As COVID-19 spikes threaten to force restaurants into a cycle of loosening and tightening restrictions, loyalty programs may provide some much-needed stability. In a recent interview with The Spoon, the president and cofounder of Paytronix said during the worst of the downturn, one customer – who was representative of what the company observed with others – saw sales from non-loyalty members drop 75 percent, while sales from loyalty members fell just 20 percent (and their spending was not significantly lower than pre-COVID levels). It’s likely, for this reason, that major brands including Starbucks, Wendy’s and Taco Bell have been either introducing or upgrading their loyalty programs recently – adding new benefits and offering more convenient app-based payment methods. What can your restaurant do to entice customers to become more loyal to your brand?
Goodwill is going an extra-long way right now. To be sure, the restaurant industry is hurting and crucially needs its own support, but the efforts that operators are taking to show appreciation for healthcare workers and other first responders are earning an extra dose of gratitude from their communities. Social media is packed with images of items ranging from donuts to salads to ice cream that are being donated to healthcare workers. Other brands are making headlines for offering free delivery or discounts to people working on the front lines – and even to many other workers who have been laid off in recent weeks. If your restaurant is among those offering generous promotions right now, tap into your local media and regional neighborhood groups to help spread the word: They are likely assembling lists of operators who are showing some goodwill to their communities. You can also show some extra care to customers who are already part of your loyalty program by making it easier for them to earn points on their favorite dishes and pushing redemption dates ahead on the calendar to when times improve. Even if you’re not operating near capacity right now, you can look at this time as an opportunity to pay it forward somehow and build a rock-solid base of loyal customers – because you’d better believe that the people you go out of your way to help at difficult times like this will be supporters for life.
During times that feel difficult and unprecedented, it helps to look for silver linings. Right now for many people, one of those silver linings is feeling an increased sense of pride in our communities and a closer connection to them – even as we have to keep our physical distance. Neighborhoods are coming together to provide help for the vulnerable, and that includes people isolated at home and businesses working hard to survive. While the restaurant industry has long been adopting a local approach to suppliers, times like this prove the value of simply being a good neighbor as well. A recent NBC news story from San Diego reported that a couple launched a GoFundMe account to help two groups important to them: healthcare workers on the frontlines of coronavirus treatment and local restaurants that are part of the fabric of the city. The account collects donations from the public and the funds can be used by healthcare workers at San Diego hospitals to buy takeout or delivery food from the city’s restaurants. The account, which launched on March 16th, was just $1000 shy of its $15,000 goal at the time of this writing. Consider tapping into the ingenuity of friends and supporters of your restaurant in your community. Many are looking for ways to be useful during these times and want to help you work through them. Make it easy for them to support you by purchasing gift cards on your website – or by sharing the website https://supportrestaurants.org/, a global initiative that allows people to buy gift certificates for their favorite restaurants below face value but redeem them at face value.
Offering a targeted loyalty program will build your customer base — no big surprise there. But how much more effective is it to offer such a program than to not offer a program at all? And with so many businesses offering loyalty programs nowadays, how can you stand out? New research from Accenture Interactive found that members of customer loyalty programs generate 12 to 18 percent more revenue for businesses than customers who aren’t members of a program, Dine Engine reports. What’s more, 81 percent of consumers said they were more likely to continue giving their business to brands that offer a loyalty program and 73 percent are more likely to recommend a brand with a strong program. The report said consumers are more likely to adjust their spending based on a loyalty program by spending more money to earn more rewards. These programs may even help restaurants retain loyal guests during economic downturns when consumers are cutting back on discretionary spending. However, research from Forrester found that more than 80 percent of loyalty programs use currency such as points or miles, which can make it difficult for programs to stand out. To boost your program’s chance of success, it can help to remove the barriers that stand between your guests and the rewards they can earn. Show them a clear path to rewards and try to avoid having them encounter multiple barriers such as having to download an app, remember a membership card or login details at each visit, enter a code or register an account online. Also, take a look at potential experiences you can offer your guests. What memorable events or offers can you provide that won’t easily be replicated by your competitor down the street?
Rising labor costs are forcing all restaurant operators to make tough decisions about how to manage staff and how to prepare the food they serve. But what happens when the decisions you have to make are central to the brand identity your guests associate with you? Case in point: Chop’t. The fast-casual chain is known for chopping salad in front of the customer, a practice that provides some visual intrigue while sending the message to guests that their food is freshly prepared according to their tastes. But the company announced recently that it would be making the switch to pre-chopped ingredients. (Guests can still have their salad chopped but have to request the service.) Darren Tristano of FoodserviceResults predicts that regular guests could be turned off by these changes — in the short term — but will probably forgive the changes and return to old habits eventually. Just the same, if you’re experiencing a similar need to cut back on services that are central to your brand and important to your best guests, what can you do? A well-executed loyalty program may help you bridge the gap. Chipotle, for example, recently unveiled a new digital loyalty program designed to both give guests what they want and continue to collect customer data that will help the brand feed future decisions that will keep guests engaged. Skift Table reports that the new loyalty program, which was market tested for months, awards guests with free chips and guacamole after one purchase. Each $10 purchase earns guests one point and after $125 spent, guests earn a free entrée. These enticements are encouraging more visitors to sign up for the loyalty program — and share their data in the process. From there, Chipotle can study what factors bring those guests back and make them spend more money, whether it’s discounts on certain items or special promotions. What can you do to keep your guests coming back?
A Harvard Business School study found that by increasing customer retention rates by just 5 percent, profits will climb anywhere between 25 and 95 percent. It pays to identify your regulars and find ways to keep them coming back. Katrina Kutchinsky of KK Communications, a public relations and social media agency focused on the hospitality industry, told OpenTable she recommends restaurants focus on offering added value over any type of discount. So once you have regulars who have already joined your email list and your loyalty program and you’d like to go the extra mile to take care of them, taking after-dinner drinks or dessert off their bill may go further than offering them 10 percent off their next visit. (This also makes your specific experience harder for competitors to copy.) There are other ways to build value into the experience you offer too. Offering free samples of a new appetizer, a bookshelf of donated books or games accessible to guests waiting for food, tableside entertainment, live music offered by musicians from a local college, or small gifts for children and for special occasions like birthdays and holidays can all communicate value as well. You don’t even have to spend money to generate value: Create memorable ways to involve guests in your decision-making, like asking them to vote on a variety of dishes you’re considering adding to the menu. Or simply be present. Having your manager make a brief stop at a table to ask for feedback or help with a concern, or to invite guests to take a post-meal survey or join your loyalty program — can go far in helping you demonstrate that you care about guest preferences.
It’s pretty simple: Your regular guests are motivated to earn points for their purchases and to get transparent communication from you about what it takes to redeem those points. It’s a lesson many major brands have learned and are now adapting to accommodate. Skift Table reports that Starbucks, Chipotle, Pizza Hut and TGI Friday’s are just a few of the brands that have implemented new points-based loyalty programs in recent months, and to positive reviews. Some of the results have been dramatic. The report said that Punchh, a digital marketing company that helps a range of restaurants with loyalty program development, helped TGI Friday’s UK generate a 66 percent increase in revenue from loyalty program members and a 51 percent increase in new unique guest visits in the first four weeks of launching a new loyalty program in July. According to Mobile Marketing, the number of users referred by the app who made a verified visit to TGI Friday’s UK skyrocketed 300 percent in that same timeframe. The new loyalty program stands out not for its bells and whistles but for its transparency. While it started in 2015 (also with Punchh) as a “scratch, match and win” game designed to generate probability-based rewards, the new program has a spending-based system of points or “stripes” to help customers see the path they need to take to earn rewards.
The California Consumer Privacy Act (CCPA) could have nationwide implications for how restaurants manage their data, protect consumer privacy and market their business. The National Restaurant Association hosted a webinar recently with Helen Goff Foster, a partner in the Technology + Privacy & Security for Davis Wright Tremaine, who reviewed the implications of the law, which is set to go into effect next year and could likely set similar legislation in motion in other states. The act will impact how businesses manage the consumer data they collect and the loyalty programs they operate. Unlike GDPR, which is about having consumers opt in to providing personal information, CCPA is about allowing them to opt out. In broad terms, for a wide swath of businesses, the law requires businesses to let consumers access the personal information you track, and gives them the right to delete information, and to opt out of the sale of that information. It also requires you to give consumers two methods of contacting you about it (including an 800 number). Businesses must therefore be able to retrieve consumer information across its affiliates, business units, product lines, etc. The law is intended to prevent businesses from providing discounted service or price to certain customers but not others (which clearly creates some hazy territory for businesses operating loyalty programs). There are fines in the thousands of dollars for violating the law and businesses could also be exposed to a private right of legal action by consumers against the business and its affiliates. Franchises could be especially vulnerable because they could bear legal risk but aren’t able to dictate privacy policies of their parent company. Foster advised that the best thing businesses can do now is identify where their consumer information is and how to access it. You’ll need to determine how to provide opt-outs for most of your consumer data and assess the ability of your vendors to do so as well, so update (or establish) your information security program. For more information about the law’s potential effects on restaurants, access Foster’s webinar and Q&A here.
It’s not enough to have a loyalty program: 59 percent of millennials quit loyalty programs because the rewards were not valuable enough, according to a recent study by Software Advice. Other common complaints: Guests feel like some restaurants string them along too long before they can earn a reward, and they feel bombarded with emails and other notifications. The right use of tech can help. The Rail suggests operators first find ways to clarify the path to rewards. So instead of saying “50 points earns you a free appetizer,” show the guest how many meals she has purchased or points she has earned toward that free offer. If you have a mobile app, integrating mobile payment into it is a bonus because it helps guests speed past the steps typically required to make an online purchase. Finally, when you send notifications, aim to customize them based on the guest’s past buying behaviors to better your chances of translating promotions into sales.
Any restaurant consultant will tell you to have a strong loyalty program. But within those programs, there is plenty of opportunity to differentiate your particular restaurant. Take McNellie’s Restaurants, an Oklahoma chain that is using different methods for generating traffic and valuable feedback via their loyalty program. For one, members of the program are invited to come to the restaurant on specific days and get 50 percent off their bill if they ask to meet with one of the restaurant’s managers and have a conversation about their experience. Another offer encourages members to bring a friend (and get a discount if that friend signs up for the loyalty program). The brand also has different levels of loyalty and associated benefits that members need to work to retain. For example, the restaurant gets a 90 percent conversion rate when they send an email to guests telling them they need to come to the restaurant at least once that month to retain their VIP status.