How to Develop a Restaurant Loyalty Program Unique to Your Business
Guest loyalty is the north star of hospitality success. It’s what drives revenue, builds brand awareness and can be the key to survival in an unstable economy. So why do so many restaurants struggle to build loyalty?
Guest retention isn’t just about scoring discounts or exchanging points for freebies. It’s about elevating the guest experience by understanding who your guests are and what they value. But to do that at scale, you need to collect guest data — a crucial step many restaurants miss.
Over the past few years, full-service restaurants have come a long way in leveraging technology, but many still don’t have the right systems in place to own or collect data. In this article, we’ll discuss guest loyalty and different ways you can collect and use data to develop a successful restaurant loyalty program unique to your business.
Guest Loyalty — What Does It Mean to Your Business?
When it comes to loyalty, there is no one-size-fits-all approach. To be competitive in today’s market, you’ve got to be creative.
For restaurants, there are two categories of loyalty programs: transaction-based and experience-based. Let’s explore both to find the best fit for your business.
Transactional restaurant loyalty programs reward diners based on spending and purchasing habits and perks are typically discounts, money back, or freebies. For example, you might reward guests based on visit frequency (e.g.,visit ten times in a month and get $25), or once they reach a purchase goal (e.g.,spend $300 in a month and get $20 back).
Smith and Wollensky Restaurant Group’s PPX program is a good example of a transaction-based rewards program. They award guests points for every dollar spent. Once a guest accrues 500 points, they get $25 to redeem. They offer different statuses and benefits based on a guest’s annual average spend.
While transactional and point-based loyalty programs are popular among consumers, tighter margins and rising operating costs make it tough for a lot of restaurants to offer discounts. Transactional loyalty also tends to be conditional. If convenience or pricing changes, guests are more likely to take their business elsewhere.
Full-service restaurants have a unique opportunity to deepen guest connections through experience-based loyalty programs.
Experience-based loyalty rewards are rooted in personalized experiences, like upgrades, exclusive events, offers to celebrate special occasions and VIP treatments. These types of rewards drive customer engagement, and over time, build trust through personal connections. Experiences can also tap deeper into a guest’s sense of recognition and belonging, creating a stronger emotional relationship with your restaurant and staff.
For example, Ethan Stowell Restaurant Group’s ESR Rewards Club offers loyalty members fun, experience-based perks, such as early access to special events and new restaurant openings, invitations to private parties, cooking classes and happy hours with Chef Ethan Stowell himself.
Each of these experiences helps Ethan Stowell Restaurant Group develop stronger emotional bonds between guests and their restaurants. Ones that aren’t likely swayed by a competitor’s convenience or price.
In a recent podcast with High EQ Marketer, loyalty and retention marketing expert Joy DasGupta explained that loyalty programs should aim to drive incremental behavior by tapping into both types of loyalty.
“You’ve got to be innovative and find ways to change your guests’ behavior,“ explained DasGupta. “You need to think more about the emotional components which could be ‘can I get the table that I want?’, which may be more valuable to a set of your customers than the actual $20 off. Those are the kinds of things that I call ‘surrounding consumer insights’. You start to understand why consumers are loyal to your brand and what they really want.”
While one type of loyalty may be more appealing to your restaurant, it isn’t black and white. Your program may be a combination of both types but to determine that, you need to understand who your guests are and what motivates them.
Define Who Your Loyal Guests Are and What They Want
So, who are your loyal guests and what makes them tick? This is the single most important step in establishing a successful resturant loyalty program, and it requires data.
How to Collect Guest Data
You might know some of your regulars but if you operate globally or run multiple locations, you need a more robust way of identifying loyalty. Guest data can help you establish who your loyal diners are at scale.
Simply put, guest data is information you collect from your guests at the time of booking a reservation or through online orders.
Guest data such as contact information is the baseline. What you want is enough information to understand your guests’ behaviors and preferences to help you identify potential rewards to offer.
If you own your reservation and online ordering channels, accessing that information should be simple. But if you rely on third-party platforms, then not only are you relinquishing your guests’ data but you’re competing for loyalty. Platforms such as OpenTable offer their own rewards program to customers directly competing for your guests’ loyalty — not to mention, it’s also where your competitors are advertising.
Working with disparate systems is another common issue for restaurants. If your platforms don’t talk to each other, you risk your ability to collect that guest data effectively and consistently. By integrating data across your tech stack, such as your reservation platform and POS system, you can create a unified guest identity. You’re then able to collect detailed insights such as location, dining and dietary preferences, check average and visit frequency.
How Mina Group Leveraged Guest Data to Identify and Reward Loyalty
Using SevenRooms’ reservation and client tags, robust guest profiles were automatically built each time a guest visited allowing Mina Group to easily analyze preferences and behaviors. Guests who made two visits within a certain time period were labeled “Future Fans”, while those who piled up 20+ visits earned the distinction of “Platinum VIPs”.
With this data, Mina Group was able to reward loyalty and create personalized experiences and targeted marketing campaigns for these guests. Read the full case study.
Regular access to quality data is crucial when building and evaluating your guest loyalty program. Moving to direct booking and online ordering channels allows you to own your data and gives you complete control over the type of information you’re collecting.
Discover the power of owning your guest data with SevenRooms direct reservation and online booking channels. Learn more
Build a Loyalty Program Unique to Your Restaurant
Once you determine the type of loyalty perks best suited to your customers and your business, the next step is to build out your program. Below are a few tips to help you get started.
Create a Clear Value Proposition
What you offer and how you offer it matters. Loyalty programs that cause friction with confusing terms, inefficient technology, or provide irrelevant benefits are doomed to fail.
If guests are confused about point systems or how and when they’re able to achieve certain benefits, you’ll only frustrate them.
Dunkin Donuts made headlines recently when they changed up their guest loyalty program. Confused and infuriated customers took their grievances to social media and the press. Originally, customers would earn points for every dollar spent and were rewarded with a free beverage of their choice once they spent $40 worth of points. Now customers have to spend $50 to earn a free basic coffee and upwards of $90 for a premium hot drink such as a latte.
This sudden change added a layer of complexity for customers and created an opportunity for competitors to step in with more attractive benefits. Your rewards should require some effort to achieve but shouldn’t be impossible. Keep it simple and make sure you’re providing transparency around your loyalty terms and benefits when guests sign up.
Educate Your Staff
Training your staff on your guest loyalty program is crucial. They should understand the rewards, points details and latest promotions well enough to not only service guests but advocate for the program and encourage new sign-ups.
Create an employee culture around your loyalty program to ensure everyone understands the benefits and importance of it. Consistent messaging from your staff at every touchpoint and across different locations builds credibility.
Pro tip: Surfacing guests’ loyalty status during service, such as check print-outs or reservation notes, is a great way to recognize your loyal customers and keep your program top of mind.
Personalize Your Experience and Messaging
If guest experience is the recipe to success, personalization is the most essential ingredient. A survey by Acquia found that 75% of American consumers say they’re more likely to be loyal to brands that understand them on a personal level.
Segmenting your guests based on their purchasing habits or preferences allows you to send hyper-targeted marketing emails with customized rewards. For example, if your rewards program offers special experiences as a perk, you could segment your wine lovers and create a personalized VIP wine tasting specific to them.
If you notice certain guests haven’t visited in a while, send a targeted email encouraging them to come back with a discount or, if they’re big spenders, promote high value incentives (e.g. exclusive products or services).
Get Regular Guest Feedback
Once you’ve created your loyalty program, your work isn’t over. These guests are driving your repeat business and are your biggest advocates. It’s important to continuously monitor their engagement and satisfaction.
Guest Surveys Periodically sending out guest surveys will help you uncover valuable insights you can use to modify your loyalty program or marketing strategies. It may also illuminate ways to enhance your menu and improve service. Below are a few example questions to include in your survey:
How likely are you to recommend our restaurant?
What did you enjoy most about your recent visit?
How often do you visit our restaurant(s)?
What measures can we take to improve your next experience?
Would you be interested in joining a guest loyalty program?
Monitor Social Listening & Customer Reviews Social listening is another effective way of collecting guest insights through social channels. Social listening tools such as Brandwatch can help you monitor in real-time what your guests are saying about your restaurant, track competitor mentions and follow guest sentiment on topics related to your business.
You can also identify guest sentiment trends from online review platforms like Yelp and Google. Check out your positive reviews to get details about guests’ experiences and what benefits typically stand out such as table and seating preferences, convenience, quick service, pricing, personalized service, and special menu items.
Consider Rewards That Enhance the Guest Experience
As we mentioned earlier, transaction-based awards alone might not be enough to keep your guests loyal. Below is a list of experiential benefits to consider adding into your rewards program that drive engagement and build stronger guest relationships.
Priority Reservations/Seating If your restaurants are hard to get into on a Friday or Saturday night or are booked out weeks in advance, prioritize your loyalty members and give them VIP access to reservations. If you have highly coveted areas within your restaurant, such as window tables or a popular outdoor patio, give your loyal guests preference. This type of reward doesn’t cost your restaurant anything, and the perceived value can be significant.
Advanced Notice/Discounts for Exclusive Events If you’re running special holiday events or wine tastings that are likely to sell out, let your loyal guests know first — and consider offering a discount for extra enticement.
Free Valet Services If your venue offers valet parking, give your loyalty members a discount — or better yet offer it for free. This is a great perk especially if you’re located in a busy city or your location doesn’t offer parking.
Free Delivery Reward your loyalty takeout diners with free delivery. It’s a simple, yet effective way to drive more takeout business.
Reward Referrals There’s no one better to ask for a referral than your biggest advocates. Reward your loyal guests who spread the word and bring new diners into your restaurant with perks and special offers.
Chef and Celebrity Events Invite your loyal guests to exclusive, VIP events with the Chef or Owner of your restaurant or to a wine or whiskey event with famous makers or connoisseurs. The more targeted and exclusive these events are, the more special your guests will feel.
Today, 57% of restaurants offer rewards and loyalty programs, and another 25% plan to invest in them within the next three years. With so much competition for your guests’ loyalty, finding unique ways to elevate the guest experience is crucial. Using guest data ensures you’re creating those “wow” moments every time with a restaurant loyalty program that keeps them coming back.
To learn more about how you can leverage guest data in your business, book a demo with SevenRooms today.
Restaurant Loyalty Program FAQs
Are restaurant loyalty programs effective?
Restaurant loyalty programs, when executed properly, are an effective way of generating repeat business and revenue. In fact, 43% of consumers say loyalty programs encourage them to buy from restaurants.
What should a good loyalty program have?
A good loyalty program should be a reflection of what matters most to your guests and your business. Restaurants should diversify transactional loyalty programs with personalized rewards and experiences such as VIP statuses, priority reservations and offers for special occasions to elevate the guest experience.