As technology develops more and more in restaurant and hospitality spaces, digital loyalty programs have become a popular marketing tool and method for maintaining an active customer base. But as loyalty programs become more of the norm, experts are finding they are losing their effectiveness, or even failing. Investigating the reason behind this failure, Nation’s Restaurant News (NRN) found that many challenges related to loyalty programs have to do with systems that keep track of points accumulation that should grant users eventual discounts or rewards.
“A recent eMarketer study found that 35% of loyalty members say point accumulation and expiring rewards are their biggest source of frustration. The instinct is to fix the program design by simplifying the points, shortening the path to rewards, or redesigning the app. Most of the time, that misses the real problem. The focus should be on the execution instead of the design,” says this recent NRN article.
Joe Yetter, president of PAR Restaurant at PAR Technology Corporation, analyzes these programs and identifies how to adjust the systems and operations connected to them to make loyalty programs work for both the business and the customer.
First, he says, points-based programs work just fine—as long as guests can make the points work for them. “Loyalty points only matter to a guest if they quickly turn into something valuable without requiring a math degree. Nobody is impressed by 10,000 points if they can’t figure out what those points buy or how to redeem them before they expire. Quick, obvious value keeps people engaged,” he explains, adding that, “Some 52% of consumers say they’d trust a program more if it handed them an immediate reward after a large order.”
Making sure the loyalty program benefits the customer is a top priority; however, loyalty programs are most effective when they offer something in return to the business as well. This helps the business keep up the effort of managing the program and improves the two-way communication required for great customer service. Yetter writes, “Personalization only works if the loyalty platform is connected to ordering data. Without it the AI is guessing. Segmentation doesn’t have to be complicated. Showing a regular customer more of what they already buy is the easy win. The goal is to personalize more without being intrusive about it.” Using data doesn’t just mean better marketing for your business—it means more personalized, efficient communication for guests who want to be at your restaurant anyway.
Lastly, Yetter urges: timing is everything. It’s important to capitalize on customers’ attention span and to make sure the next time you see them is sooner rather than later. Why? “That’s the path to the super user: the 15% of members who visit 10 or more times a year and drive 53% of loyalty sales,” Yetter says. “Moving a guest from casual visitor to that tier can increase their annual value by nearly 10x. Operators who treat it purely as a marketing problem will keep leaving that lift on the table.”
Richard Weil, owner and principal for National Restaurant Consultants (NRC), adds, “The main objective for a loyalty program is to attract and retain customers. Loyalty programs are abundant throughout the industry, especially in the casual dining segment. Create differentiation by listening to customers and staff for success. Often, the ideas from this base may be the secret solution.”