personalized recommendations and relevant rewards to enhance dining satisfaction and overall customer satisfaction.
  • Ease, Convenience & Safety – Customers have turned to new solutions that simplify their lives and help them feel safe and healthy. For many brands, this is translating the dining experience into an online and mobile ordering solution to better serve guests. This includes contactless payment, curbside pick-up, and a range of delivery options.

Loyalty programs help brands deliver on these important aspects and keep customers engaged across multiple channels and touchpoints. Restaurant loyalty programs also deliver benefits to concepts by encouraging check lift, reducing churn and growing customer lifetime value. However, understanding the value of a restaurant rewards program is just the beginning for brands.

Customer sentiment studies indicate guests want more from their favorite restaurant concepts. According to a 2019 KPMG report, 96 percent of consumers feel that loyalty programs can be improved. Furthermore, 75 percent of consumers would switch to another brand (enter your competition) that has a better loyalty program. Lastly, only 37 percent of participants identified points to be an effective mechanism for retaining their loyalty. 

Because no two guests are exactly the same, brands must rely on their loyalty programs to help them identify each customer, appeal to his or her specific needs and preferences and build a level of trust with those they serve. If your loyalty program isn’t driving lasting customer loyalty, here are three aspects of functionality that your brand needs to address within your solution.

loyalty program system integration3 Reasons Your Loyalty Program Isn’t Working

#1 Lack of Integrations 

Over the past two years, concepts have had to increase their digital capabilities to continue driving sales during the pandemic. With a shift in customer behavior to off-premise dining, brands are prioritizing online and in-app ordering, contactless payments, curbside pick-up and a range of delivery options. Many concepts are finding a need  to reposition their current model to create a seamless, modern restaurant experience on- and off-premise, while also considering how to ensure a safe and convenient environment that connects front-of-house guest management systems (tablets, QR & kiosks) to back-of-house (POS, kitchen display & 3rd party ordering/delivery) systems. Brands without integrated systems are not achieving maximum operational efficiencies and leaving valuable data siloed without the ability to optimize this information in their marketing and loyalty efforts. 

Restaurant Loyalty Integration Tips

Loyalty programs that seamlessly integrate with a brand’s existing tools and technologies provide a 360-degree view of the customer that drives visit frequency, reduces the risk of lapsed customers, and leads to higher spend. Look for a loyalty solution with an extensive set of APIs for a wide-range of systems. This offers the quickest time to value for a brand and maximizes their investment by reducing the need for multiple vendors to round out their tech stack.

#2 Lack of Unified Data

Today, restaurants must lean on data and analytics to help establish and build guest relationships that enhance and personalize the customer experience. This means having the ability to tap into information in real-time, which is coming from multiple sources such as

Wifi marketing, POS systems, order-taking kiosks, payment systems, social media channels and more. Many concepts lack the right technology and are not positioned to track, understand and deliver on the wants and needs of current and prospective customers. Additionally, without unified data restaurants lack the metrics to guide their operations. Sales growth initiatives, labor software, inventory management, menu updates, and hours of operation must now all be connected in one way or another to truly deliver on the ultimate customer experience.

Restaurant Loyalty Data Unification Tips

A single platform that unifies data from multiple systems and utilizes a dashboard to display daily metrics gives restaurants the best method for tracking trends and delivering real-time actionable insights. Programs need to move beyond end-of-the-day batch reporting to deliver a better customer experience as guests receive updated rewards and point totals in real-time. Concepts should access performance data results at the store, program, campaign, offer, SKU and customer levels to gain a comprehensive view of their loyalty strategy.

#3 Lack of Personalization

Marketers need to be very strategic with how, when and what promotions they offer customers in order to gain their loyalty and in order to remain a competitive business. During this highly uncertain environment, static offers have the potential to provide ineffective discounting while also devaluing the food, ordering and dining experience. Restaurants must understand that static, one-size-fits-all promotions, despite any short-term bump in traffic, will be canceled out by decreases in margins and the short-lived attention of price-conscious guests. Without the ability to connect on a 1:1 basis with their guests and provide them with value and personalization, brands will easily lose customers to the competition.

Restaurant Loyalty Personalization Tips

With the right integrations and platform, brands can fit data together in real-time to create individual customer profiles that “show” marketers how, when and over what channel to best engage their customers. In the new frontier of the customer experience, the true measure of effective personalization will be a brand’s ability to understand an individual’s current context and deliver precisely what he or she is looking for, in the moment of need. Brands also need the ability to drive specific outcomes like incremental visits, changing customer habits, or engaging lapsed guests in automated ways like a personalized push notification. By personalizing messaging and incentives, a brand rewards their guests and improves the customer experience to deliver on their loyalty promises. 

Punchh can help you overcome any barriers to loyalty program performance and provide solutions that will help you efficiently scale in the future. Contact us today for more information.

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