In an ideal world, your restaurant will be filled with loyal guests that return one day after another. They will be placing bigger and bigger orders, generating you higher and higher revenue.
Are you ready to take off the rose-colored glasses now?
Reality doesn’t have to be grey. It’s actually possible to keep your guests coming back, again and again and again. Maybe not everyday, but hey, a few times per month is a pretty big difference than once. Now let’s take a look at the most common reasons why your restaurant guests are not loyal.
People go to restaurants to have a fun night out, to enjoy tasty food and socialize with others. How many times have you personally made plans such as “let’s grab dinner somewhere”? To me, it happens almost every time. Do I have favorite dinner places in town? Of course. Does it really mean so much to me that I visit them all the time? Not really.
Here is another scenario: I order takeout from Alex Sushi. I have 6000 cash points with their loyalty program and if I earn 2000 cash points more, I will get a free sushi menu for 2. Suddenly, my takeaway preferences become very specific. And it’s all because, I (as well as millions of people) fall into the simple physiological trick of rewards motivating my behavior and choices.
So back to the question, do you give your guests reasons to come back? Do you nudge them to swing by tonight because you are running a two-for-one offer on starters or do you expect them to come back just because?
Let's talk about loyalty programs. I’ll admit .. They can be a bit controversial. How is losing profit making you money? Well losing a small amount of the profit over higher revenue brings you more money that keeping all the profit from a lower revenue.
Here is the math - on a slow Monday night your revenue may be as low as $ 200.
You still have all your expenses present - kitchen staff, waiters, inventory, etc. Let's say that adds up to $150
Which makes your profit of the day $50
If you are giving out a 10% discount, and you get around 30% more orders. Your revenue will be around $260 . Losing 10 % of that means you have $ 234
You will use a bit more money on products but other than that your expenses stay the same. Suddenly, your daily profit rounds up to almost $100
On top of that, your clients feel rewarded for ordering your delicious food and that’s how a loyal customer relationship is built.
If you already have a loyalty program and it isn’t working for you then you might be doing something wrong. Here are a few questions to consider;
Promotion is a crucial part of a loyalty program. If people don’t know it exists, they won't sign up for it. If people don't know what the advantages are from being part of your loyalty program, they won't join it.
This brings us to our point, for a successful loyalty program you need to advertise it. Put up posters on the walls, make flyers for the tables, train your waiters to talk about it, print out information on the receipts.
Make sure your promotional materials explain what the loyalty program is, what benefits can one get and how to join. It’s also a good idea to offer a 10% discount from the first order. Offering an instant reward will give people a concrete reason why they should join your loyalty club.
Is your focus only on getting people in your loyal program and expecting them to use it without you moving a finger? Reality check! It doesn't work this way.
A restaurant guest’s life cycle is usually something like this:
Acquisition - retention - win-back - retention - win-back - retention and so the cycle continues..
Failing to realize this means you are probably giving one time visitors a discount for joining a loyalty club they have no intention of using again. Sending offers, inviting people to events, such kinds of initiatives make your guests come back.
It’s only normal that at some point your loyal guests will stop visiting for a longer period of time. Maybe there is a new restaurant in town, maybe people just have a slow period in their social circle, the reason doesn't really matter. What matters is that this is the moment you have to win back your guest. Create an emotional connection. As pathetic as they may sound, those “We miss you” messages actually work wonders. Your guests feel noticed. They feel important and before you know it they are booking a table for dinner.
And so the cycle continues..
Loyalty programs help you collect guests' contact information. They give you an easy way to directly contact your guests, retain them and boost your sales.
But that is not all, for example data collected from your loyalty program can show that people tend to redeem offers on Fridays and Saturdays. In this case, you can get even higher engagement with special offers and discounts. Or you can test sending out offers that are only redeemable for on a Monday night to boost the sales that evening.
You can continuously test and optimize your campaigns. You can segment your guests by how often they order, how big orders they place, etc. and send them a personalized offer based on their previous purchase behavior . For example, people who order your family combos, probably will be interested in getting an offer on them instead of an offer on cocktails.
Another big question, right?
So what is “adequate” when it comes to loyalty programs in restaurants? First off, people are not impressed with small rewards. If you offer under 10% discount, people will probably ignore your offer.
Second, keep your offer simple. People want perks, not a math exam. So offering “5% off burger and 8% off starters and 4 cocktails for the price of 3 and earn 1% cashback on the whole order” might be a better offer than “Earn 1% cashback on your order” but which one is easier to understand?
At the end of the day, the key to loyal guests are loyalty programs. It’s all about investing in your guests so that they feel motivated to invest in you.
Remember to keep it simple, keep it exciting and keep it rewarding. Read more about profitable loyalty programs for restaurants here.
If you are in need of a partner to help you with a loyalty program that is designed to fit the specific needs of restaurateurs, just give us a call.