marketing-strategies | 9 mins read

Loyalty Program Benefits- Why You Need One and How to Get it Off the Ground

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Yamini P.

By Yamini P.

What is a Loyalty Program?

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Assume you're the owner of a quick-service restaurant. Residents flock to your establishment because it has a wonderful selection of dishes. However, a major restaurant a few kilometers away opens, and you are concerned that the new restaurant would eat into your hotel's business. You weigh your options to keep the customer. Implementing a customer loyalty program is the finest and most immediate action you can take.

A customer loyalty program is a company-run program that rewards loyal customers with additional incentives. Discounts, free products, rebates, and other types of promotions are examples of these perks. Customers who buy products from a store or restaurant regularly are rewarded with a loyalty program, which encourages them to return.

A loyalty program has numerous objectives- increasing sales, increasing business, building a customer-company relationship, and bringing customers back regularly. Customers should find loyalty programs appealing and fascinating because they help increase sales and encourage customers to return to the company for their next purchase.

Benefits of a Loyalty Program

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Did you know that improving customer retention by 5% increases earnings by 95%? However, restaurants and companies frequently place a greater emphasis on attracting new customers than on retaining existing customers. Customer loyalty programs are an excellent method to keep current customers happy.

Loyalty programs are beneficial to customers and come with several advantages. Here are the best among them.

  • Improves customer retention- Customers nowadays make purchases based on shared values, engagement, and the overall brand experience, not just on price.
  • Cost-effectiveness- It's better to keep happy consumers than to find new ones. Loyalty programs can help with this, and they are a low-cost technique.
  • More customer referrals- When a consumer enjoys a loyalty program, they are more inclined to tell their family and friends about it.
  • User content- Customers who participate in loyalty programs that allow them to contribute comments and ratings on social media are essentially becoming brand ambassadors for the product.

  • More than 80% of businesses still rely on email marketing to keep their customers happy.
  • Approximately 59% of internet users believe that earning rewards and loyalty points while buying makes them happy.
  • More than 87% of Americans agree to have their shopping habits tracked in order to receive customized rewards.
  • 95% of loyalty programme users prefer to interact with the program using cutting-edge technology.
  • If a brand or product has a good customer loyalty program, 70% of customers will recommend it to friends and family.

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Types of Loyalty Program

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Customer loyalty programs have changed dramatically, from simple card-based programs to fully digital incentive programs. Here's a breakdown of the various sorts of loyalty programs.

Point-based loyalty programs

Customers who use the points-based loyalty program earn points for every dollar they spend. For every dollar spent, most restaurants award one point. When the total number of points reaches a certain threshold, customers can redeem them. Make sure the point-based incentive system is basic and straightforward. Customers will be more engaged if they understand the process in detail.

Item-based loyalty programs
The item-based rewards program works in the same way as a punch card system in school. Customers are rewarded when they purchase an item a certain number of times, with the next purchase being free. For example, if you buy six cups of tea, give the seventh cup out for free. You can also combine a point-based program with an item-based program. For example, for every 100 points acquired, you can give out a free burger.

Subscription loyalty programs
Customers who complete particular membership milestones are rewarded through subscription-based rewards programs. For example, when a customer joins a restaurant loyalty program for more than 6 months, the owner can offer them a free meal kit subscription plan or a free dish combo plan. This includes not only meal kits, but also vineyard tours and complimentary cookery classes.

Promotional loyalty programs
This type of loyalty program offers rewards with expiration dates. The prizes could be in the form of a free meal or a product order within a certain time frame. It might be used to improve business during off-peak times or even as a surprise promotion.

Elements of an Effective Loyalty Program

Ultimately, a successful loyalty program should bring in more customers and increase sales. There is currently a plethora of subscription-based and feature-rich customer loyalty programs available. Before choosing a loyalty program, make sure it includes the following features.

  • Keep it digital
According to research, more than 61 % of customers want a digital component to the restaurant loyalty program. They believe that punch cards and loyalty cards made of paper are easy to misplace. Customers can be asked to download a mobile app to track the number of points they have accumulated from loyalty program providers. For example, Zip Loyalty software, which is available on the Hub Works website, may be integrated with your POS system to track customer purchases, manage lists, and send offers via email or SMS.

  • Keep a tier on the rewards
One of the primary reasons why customers do not participate in a loyalty program is because it takes a long time to accumulate enough points to be able to redeem them for prizes. Many businesses have benefited from tiered rewards since it allows consumers to collect low-level prizes fast and effortlessly.

  • Always try a point-based reward program
In a loyalty program, the majority of customers, particularly millennials, want to accrue points and use them for incentives. A point-based Loyalty Marketing system enables restaurants to provide consumers with access to earn more points and subsequently redeem them. They can utilize it during the off-season or even purchase a specific dish.

  • Not just about free food
Don't limit yourself to simply providing complimentary food to your customers. Other possibilities include invitations to special events, baking classes, or even a complimentary visit to a restaurant. As a restaurant owner, you can add a dash of originality into the mix to make the customer experience one to remember.

  • Promote well
The majority of customers are unaware of restaurant loyalty programs. As a result, instruct the servers about the offers and programs as a restaurant manager. It should be promoted in emailers, social media feeds, and even advertisements. This has a significant impact on the Customer Experience.

How to Make Your Loyalty Program a Success

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It is critical for a restaurant loyalty program to address a variety of customer requests to be effective. As a result, tailoring Customer Loyalty programs to their specific requirements and desires is critical. The loyalty program must first and foremost capture the attention of the customer. It should emphasize the advantages of joining the customer loyalty program for customers. For getting customers to join the loyalty program, some restaurants give sign-up discounts, first-time deals, gifts, and discounts.
Another essential factor is the ease with which one may sign up. Customers should be able to sign up in a transparent and smooth manner. Most organizations maintain the number of fields required to complete the sign-up process as low as possible to make the process simple.
Customer interaction is also critical to the success of the Restaurant Loyalty program. Customers should be contacted with relevant offers, announcements, and discounts, which will help to boost the likelihood of customer retention.
To ensure that the loyalty program is running properly, it is always a good idea to obtain regular feedback from customers. Owners can send survey forms to customers and ask for feedback. This also assists in determining where the program is failing and how to enhance it to attract more customers.

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Top 3 Loyalty Program Program Software

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Zip Loyalty is a loyalty rewards program software that collects and analyses consumer data and is accessible on the Hub Works web store. It has a simple user interface that makes the software easy to use. It allows restaurants to simply collect consumer information and build rewards programs based on past purchasing patterns and current market trends. It also provides clients push notifications and offers about the newest incentives and deals, enhancing Customer Relationship. When a consumer accumulates Loyalty Rewards points, it is automatically assigned to them. Zip Loyalty is easy to sign up for and can be found at or

Posist is a loyalty program software that makes rewarding customers simple and smooth. It also has a simple award system and an even better manner of prize redemption. It simplifies the process of implementing a rewards program. It also features a business intelligence component that allows it to learn about the customer's tastes to send out appropriate offers and discounts. This information is utilized to gain a better understanding of customer spending patterns, as well as to focus marketing efforts and attract additional visitors.

Lightspeed Loyalty
Lightspeed Loyalty is a loyalty program software designed to convert every visitor into a regular in a restaurant or other business. It has a customer-facing web app and an online points tracker as its key features. These are used to generate SMS campaigns that are sent automatically. It also includes a dashboard for tracking customer insights, spending patterns, and campaign outcomes. It also includes Loyalty Rewards programs depending on categories, as well as deal and discount alerts.

How to Tell if Your Loyalty Program is Working?

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You may have created a fantastic loyalty program. But how do you determine if the loyalty program is effective in bringing in new customers and maintaining brand loyalty?

Most loyalty program software, such as Zip Loyalty, provides a complete view of consumer data and trends, allowing you to track them and make smart business decisions. There are two key metrics to keep track of that provide useful information about how the loyalty program is performing. These are the total number of customers participating in it, as well as the total number of customers who have used it and reached the redemption point.
These two metrics provide insight into the effectiveness of your customer loyalty program.
To calculate the participation rate of a loyalty program, divide the total number of loyalty program members by the total number of customers. This shows the total number of customers who have signed up for the loyalty program as well as the number of active participants.
Divide the total loyalty points redeemed by the total loyalty points issued to calculate the redemption rate. This provides information on the level of participation in the loyalty program.
Restaurant operators can make required improvements to loyalty programs and develop better customer relationships using these two indicators.

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