Profitable restaurant loyalty program in 3 easy steps

What’s your favorite loyalty program? Mine is getting the 10th coffee at Starbucks for free. You might not think of that little card with Starbucks stamps as a loyalty program.. but it is. A loyalty program is any type of reward, discount or special offer you get as a reward for your brand loyalty.

Now if a paper card can get people to choose Starbucks over any other coffee shop, think of the power of digital loyalty programs. A digital loyalty scheme means your customers don't have to think about remembering their loyalty card or physical coupon. All they need is their phone. 59% of 25-34 year olds think it's important for a loyalty program to offer a digital option. If that is the regular clientele of your restaurant, then it’s time to embrace technology.

Restaurant loyalty programs in numbers

Many people have the perception that loyalty programs are just giving out free merchandise without any real profit for the business. Let’s put loyalty programs into perspective.

You do indeed have to give something for free. But the profits that you can make by utilizing a loyalty program and keeping your restaurant busy with orders, can grow your business tremendously. Here are some loyalty programs statistics:

• 81% of consumers say an offer would make them likely to switch restaurants they planned to dine at.
• Loyal customers spend 67% more than new ones.
• Increasing customer retention by just 5% boosts profits by 25% to 95%.
• The probability of selling to an existing customer is 60-70%, while the probability of selling to a new guest is only 5% to 20%.

There are in fact a lot more statistics online, all of which show the positive effect of loyalty programs in any business industry. Because loyalty programs really work.

Why do loyalty programs work?

It’s all simple psychology. Loyalty programs boil down to motivation and reward. Motivating people that they can achieve something - e.g. one cup of coffee will bring them closer to a free cup of coffee. And rewarding them for their loyalty - getting that free cup of coffee.

Positive reinforcement makes people repeat the actions that rewarded them and builds a positive relationship with the one rewarding them (in this case your restaurant).

That is the big secret to loyalty programs, engaging people, giving them a reason to buy from you and rewarding them for it. This simple logic keeps people coming back and spending even more - 66% of consumers modify the amount they spend to maximize points. It may sound crazy but have you really never added an extra portion of fries just to get your delivery for free? I have added a whole extra pizza.

How to make your restaurant’s loyalty program successful?

Keep it simple

First step to a successful loyalty program is to make it easy for the customers to understand what rewards they can get and how they can get them. When planning your rewards, always think about simple ways to encourage customers to purchase more. The more value people see, the more they will buy.

For example, you are running a bar and you want to attract more people on a Thursday night. You can create two discounts for loyalty members with different rewards - “Buy 3 cocktails and get 1 for free” and “Get 10 cocktails, for the price of 7”. More or less the profit of these 2 discounts will be the same but people see more value in 3 free cocktails so are much more likely to order 10 cocktails. This is an easy way to double your sales with a simple loyalty program offer.

Keep it exciting

The fear of missing out is one of the best techniques to push your guests into making an impulse purchase. The idea is to offer a reward that can be redeemed only within a short time period. Leveraging your guest’s desire to get something for free can make them change dining plans and visit your restaurant.

Let's look at an example: How tempted are you by the following message “Friday offer - get a free bottle of wine if you place a sushi order for over 600 kr. by 16:00 o’clock”

I mean.. You can't tell me that didn't trigger you at least a bit. Fear of missing out is all about creating a sense of urgency so people quickly convince themselves that this is the best dinner offer they will get tonight.

Create long-term commitment

Keeping your guests engaged is not always easy. Coupons for a free drink, soda or a side dish are great short term revenue boosters. But for a successful loyalty program you have to think long- term as well. It’s important to offer a loyalty system where the longer people stay the better rewards they get.

One of the best loyalty programs to keep your guests committed to your restaurant is point-based schemes. A point program means giving points to your guests every time they place an order, guests can use the points to get free drinks or food or a specific discount. This type of loyalty program provokes people to visit your restaurant more often and to spend more money, so they can continue adding points to their accounts.

How to find the right loyalty program system?

There are many providers of digital loyalty systems but only a few of them specialize in the restaurant industry.

To help restaurateurs grow, Quickorder developed a loyalty program integrated with your mobile ordering webpage. This way you can get people to join the program seamlessly as part of their online ordering experience. Such integrations allow you to easily grow your loyalty program, gather data on your guests, track consumers behavior, identify trends, send personalize offers and increase your revenue. Do you want to hear more? Get in touch for a nonbinding offer!