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Restaurants fall short in loyalty programs

Restaurants fall short in loyalty programs

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You can bet restaurant marketing executives will spend plenty of time analyzing the data that appears in Deloitte’s new study, "Second helpings: Building consumer loyalty in the fast service and casual dining restaurant sector.” The consulting firm’s research found that existing programs are widely underused and could be significantly more effective than they currently are.

Deloitte surveyed 4,093 people for its report. Slightly more than half of all respondents—50.4 percent—belonged to one or more restaurant loyalty programs. In comparison, 78 percent were participants in an airline loyalty program and 70 percent were members of a hotel loyalty program.

Of those who did belong to a restaurant loyalty program, 74 percent said they did not participate in a program offered by their favorite restaurant. How come? Respondents said that either such a program was not offered or that they weren’t sure one was available.

Other data was equally cringe-inducing for those whose job it is to spread the word about restaurant loyalty programs. Forty-three percent of respondents said the restaurants they visit do not offer loyalty programs, and 48 percent said they have no information about the loyalty programs available from the restaurants where they often eat.

It’s hard to tell if loyalty programs are an underutilized marketing program, something whose availability needs to be better communicated to customers—or both. But somewhere along the line, restaurant operators have missed the boat.

"Although restaurant loyalty program participation is lagging, the study indicates that consumers do not have an inherent aversion to such programs," said Scott Rosenberger, principal, Deloitte Consulting LLP and Deloitte's U.S. Consulting travel, hospitality and leisure leader. "These programs can drive value if promoted effectively, as a restaurant's most frequent patrons are more inclined to join that restaurant's program and use it more than any others. Additionally, we found that those core customers who do belong to their most-visited restaurant's program are more satisfied customers and stronger brand advocates than those who do not. Restaurants should clearly market these programs to consumers to encourage participation, increase customer visits and strengthen the connection between members and the brand."

The study also provides some evidence of how restaurant loyalty programs are faring in an era when potential customers can tap into a steady stream of deals-of-the-day offers on their smart phones or via email. If everyone can get these kinds of deals, why go to the trouble of joining a restaurant’s loyalty program?

For example, what’s the value of a loyalty program membership if an app like SimpleDeal catches on? This service enables customers to point their smartphone at a restaurant and see an immediate deal offer powered by the phone’s GPS. Or what about a service like LiveDeal that pushes real-time and instant offers to nearby customers over their smartphones?

Mobile is clearly becoming a factor. Nineteen percent of respondents to the Deloitte survey had downloaded a mobile app. Of this group, 55 percent said they use it to view a restaurant’s menu and prices, while 46 percent check for a restaurant’s hours of operation. Deloitte thinks restaurant can build on this existing base of customer activity to offer them loyalty programs and promotions.

“Loyalty programs, mobile platforms and customer outreach, among other approaches, afford restaurants the unintrusive means to understand and connect with customers in ways that matter to them individually," Rosenberger notes. "Blending traditional and digital channels, restaurants can gain insights into customer preferences through each transaction and interaction. Armed with that knowledge, they can make more personalized gestures, such as a free favorite beverage or dessert as a birthday or anniversary present, that help garner goodwill and drive brand affinity."

One thing that came out of the study is that loyalty programs need to be made more relevant to restaurant patrons. These programs ranked a lowly 19th out of 23 attributes in terms of what is important to restaurant customers and 24th out of 28 factors that drive repeat patronage.

What matters most to potential customers? For full-service restaurants, it’s food taste, food safety and the friendliness and responsiveness of the restaurant’s staff. If you’ve got those basics in place, you’re already delivering what customers want before they’ll be loyal to your restaurant.

Find out more about this study and view the full results >>

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