We all know loyal customers spend more (67% more to be exact). But what are the best practices for capturing that loyalty via loyalty and rewards programs? In the age of thousands of restaurant apps and programs, it’s not enough to just have a loyalty program—you need to nail the loyalty experience.
In a recent HungerRush survey, we interviewed 1,000 Americans to find out just how restaurant loyalty programs influenced their behavior, and how they determine if a program is valuable or not. This post covers:
- How to use customer data to build a connected restaurant experience
- The benefits of loyalty programs – for every generation
- Why third-party apps have missed the mark on loyalty programs
Without further ado.
The Key Takeaways
- 55% of consumers surveyed visit a restaurant at least twice per month to earn rewards. Loyalty programs work. However….
- Getting sign-ups is tricky. Most diners haven’t signed up for a new rewards program in the past year.
- Third-party delivery apps have missed the mark. Customers crave a more personal reward system, and a lot of them are willing to exchange personal data to get it.
- The age gap is real. Millennials gravitate toward restaurants with digital rewards while Boomers opt out. But restaurants can properly tailor their loyalty programs to reach any generation.
What Your Customers Really Want From Loyalty Programs
We asked a broad cross-section of Americans (1,000 of them to be precise) what they thought about loyalty programs. Here’s what they had to say:
- 61% are comfortable giving their personal information out for more targeted and individualized offers.
- 71% of Millennials and 63% of Gen Z are willing to share their personal information with restaurants in exchange for more frequent or personalized offers, compared to only 50% of Boomers.
- 47% have signed up for up to 5 loyalty programs within the past year in order to get discounts.
This data shows that loyalty programs are 1) still popular and 2) many of your younger customers are willing to part with personal information in order to get better, personalized rewards.
This is important for your restaurant because customer data is worth its weight in gold. In practical terms, you need access to:
- Personal Data — name, contact information
- Demographic Data — age, gender, income bracket, location
- Preference Data — favorite dishes, allergies, table preference, preferred ordering channel
- Ordering Data — ordering history, ordering frequency, dining frequency, average order value
This data lets you build a genuine connection with your customers, turning them from one-time diners into loyal fans. With accurate customer data you can fine-tune your marketing efforts and create offers that stick, rather than shooting generic emails into the void – which equals better sales and higher profits.
This is exactly the kind of personalization that third-party delivery apps fall short on. The platforms are notorious for hyper-generalized marketing and experience that over-rely on opportunistic transactional tradeoffs (“$5 off!”) rather than real loyalty-building. And that’s the white space where restaurants can outsmart the platforms (and generate more higher-margin first-party orders).
But this data isn’t just for marketing. It also allows you to cut down on waste, labor, and other overhead costs. That’s because accurate data allows for accurate forecasting. You know when you need to order inventory, when you need to hire additional part-time staff, and what menu items are hits or misses.
“When a restaurant opens its doors, the goals are simple: make great food, drive sales, and create an experience that keeps consumers coming back for more. Introducing a loyalty and rewards program creates meaningful connections with a restaurant’s community and is an easily implementable strategy to increase brand awareness, loyalty, and sales.” — Perry Turbes, CEO of HungerRush
The old one-size-fits-all approach to loyalty programs simply will not work anymore – if it ever did – which is something 3rd party delivery apps like Uber have failed to realize. Restaurant owners who leverage customer data to craft custom loyalty programs and offers will be sure to stand out from the crowd.
Learn More: HungerRush Loyalty Infographic
What’s The Best Loyalty Program For Your Restaurant?
Next up we asked our diners a series of questions relating to how loyal they are to the restaurants whose loyalty programs they signed up for. Let’s take a closer look.
Most of our respondents belonged to between 1 and 5 loyalty programs. That tracks across all demographics. However:
- 55% of diners reported that they visit establishments where they earn rewards at least 2 times per month.
- 51% say they wouldn’t stop going to a restaurant if the rewards program they were a part of changed or was devalued.
It seems that while getting customers to sign-up to your loyalty program might take some effort, the data shows that once they sign-up, they stay loyal. And loyal customers do more than just visit your restaurant more – 47% will spread positive word of mouth and actively encourage their friends and family to sign up too.
But what’s the best kind of loyalty program?
The clear winner is points-based systems, with 52% of our respondents preferring them. The worst? Premium or subscription-based systems with just 10%. Subscriptions might work for household essentials on Amazon, but when it comes to food, your customers want the satisfaction of earning points with every purchase that they can later spend.
“For any business today, knowing your customer is essential to capturing their attention. That is especially true in the restaurant industry. We believe loyalty and rewards programs are a great way to stand apart from the competition while also giving restaurants greater insight into their customer base.” – Perry Turbes, CEO of HungerRush
To recap: our study shows that customers prefer point-based systems. Luckily for us, most of them are willing to share their personal information in exchange for customized recommendations — a win-win situation.
In practical terms, this means you should:
1. Offer discounts to customers on your loyalty program. Think personalized coupons on items likely to match their specific tastes and habits.
2. Provide incentives to attract new customers to sign-up. Think QR codes for easy sign-up on your menu, coupled with a free drink or appetizer coupon.
This is where investing in unified guest profiles comes in handy.
When you take the time to integrate loyalty programs with your guest profiles, you’re able to get keener insights into your customers’ preferences and provide them with a stellar experience. I.E. giving them a discount on their birthday along with a kind note, or a custom loyalty program reward based on their spending habits and purchase history.
Unified guest profiles let you personalize loyalty programs at an individual level. That means you can provide a personalized dining experience, and provide an unbeatable guest experience that increases average ticket order size and customer lifetime value.
Generic marketing emails and texts are outdated. In-fact, 63% of respondents to one survey said they were “highly-annoyed” by this repetitive and low-effort strategy. Knowing your customers inside and out allows you to do a whole lot better — increasing the probability of return and loyalty, while also encouraging your own customers to promote the restaurant to their friends and family.
The Connected Restaurant Experience
With 50% of Americans dining out less frequently due to inflation, your customers are under more financial pressure than ever.
But it’s not all doom and gloom — restaurants that take the time to understand their customers and implement custom loyalty programs will see an increase in customer retention, satisfaction, and revenue.
By fostering a strong relationship with your customers and rewarding them for their loyalty, you can craft a memorable dining experience that keeps them coming back for more — whatever the economic climate.
“HungerRush loyalty allows me to give time back to the operations side of my business without skipping a beat. It is one less thing for me to think about” — Jeremy Galvin, President of Master Pizza Ohio
Looking for even more fresh data? Check out our 2023 Rush Report for more original research and insights.
The post New Data: Restaurant Diners Crave Loyalty Programs, And Spend More With Them appeared first on HungerRush.