Barely a third of consumers currently participate in a restaurant-based loyalty program, but 80 percent say they’d like to if their favorite restaurant offered one. Those results, according to a Market Intelligence Report from Technomic, indicate loyalty programs are an untapped resource for restaurants looking to turn random customers into regulars.
The benefits of a rewards program are hard to ignore: 58 percent of loyalty-club members say they base their dining decisions on where they have a membership and 96 percent say they’ve dined at a restaurant where they have a membership in the past six months, according to Technomic’s survey.
“We’ve come a long way since the 10th-meal-is-free punch cards,” says Darren Tristano, executive vice president at Technomic. “Consumers are now receiving rewards via email, apps, social media and on their smartphones. As mobile marketing continues to evolve, so will loyalty marketing. Its direction may be unclear, but the need to recognize and thank loyal customers will always be there.”
By taking those primitive punch cards and turning them into digital applications, companies can draw and retain more customers, which ultimately provides more data and opportunity for targeted and customized promotions. James Sun, CEO of digital loyalty platform company Pirq, estimates 80 percent of profits come from just 20 percent of your customers. He suggests restaurants should offer rewards with real value, not gimmicks.
A recent study from Loyalogy, a restaurant loyalty program consulting firm, echoed just that: Four out of five consumers want a simply defined program that has a clear proposition in which they earn points for rewards, not periodic and surprise free items.
Loyalty programs, long a standard in the airline and hotel industries, and now with most major retailers, are beginning to gain traction in the restaurant world. OpenTable offers a program for frequent diners, and the airlines have recently expanded their programs to include restaurants. American Airlines (AAdvantage Dining), United (MileagePlus Dining) and Southwest (Rapid Rewards Dining), for example, all offer points if members of their rewards programs dine at network restaurants, which can include independent and chain offerings.
Technomic found 77 percent of loyalty members prefer email as the method to receive rewards communication, but 70 percent said they were leery of their information being passed to others. The study also found consumers say their participation is higher among causal-dining brands (57 percent) than fast-casual brands (44 percent).
If done right, loyalty programs can provide restaurants with a way to recognize their best customers, and keep them coming back for more.