All You Need to Know About Restaurant Loyalty Program

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When I was living in Bangalore, I avoided trying new restaurants. First, I don’t like to experiment with food. Second, I had a favourite restaurant in Indiranagar.

Of course, the favouritism was not limited to the food there. It was also because of the experience they delivered and the offers I received.

That restaurant has literally turned their customers into brand loyalists and I was one of them!

How did they do it? Through their restaurant loyalty programs!

And I always wanted to write about it. So, here’s a  blog where I walk you through the nuts and bolts of the restaurant loyalty programs to turn your visitors into repeat customers.

The History of Loyalty Programs

Before I jump in and write all the stuff about restaurant rewards programs, let’s go back in time and see how it was in the past.

There is a lot of information available on the internet about the history of the loyalty program. And I have gathered some of the significant points.

According to several resources, the practice of loyalty or reward programs started back in the 1700s. A lot of retailers used to give their customers a copper token which they could redeem later for future purchases.

This model of rewarding soon became an effective way of retaining loyal customers. It even turned popular during the early to middle 19th century.

However, there was a drawback. The use of copper was costing merchants a lot more. And from there, different approaches kept coming — green shield stamps, card-based programs, box tops etc. were some of them.

Despite all the transformations, loyalty rewards programs for restaurants are still in the game. Only the way it works has changed. It has become more comprehensive (you’ll learn about it going forward) and sophisticated.

The Science Behind Loyalty Program

These restaurant rewards programs definitely help businesses gain loyalists. But have you ever wondered what’s the science behind this? Let me explain!

First things first, there’s no rocket science involved. You don’t need to have a degree in psychology from Harvard.

You just need to know the basics involved in influencing profitable customer behaviour. When you understand this about the human brain, you’ll be able to reach your loyalty program’s full potential and maximize conversions.

Positive reinforcement

Positive reinforcement plays a crucial role in curating loyalty programs. If you don’t know what it is, positive reinforcement is a process that is used to encourage new behaviour.

Whether you’re training your furry friend to sit, or asking your kids to complete their homework, or getting your employees to turn up to work on time, positive reinforcement is what you need.

Gamification is a great example of this approach. When you apply game-design elements and principles in your loyalty program, people are more likely to perform a certain action. Why? Because the human brain loves competitive or achievement-gated rewards. Every time they win and get points, they build a sense of accomplishment, happiness, and excitement.

Simply put, when you offer rewards to your customers for a certain action, you encourage them to keep engaging in the desired behaviours.

Key Statistics to Keep in Mind

Now, if you’re wondering whether a loyalty program is worth investing in, then here are some statistics from Bingage:

• 49% of customers spend more after joining a loyalty program
• 83% said that they are more like to purchase with a brand with a loyalty program

If this doesn’t convince you that loyalty programs are imperative then I don’t know what does.

How to Run Loyalty Programs?

You just cannot start a program upfront. There are certain things that go behind the scenes. Let me tell you how to create a successful restaurant loyalty program.

The Prerequisites:

• First and foremost, you have to understand your customer base. Because your loyalty program has to be aligned with the interests of your customers.
• Next, you have to do some compset analysis. Having a comprehensive understanding of your competitors is crucial in the F&B industry. Try and determine what sort of reward programs other restaurants are running. Also, figure out how they are working for them.  
• You also have to revisit your budget before you start a loyalty program. It is important to keep aside cash for the rewards of your program. If you haven’t made any slot for a loyalty program in your budget, maybe you can try reaching out to the finance folk and make some adjustments.
• That’s not all, you also need a system to keep track of all the happenings so that there are no discrepancies.

The Must-Apply Elements:

• Start with deciding a name for the program. It has to be catchy to attract customers. 
• People are smart and most of them are always cynical about customer loyalty programs. So, you have to ensure that it is more than just the money. Get your customers excited about the program.
• If possible, don’t limit your programs only to purchasing. Try rewarding customers for other actions too. So, spend enough time deciding on the proper model. 
• It’s the same with rewards. People will eventually get bored of collecting points. So, try out other rewards as well.
• Expand enrolling opportunities for customers. For example, mention in the restaurant menu that there’s a loyalty program going on. And if possible, mention the number of points they get when they purchase a certain item.
• Incorporate game-design elements and game principles in your program. You have to make it fun for your customers.
• Last but not the least, keep testing and tweaking your programs. If you feel a certain program isn’t working, don’t shy away from making some tweaks.

Different Types of Loyalty Programs You Can Use

While there are many types of loyalty programs in the restaurant industry, I have listed some of the best ones to reduce your effort. 

I am also mentioning some of the restaurant loyalty program examples. You can try incorporating and see which suits you the best.

#1 Loyalty points

This is one of the common models in the reward program. How does this work in a restaurant? Every time a customer dines in or orders a takeaway, they earn points that can be redeemed for a reward.

Futher, you can decide the point structure according to you. For example, it could be 1 point for every ₹10. So, if the bill is ₹500, the customer gets 50 points.

#PointToNote: The loyalty points model also works for rewards networks. Meaning, customers can redeem the points to get a reward at some other restaurant (mostly partnered restaurant). However, there’s a drawback. Customers might become loyal to the partnered restaurant instead of yours.

#2 Tiered loyalty program

Also called ‘tiered membership’, it is one of the most effective and interesting models. Unlike the traditional earn and burn reward programmes, this takes a completely different approach.

Under tiered programmes, you can rank customers based on certain metrics. And you can allot different rewards for the ranks.

Simply put, depending on the rank, a customer can avail a reward.

For example: You can rank your customers with positions like gold, silver, and bronze. Also, you can create a separate group (apart from your regular memberships) and name it ‘Insider’ (or if you have something else in mind) and offer them perks that aren’t there in your regular memberships. 

#3 Free or complimentary service

In this loyalty program, you can offer your customers something complimentary in their next visit or upfront (conditions may apply). Just like the points, you can create a certain structure for this as well.

For example: If someone dines at your restaurant and the bill is above 500, they get a free drink on their next visit.

#4 Jump the queue

This reward works really effectively with restaurants that deal with takeaways. Let me explain with an example.

Restaurant ABC has a membership plan that lets customers jump the regular queue to collect their orders. They have a separate counter for all their members that fast forwards the handover process.

It’s just like the airlines’ model that lets passengers drop and collect their luggage quickly by jumping the queue.

#5 20^th visit reward

I am sure you all have seen these sorts of restaurant customer loyalty programs. There are restaurants that offer certain rewards to the customers for completing a number of visits.

Like I mentioned in the beginning, I had a favourite restaurant in Bangalore and they had this loyalty program. So, every customer gets a meal free on their 20^th visit. Also, once you get the reward, you are again eligible for it and the counting will begin from scratch.

#6 Shopping voucher

You can also offer your loyal customers shopping vouchers that they can use while making a purchase on Amazon or any other shopping site. Many restaurants turn to this model as it doesn’t take much of an effort. People love shopping and when you offer them a voucher, it’s a win for you.

#7 Exclusive menu

Again, that same restaurant in Bangalore also had an exclusive menu for its members on Fridays. These are basically exotic dishes that are cooked only for the members. Not to mention, the prices are way too low compared to any other restaurant in town.

There are several other models that you can turn to for your restaurant loyalty program. The ones I have mentioned above are sort of ‘in trend’ and tend to attract more customers.

But you can also create your own models and align them with your restaurants and customers.

Word to the wise: We have a dedicated loyalty program blog for hotels. You can read and see if you can steal some ideas. Here it is “Hotel Loyalty Program for Maximum Customer Retention”.

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