Like everything else these days from thermostats to light switches, loyalty programs are getting smart.
They can offer personalized rewards and provide marketing messages to your customers. Plus, research shows that customers are 82% more likely to shop at a store with a loyalty program.
They’re also a great way to encourage repeat business.
And we know how valuable current customers are. They spend an average of 67% more than new customers!
Offering a reward or incentive is a no-brainer. Read on to learn about how you can use this valuable tool to maximize your revenue!
1. Punch Cards
The punch card loyalty system is one of the oldest methods out there. The appeal is its simplicity.
You can create basic punch cards online and get them printed at a very low cost. There is very little staff training involved.
And all of your customers, from teens to senior citizens, will know how to use them.
To start, make sure you have a really good incentive for people to use your card. If they have to buy 19 sandwiches to get one free, it won’t feel attainable, and customers will be less likely to use it.
Also, consider requiring a minimum purchase amount to get a punch on the card. If sandwiches are between $7.00 and $8.00, make the punch minimum $8.00 to encourage customers to buy a drink or chips.
Don’t use a basic round hole punch! It will be too easy to duplicate, and you could end up with fraudulent punches.
Make sure that you have a unique way of marking a visit. It could be the staff member’s initials, a stamp of your logo, or a hole punch in a specific shape such as a star or heart.
While the punch card is a simple, low-cost way to increase customer spend, it doesn’t have the same appeal and convenience as an app-based system.
Apps let you send push notifications to your customers, letting them know about new deals or specials. And they collect customer data, letting you target your messages based on purchase history.
So while punch cards are a classic, there are ways that you can use customer rewards to see a much bigger return.
2. Points System
The points system is probably the most common rewards program there is. It involves the accumulation of points that customers can then redeem for product.
The most common points system that we’re all aware of is credit card points.
Credit card companies have become experts at encouraging users to put everyday purchases on their cards. Users then accumulate points that they can spend on travel, groceries, entertainment, and more.
Your restaurant probably doesn’t have the clout of American Express when it comes to securing reward partners. But you can still use a points system to encourage customers to spend at your restaurant.
After all, 66% of consumers in a points program spend more than they would have to get more points!
Your points system can be as simple as $1 = one point.
And you can assign any point value you wish for the rewards that you offer. For example, you could decide that 50 points will earn customers a free appetizer.
When establishing your rewards, make sure to consider your menu costs. If there is one appetizer that has a higher food cost than another, make sure your reward makes financial sense even for that expensive item.
To encourage people to accumulate even more points, you can offer bonuses. For example, you could offer five bonus points to customers if they buy a certain higher cost item or a certain number of items within a limited time.
Starbucks does this really well with their rewards app. They offer incentives for purchases on certain dates, allowing users to earn high bonus points.
Sometimes their offers are good for any visit during the offer period. But sometimes they only offer bonus points for specific items, such as Teavana tea or an espresso drink.
This system provides a great incentive to customers. If they can get their normal points plus bonus points, they’ll be much more likely to choose Starbucks over another coffee shop.
3. Tiered System
The tiered system is an offshoot of the points system. Users accumulate points, but they have an extra incentive to spend more due to reward tiers.
With a tiered system, customers earn extra rewards for spending more money within a limited time frame.
Here’s what it could look like:
Base Level — Customers earn one point for every $1.00 they spend.
Medium Level — After customers spend $500 at your restaurant within one year, they earn two points for every $1.00 they spend.
Highest Level — After customers spend $1,000 at your restaurant within one year, they earn five points for every $1.00 they spend.
You could change the values to whatever makes sense for your restaurant. If your check average is very low, you may want to lower those amounts to create a more realistic goal.
Fast-food chain Chick-fil-A uses a tiered system in their rewards program. When customers earn 1,000 points ($100 spent), they earn an additional point for each dollar spent.
Customers can also see how many points each item on the menu costs. So if a user has 450 points, they’ll know they’re only a $5 spend away from a free chicken sandwich.
That’s an incentive to add an extra snack to their order so they can earn that tasty reward!
Consider the potential change in behavior this could cause. If a customer is scheduling a dinner for a large group, they’ll encourage the group to go to your restaurant so they can get closer to that next tier!
4. Membership Buy-In
Another possible reward system is the membership program.
Instead of relying on accumulating points, these systems require an up-front investment from the customer. These programs don’t have the same wide appeal as the points programs, but they are great for a specialized type of reward.
For example, beer bar Flying Saucer has something called the UFO Club. For a buy-in of $18, members receive a T-shirt and a swipeable membership card.
The purpose of the card is to track your sampling of their huge tap wall. Most Flying Saucer locations have over 200 beers on tap.
When you’ve tried 200 unique beers (which are tracked by your membership card), you get your name on their “Ring of Honor,” a plaque that gets posted at the bar. You also get some free merchandise.
This type of reward won’t work for everyone. Many people aren’t interested in sampling over 200 different beers.
But if you’re a beer nerd, this is absolutely appealing. And every time you want a beer, you’d head to Flying Saucer to get one step closer to your goal.
If your restaurant offers something unique that would appeal to a devoted niche, a membership program could be a great choice.
5. Play a Game
The big word in rewards programs these days is “gamification.” That’s just a fancy way of saying “turn customer rewards into a game.”
McDonald’s did this for years with their Monopoly game. By requiring customers to match several game pieces in order to win, they were able to incentivize return visits.
After all, if you were one game piece away from a prize of $1,000,000, you’d be much more likely to choose McDonald’s over Burger King.
The game has since been retired in favor of newer games. But the principle of gamification is only on the rise.
How can you bring games into your loyalty program?
Consider the aspects of games that make them attractive—bright colors, badges, awards, and moving through levels.
The Starbucks program uses a game-like approach, letting you see the growth in your points as you place orders.
6. Personalization
Beyond what your customers spend to rack up points and rewards, there is another benefit to reward and loyalty programs—data.
Any online or app-based system can collect email addresses or phone numbers. And that’s information you can use for your future marketing efforts.
You can also tailor your marketing to the app users’ purchase history. It’s easy to track when they’re making their purchases in an app!
Offer customers a special deal “just for them” based on their past purchases. Again, Starbucks does a great job of this.
The personalization of this offer makes it a home run.
Starbucks is telling me that if I buy two drinks from them that they already know I like based on my purchase history, I can get 75 bonus points. That’s enough points for a free coffee drink.
You better believe that I’ll go to Starbucks twice this week instead of to another coffee shop.
Conclusion
Restaurant rewards are a popular choice among those who use loyalty programs.
By offering attractive rewards, you can incentivize your customers to choose your restaurant more often—and to spend more.
And yet, only about 30% of restaurants have a loyalty program of their own!
If you’re not a member of any current loyalty programs, I encourage you to sign up for a few to see how they work and what a powerful tool they can be.
And you don’t need to invest thousands of dollars in a custom app to create your own program. There are companies out there that can help you create a simple loyalty program that will work with your current POS system.
Are you ready to make a loyalty program a priority and join the 30% of restaurants that are using this valuable tool?
This article was contributed by Adam Guild: a restaurant marketing expert and the CEO of Placepull. You may have seen him in Forbes, Entrepreneur Magazine, MRM Magazine, and other top publications.