If you’re a restaurant manager, you know how important repeat business is to your bottom line. Not only do returning customers outspend new ones by 67%, but a loyal fan base can also provide you with the social proof you need to convert new customers into regulars.

Say thank you to your best customers with a loyalty program that captures feedback, rewards referrals, and fuels the return business your restaurant needs to thrive.

The good news? You don’t have to be a major chain or franchise – or spend a lot of money – to implement a rock-solid loyalty program. If you’ve been waiting to launch your referral program or dragging your feet before purchasing punch cards, then it’s time to put a plan into action. We’ll show you how with our expert guide to restaurant customer loyalty programs, from simple and straightforward, to data-fueled ROI-generators.

Customer Loyalty Programs on a Shoestring Budget

You don’t need fancy rewards or 50% discounts to capture the attention of your best customers. You already have their attention – and their business.

According to Maritz Solutions, customers value simplicity, speedy rewards, and fun when it comes to loyalty programs. That means your program should be easy to join, simple for customers to track, and a snap to redeem.

Here are a few tried-and-true models you can pilot that won’t break the bank.

From Points to Rewards

Chances are you have a punch card – or five – for your local coffee shop in your wallet right now. That’s for good reason. According to PR News Wire, 81% of customers are more likely to return to an establishment if there’s a reward in play.

Whether you provide a path for customers to earn free coffee, or design a more complex membership program, transactional-based rewards offer clear value to the customer and help you drive repeat business.

Punch Cards

Interested in a “Buy 10, Get 1 Free” model? Instead of a paper punch card, consider digital loyalty programs. Programs like BellyCard and Pirq offer digital punch cards for mobile customers, which will also help you track crucial marketing data. Tracking the number of visits, typical order, or rewards redeemed by each customer in your database can fuel future offers from your marketing team, too.

Membership

Points-based membership programs require more work upfront. You’ll have to assign value to your products, track points for each customer in your POS, and provide a way for customers to track their own progress.

Take the Mellow Mushroom Beer Club, the pizza franchise’s loyalty program, for example. According to RockBot, customers can sign up at any Mellow Mushroom location for a membership and then track purchases and rewards online. With a wide selection of local craft brews on tap, Mellow Mushroom makes it fun for beer lovers to earn rewards. No surprise here: they use the data from their program to target individual tastes through email marketing offers.

Referral Programs

Most referral programs require a little bit more legwork from the customer – so you should offer more value for their time. In exchange for a dinner review on your website, for example, or for sending five friends an email discount code, you can offer customers discounts on future meals, gift cards, or branded swag.

Whether you implement a referral system in addition to another rewards-based loyalty program, referrals are crucial to the success of your restaurant. Loyal customers make excellent referrals for your business – referrals convert new leads 15 times more effectively than other outreach efforts.

Online Reviews

Services like FiveStars or Yelp make it easy to capture feedback from customers about their dining experience. Use your email marketing system to ask customers to share their thoughts in exchange for a token of your appreciation. More advanced systems like FiveStars help you integrate customer data from your POS, email marketing, and referrals all into one dashboard, so you can use insights to drive sales with targeted offers.

New Lead Conversion

Everyone loves a discount code passed along from a friend. Not only do 92% of consumers trust the recommendations of friends and family, but a discount code from a trusted friend may sweeten the deal for new diners. ReferralCandy, which integrates with Shopify, is an incredibly simple tool to encourage loyal customers to refer friends – and reap the rewards.

RewardStream helps you custom-design a referral program fueled by email and social media through their robust software, promotion and reporting tools.

Exclusive Deals or Promotions

If you can run sales data per customer with your POS, then you have the capability to offer exclusive deals to your best-paying clientele. Make sure you have an easy way to contact these customers via email to offer exclusive deals or promotions for their loyalty. Think 5% off a future catering order, or a free first round of drinks during the summer or holiday season.

Email Marketing

Ideally, your POS systems offer a way to integrate customer data – including a number of visits, meal preferences, and dollars spent per check – with your email database. Use your customer data to send the right offer at the right time like just before your regular, John, starts jonesing for his daily 3 p.m. caffeine fix.

Victor Ho, the CEO of FiveStars, explained this concept to StreetFight.com: “For us, messages are custom tailored to specific people because we know things about them, and it’s been tested across hundreds of different coffee shops so we know what message works.”

Mobile Push Notifications

App-based customer loyalty programs, including beacons that allow you to geotarget customers, are no longer the wave of the future. With services like Stealz and LevelUp, sending geotargeted push notifications to customers in your area makes it easy for diners to take advantage of free guacamole on their burritos, or 10% off your new appetizer menu during happy hour.

Client Calls or Personal Invitations

For some restaurants, weekly email marketing or mobile push notifications won’t cut it – your clientele demands a more personal touch. If this is the case, collaborate with your hosts to issue VIP invitations in person or by phone, then follow up with a branded email containing details about your new menu launch or an exclusive wine tasting.

Gamification

If you run a smaller establishment – like a bubble tea joint or a taco truck – make it fun for your customers to check-in at your establishment (or parking spot). Design check-in prizes for users of mobile apps, like Foursquare Swarm, from discounts to giveaways. These interactions have the added benefit of increasing customer engagement and making your establishment more visible on social media, too.

Top Customer Award

Does your coffee shop have a “mayor”? If you incentivize the use of Foursquare Swarm for regular customers, you can crown your most frequent visitors king or queen for a day when they check in. Some coffee shops and bars even create their own leaderboards with photos of their best customers. Public recognition is never a bad idea for encouraging friendly competition!

Group Challenges

In 2014, Foursquare released the Swarm app, which encourages users to round up their friends to check in and hang out. This feature is a great way to encourage hungry college students or brunching Millennials to take advantage of group discounts and promotions at your restaurant.

Check-In Prizes

If you run a smaller establishment – like a bubble tea joint or a taco truck – make it fun for your customers to check-in at your establishment (or parking spot). Check-in prizes from mobile apps like Foursquare have the added benefit of increasing customer engagement and making your establishment more visible on social media, too.

Business Partnerships

Partner with other local businesses to increase your marketing reach and make it easier to offer rewards that benefit all partners. Not only will customers appreciate the rewards, but local partnerships also help cement your place in the community, an important component of the relationship-building that leads to increased sales.

Shared Rewards

In Portland, Oregon, 15 restaurants from the ChefStable restaurant group teamed up to develop Chew Dining Club, a mobile app that works as a tiered reward system throughout the network. By working together, owners were able to leverage a product that could actually compete with the technology of bigger companies, and it seems to be working – more than 5,000 Portlanders downloaded the app.

“Based on your order history, we’ll set aside something special for you: When you walk in, the bartender comes over with your favorite ale,” founder Kurt Huffman told Eater. “Or the sommelier has a special bottle to share with our 20 best wine-drinking clients. If you’ve spent thousands with us, I want to know that.”

Scale Your Loyalty Program with These 7 Tools

When it comes to customer loyalty programs, customer data is king. Optimize and schedule your promotions, track the success of your offers, and integrate data with your POS to maximize the returns on your new customer loyalty program.

Each of these tools provides platforms with robust reporting. Which one works best for your needs?

1. Foursquare

Have a younger demographic? You can bet customers aged 21-34 are most likely already using Foursquare Swarm, which you can leverage as a customer loyalty rewards tool. Design a campaign around a promotion, schedule it for a specific time, and offer the deal to customers who “check in” to your restaurant. Just want to bring in new business? Make sure you’ve claimed your business location, so the new Foursquare City Guide app has the most up-to-date information about your menu and service.

2. Belly

Customize your loyalty program with BellyCard, iPad software that helps you get rid of paper punch cards and integrate customer data into your marketing channels and POS. Since Belly is becoming more widely used by national brands like 7-Eleven and McDonald’s, customers will be increasingly willing to download and use the app at smaller venues, too.

3. Loyalty Gator

Design and manage your own customer loyalty program with Loyalty Gator. The service offers solutions for everything from points-based awards to referral systems. If you’re interested in a membership program or points-based rewards system, Loyalty Gator is an effective solution – both you and your customers will easily be able to track data.

4. Pirq

Like Belly, you can use Pirq to eliminate paper punch cards and offer transaction-based awards for loyal customers. You can also use geolocation and push notifications to send timed deals to regular customers. If you hit a slump during the late afternoon between brunch and dinner, use Pirq to send a mobile incentive to customers visiting your neighborhood.

5. LevelUp

Café Nero and Boloco are using LevelUp to entice regular customers through their doors, offering ease of payment through their mobile app, as well as rewards to returning clientele. Since LevelUp integrates with your POS, you can also use customer data to send targeted push notifications that bring customers back for their favorite dishes.

6. FiveStars

FiveStars is sophisticated marketing software that allows you to send targeted email messages, collect meaningful customer feedback, and publish the reviews that will generate repeat business. Use customer feedback as a way to demonstrate appreciation for your most loyal customers. With FiveStars, you can easily generate reports that will help you offer just the right reward for engagement.

Customer Loyalty Re-Imagined

According to Selfstartr.com, the majority of transactional-based customer loyalty programs – rewarding points for sales – fail within the first year of launch. That’s not to say you should avoid mobile or paper punch cards to offer that free cup of coffee, but if you don’t have a system in place that helps you personalize incentives for regulars, you’re going to lose out.

Overall, programs that promote customer engagement, like feedback and referrals, tend to be more successful because they’re more personal. By linking dining habits and purchasing behaviors to customer engagement programs, you can offer an incentive your diners will actually like and use.

Plus, rewarding customers for engaging with you subverts the idea of most transactional loyalty programs – that customers should be loyal to you. According to Marketing Land, 66% of businesses think “loyalty” is what customer loyalty is all about. But 75% of customers don’t think that way at all – they want to be appreciated for their repeat business.

Programs driven by engagement offer a way for restaurant owners and their regulars to meet in the middle. Not only will you learn more about your customers’ habits and needs, but you’ll build relationships built on meaningful feedback, which in turn helps your bottom line.

Case Study #1: Starbucks Rewards

What they did: Yes, Starbucks customers still get rewards based on their purchasing power, which is tracked through a powerful mobile app. But the real key to Starbucks’ loyalty program is the way they offer efficiency and value for their customers. Not only do loyalty customers get to order ahead and skip lines, they can also pay via mobile phone and easily track their progress toward a reward. According to Thanx.com, the Starbucks My Rewards app has more than 12 million downloads. And that’s not just because there’s a Starbucks on every corner – the app actually makes customers’ lives easier.

Our takeaway: It’s crucial to add value for the consumer above and beyond the transaction. For busy Starbucks customers, not having to stand in line or being able to pre-pay via mobile are worthwhile services because they save time and eliminate hassle. Starbucks also makes their tangible rewards – like free drinks, free refills, and points – easy to track and redeem, which propels customers to spend more.

Case Study #2: Chipotle’s Chiptopia

What they did: Chipotle’s short-lived reward program, Chiptopia, created both a sense of competition and of scarcity. A tiered reward system, Chiptopia rewarded users for buying burritos over time. Since the program was only available during the summer, there was a sense of urgency for customers interested in redeeming their rewards and leveling up.

Takeaway: Since this reward system was transactional-based, the company didn’t necessarily capitalize on referrals or social media shares. This would have increased engagement and helped build relationships with consumers.

Measure Your Success

You regularly track and assess marketing data, from social media engagement to your newsletter open rate. Your loyalty program should be no different.

Just remember that customers – especially loyal ones – don’t always appreciate sudden changes, even if it means you’ll be able to offer them better service. If your data suggests that you need to make a shift, involve customers in your membership program in the feedback process, so you have a concrete idea of how to better meet their needs.

Here are a few metrics you can track to assess the success of your customer loyalty program:

Engagement

By linking usage data with your CRM or POS, customer loyalty programs powered by apps or other marketing software make it easier to track how engaged your customers are. Stuck using paper? Make sure you have a way for your sales team to indicate a reward “purchase” in your POS so you can run data on how frequently offers are redeemed. Outside of sales, social media hashtags and mentions across your social channels will give you a sense of whether your audience is crazy for #UnicornFrappuccino – or not.

  • How to track it: Click-through rates on email marketing messages; total rewards redeemed per month; percentage of total users who redeem rewards.
  • When you should change: Six months of low engagement indicate that no one’s buying what you’re selling. Experiment with your email marketing, push notifications, and other targeted offers. Are you personalizing your incentives?

ROI

According to Entrepreneur, more than half of small business owners don’t have a good way to track customer data beyond their POS. In order to know if your customer loyalty program is actually making you money with repeat business, you’ll have to link your sales to CRM data, including dollars spent per visit, the timing of purchases, and number of rewards redeemed. With this level of insight, you’ll get a much better sense of which repeat customers and rewards are driving your margins.

  • How to track it: Repeat visits; total dollars spent; total dollars spent per visit per customer; profitability.
  • When you should change: If your reward program doesn’t seem to drive the consumption habits of your most profitable diners, then it’s time to re-think it.

Customer Lifetime Value

Customer lifetime value (CLV) calculations can help you assess how well your loyalty program is driving return business and which customer populations are responding to your marketing efforts. Maybe you’ve got a booming weekend brunch set in a younger demographic, but you want to turn those weekend brunchers into more regular customers. CLV can help you pinpoint your best mode of attack.

  • How to track it: You’ll need to run data on average order value and purchase frequency for members of your reward program. Once you have your data points, learn how to calculate CLV at Sweet Tooth Rewards. These calculations are particularly useful if you’re still experimenting with segmenting your customer data to get the best returns on your marketing efforts.
  • When you should change: If the CLV of your top customers begins to drop, or your segmented data suggests a new population is becoming more profitable.

Grow your restaurant with a foolproof loyalty program

No matter what kind of customer loyalty program you roll out at your restaurant, engaging customers and rewarding their business is ultimately what drives your bottom line. Use the data from your current POS to help you make important decisions about which customers will be most profitable – and how you can add value to their busy lives. With the right metrics in place, your customer loyalty program will help your business continue to grow and give you the tools to make customers’ dining experiences even better.

 

Have a loyalty program that you love? Share it with us in the comments below.