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By Zach Goldstein, Founder and CEO of Thanx
THE NEXT GENERATION OF THE
RESTAURANT LOYALTY PROGRAM Restaurant loyalty programs — and the regular guests they engender — are more in-demand than ever entering 2024. Nothing beats an innovative menu and flawless execution for driving repeat purchasing; that used to be enough. But in this hotly-contested digital restaurant era, a well-structured loyalty program can be the secret sauce in building lasting relationships with your best customers. As such, the journey to implementing or revamping a loyalty program requires careful consideration. From quick service to fine dining, the post-COVID era has ushered in widespread reevaluation of loyalty. Today’s winning programs have reduced an exclusive dependency on rote rewards which are easily replicable by any brand (or the digital behemoths Doordash and UberEats), in favor of differentiated, on-brand loyalty experiences and first-party digital convenience. Some key considerations and potential pitfalls to analyze when scouting a potential loyalty program.
KEY CONSIDERATIONS 1. Focus on Non-Discount Rewards That Resonate With Guests Sure, $5 off can be a motivator for certain customers. But it’s hard to own a rote discount, often creating an expensive, margineroding race to the bottom. In 2024, brands should proactively seek loyalty models that offer exclusivity and status — for instance, early access to limited time offers or VIP reservation inventory can be more effective and more friendly on the restaurant bottom-line. Page 33 | Food & Beverage Magazine v February Issue 2024
2. Reduce Participation Friction, Prioritize Convenience Exclusivity creates excitement; convenience creates habit. Broaden the definition of loyalty to go beyond the “reward”; is the experience of enjoying your restaurant easy? As former Yum! CEO Greg Creed reminds us, “easy beats better.” Customers should never have to jump through hoops when trying to give you money — reservations, first-party digital ordering, etc. must be simple. The same goes for loyalty. A restaurant’s highest value guests are not going to hassle with check-ins and punch cards. 3. Don’t Fear Change Changing point-of-sale is a hassle for any restaurant; the same is not true for loyalty programs. With marketing, uncertain return on investment generally means no return on investment — if you’re in that camp, act swiftly. When done correctly, changing loyalty technology vendors can be done almost overnight — literally, a consumer wakes up one day with an updated mobile application, accrued rewards and progress seamlessly transitioned to the new program. 4. Frequency, Frequency, Frequency The last several years have seen many restaurants raise prices to combat rising costs and inflation. As a result, most brands are seeing growing top-line revenue post-COVID. But underneath that rosy exterior is a harsher reality; most restaurants are seeing flat or declining “traffic”. Two metrics are critical for restaurant loyalty: Activation Rate (what percentage of first-time visitors return for a third purchase) and Engaged Customers (absolute number of guests who have made at least three purchases including one in the previous 90 days). Track them like a hawk.