Loyalty Marketing

Here’s Why Restaurant Loyalty Programs Are So Hard

Millennials’ Preferred Loyalty Program Rewards

Restaurant loyalty programs are hard things to master. Particularly with Millennials, when you consider these statistics:

  • 59% quit restaurant loyalty programs because the “rewards aren’t valuable enough”
  • 51% cite the speed they’d accrue loyalty rewards as the biggest incentive for joining
  • 40% want to track/redeem rewards on an app, yet 38% still prefer a physical loyalty card
  • 37% primarily want to receive a discount

We’ve been bearish (to say the least) on whether you need a restaurant loyalty program. We’ve made you think twice. And we’ve introduced new approaches for you to consider.

Software Advice, a site that helps businesses make a shortlist of restaurant POS systems, just published the statistics above, along with a variety of additional findings after wrapping up an intensive study, along with a variety of additional findings after wrapping up an intensive study on restaurant loyalty programs. One major takeaway for me is how app-based Millennials expect loyalty programs to be — and yet, most restaurants should NOT be rushing to launch an app.

“What we see is [that millennials], especially on the restaurant side, do have a great deal of loyalty,” says Mark Johnson, CEO and CMO at Loyalty360, a professional loyalty marketing association. “They want to have a very unique relationship [with,] and more emotional attachments to, brands.”

5 Tips for Success for Restaurant Loyalty Programs

This is hard, isn’t it? So, where does that leave you?

You Could Align with a Third-Party Payments or Loyalty Platform

We’ve introduced you in the past to multiple loyalty and payments platforms. Companies like FiveStarsPirq, PerkaBelly, Venga, long-standing veteran in this space Rewards Network, even Square is doing some pretty innovative things for small restaurants.

Some of these are app-based platforms that you can tie into very well. Some are standalone loyalty providers without the app.

When you work with some of these companies, while you sacrifice a bit when it comes to your brand, you don’t give it all way. You select your rewards, you select the criteria to unlock those rewards, and you get visibility with an audience who’s high on intent when opening these apps — they’re looking for a great place to eat that supports the diner’s mobile loyalty/payments platform.

Read:  When We Say 'Restaurant CRM' What Do We Mean?

We’ve also told you about killer platforms like Rockbot, with an entirely different angle on location-based engagement and loyalty. And LevelUp.

What you need to decide is this: How do you want your brand to attract a loyal audience? Simply through discounts? Millennials want more than that, though they want that too.

Duane Owens, business development manager at Restaurant Manager POS—a restaurant point-of-sale software vendor—agrees that monetary rewards aren’t necessarily the best way to encourage loyalty. He suggests using exclusive rewards, such as guaranteed reservations for exclusive events or members-only special dinners. Not only do these help your bottom line, they are also great ways to cultivate the unique brand relationship millennials seek.

5 Tips for Success for Restaurant Loyalty Programs

Here’s Perhaps the Most Intriguing Finding About Loyalty Programs

Here’s the good news in all of this: The study from SoftwareAdvice found that the speed with which points and awards can be gained has the greatest impact on millennials’ likelihood to participate in a restaurant’s loyalty program. That perfectly aligns with what you want as a restaurateur: a repeat visit as quickly as possible.

It’s why I constantly wonder why a restaurant offers a reward to a consumer who has made their tenth visit when that tenth visit may have taken ten months to accumulate. 

My advice is this: Focus on incentivizing consumers whose behavior matches your desired outcomes: more frequent visits along with higher spend — across a tighter window of time. Our article on restaurant memberships, even if you’re not open to THAT idea, provides a list of good starter ideas that take consumers’ eyes off the monetary reward, but still makes the program fun.

Whichever route you choose to go — running an offline loyalty program, painstakingly choosing a loyalty program that integrates with your POS, or simply piggybacking one of the solutions mentioned in the previous section — be wise to the preferences and patterns of your customers, including, but not limited to, Millennials.

Align your program with what they want, and you’ll be on the right path.

About the author

Brandon Hull

Brandon is the original founder of NextRestaurants.com. He has helped thousands of restaurants implement innovative marketing strategies, campaigns, and tactics by incorporating new technology, in order to attract loyal guests.