With new guest acquisition costs significantly higher compared to the cost of bringing repeat guests back, it is a top priority for restaurants to build and sustain their guests’ loyalty. According to a survey conducted by the National Restaurant Association, adding and expanding rewards programs proved to be the most successful strategy used by casual and fine dining restaurants to maintain their guest base’s loyalty. What follows is just a few of the various forms and mechanics that any restaurant can adopt based on their capabilities and needs:
Points-based Rewards Program
Points-based rewards systems remain the most popular loyalty program models among restaurants. They are intuitive and easy to understand for guests, making it more likely for new and frequent repeat guests to participate in.
One of the major advantages of points-based rewards systems is their flexibility. Restaurants can easily establish how many points guests earn per dollar spent and design a wide range of compelling reward offerings such as freebies, discounts, or specialty promos. Points-based programs also benefit new and repeat guests alike. New guests are rewarded for their very first order making them more likely to participate in the program. Loyal guests, on the other hand, earn points faster for their frequent purchases, helping restaurants deepen their relationships with them.
Café Rio Mexican Grill’s Point Based loyalty program is one of our favorites:
Visits-based Rewards Program
Just like the points-based rewards system, visits-based loyalty programs are extremely popular because its intuitive mechanics makes it very easy for both new and repeat guests to participate.
Compared to point-based reward systems, visits-based programs make the rewards seem more attainable as they are tied to the number of visits, rather than the amount of dollars spent. This significantly lowers the program’s entry barrier and makes loyal guests feel rewarded and invested regardless of how much they actually spend. For example, a coffee shop that gives away a free planner for twelve drinks of any kind makes it easier to enter and achievable to earn the prize.
While points-based programs may raise restaurants’ revenues per guest by incentivizing greater spending, it fails to engage regular guests that don’t make major purchases per visit. This is not the case for visits based programs, which are aimed at incentivizing frequent visits rather than higher spending. Research has shown that returning guests tend to spend more on their next visit. So while visits-based programs may not directly focus on raising revenue per guest, the same effect is achieved in the long run.
Nekter Juice Bar’s Visit Based loyalty program is one of our favorites:
Tiered Membership Programs
When designing rewards, restaurants often need to find a balance between attainable and desirable rewards. To entice new guests to participate in the rewards program, restaurants should focus on presenting attainable rewards for their initial buy-in. Regular guests, on the other hand, need to be presented with desirable rewards in order to secure their continued participation and purchase more. Tiered membership programs help restaurants in this balancing act.
Offering basic memberships with easily attainable rewards encourages new guests to participate in the program, with more compelling rewards in higher tiers reserved for encouraging guests to get invested in moving up the membership ladder. Not only does this help incentivize increased spending among regular guests, membership in the higher tiers make guests feel more valued by the brand and, likewise, strengthen their investment in and loyalty to them.
One of the key strengths of membership programs is how they enable restaurants to maintain long-term relationships with their guests.
Moe’s Southwest Grill’s Rockin’ Rewards is one of the Punchh’s favorite customers with Tier Based loyalty program.
Surprise and Delight Programs
Giving away unexpected prizes can establish good and lasting relationships with guests. It is also effective in generating buzz and goodwill among loyal guests, benefiting restaurants in the long-run. It can also be used to introduce new products and drive their acceptance by the market.
While delighting guests is still the most effective way of encouraging their loyalty, it is not always the most sustainable strategy. Surprising guests, again and again, may stimulate short-term revenue increases and interest, but whether or not that interest translates into guest loyalty is an open question. Furthermore, while the goodwill generated can have a beneficial impact on the brand’s market perception, its long-term effect on guest behavior and business metrics can be difficult to measure.
TGIF UK’s Scratch Match & Win is our favorite Surprise and Delight program:
When choosing a loyalty program for restaurants, owners should consider their products, guests, competitors, and strategy.
- Restaurants with a large guest base and few competitors can encourage loyalty through points-based systems.
- Cafes and coffee shops whose guests are looking for places to work or study can benefit most by introducing visits-based programs
- Fine dining restaurants can further their exclusivity with tiered membership programs.
- New concepts and casual dining restaurants can generate buzz with surprise and delight programs.
Restaurants can also use different combinations of programs to maximize their effectiveness and encourage more purchases and visits.