A growing trend in the hospitality industry is the use of loyalty and reward programs to give incentives to your customers to continue returning. Rarely will a customer visit a national or regional restaurant or hotel without finding an incentive program. Dine 9 times and receive your 10th meal free or earn 500 points and receive a free dessert. The options are many, but where are the independent restaurants in the loyalty game? Often times, loyalty programs are difficult to maintain, require a high upfront cost, or are simply too much of a hassle for local and regional restaurants and restaurant groups. But even with the difficulty presented, tapping into the realm of creating a loyal base with the use of incentives can be a powerful tool in your passive marketing campaign.
We are a generation of attention seeking, pat-on-the-back desiring consumers who enjoy when a company appears to go a little further to recognize us for choosing them as the recipient of our hard earned money. It’s a fundamental part of our self esteems and egos to desire a nod of approval. A nationally recognized weight loss program even realized this, and many of its followers attribute their success as well as their continued patronage to a simple gold star and recognition given each week. Studies have shown it often doesn’t matter the value or the size of the reward given, rather the ability and ease for the customer to earn the reward that makes the incentive valuable.
The most difficult issue the local or regional restaurant has in creating loyalty programs is scope. National restaurant chains like T.G.I. Fridays can create self branded cards and have a national loyalty program simply due to the size of the organization. But without national recognition, what avenues of creating a successful reward program should a restaurant take? There’s several.
The most common method is the self-branded card. This can range all the way from self printed business cards with check boxes to barcode or magnetic strip plastic cards integrated into your Point of Sale system. The benefit is that the customer has your card in their wallet and it serves as a reminder of your presence. Additionally, it can be easily integrated into the POS system, allowing very little additional work for your servers and cashiers. The detriment of the self-branded card is that customers are growing more and more leery of carrying so many cards. If the customer doesn’t have the card, it can create a barrier between you and the customer when the goal was to create a stronger relationship. When asked if she would eat at a particular restaurant more if it had a loyalty program, Emily Gamin, restaurant patron from Oklahoma City, Oklahoma says “I would, if it didn't involve punch cards or other types of cards. If it could be managed through a smartphone app, that would be ideal. I never remember the cards, or I can't find them.”
As a technologist, I find the most successful and consumer friendly options for loyalty programs are the ones that utilize the very tools that I already have. With the number of individuals in the United States with cell phones approaching 100%, it seems advantageous for restaurants to find more ways to allow the customer to use their favorite gadgets to connect with you, and vice versa, and several methods exist to allow you to tap into this connection.
Many restaurants are choosing to create loyalty programs by the development of their own custom smart phone apps. This allows the restaurant to create individual, specific, custom content utilizing your own branding and marketing strategy. However, keep in mind, custom app development can range from $5000 to $10000 depending on the complexity of the system you desire. Additionally, it requires the customer to have additional applications on their device. With that in mind, custom app development would be an advantageous option for a regional or super regional restaurant group, but would most likely be ineffective for a local restaurant or small regional restaurant group.
Another option would be to participate in a national rewards network system. Deelioz, an app for the iPhone and Andriod, (www.deelioz.com) uses GPS coordinates to allow your customers to earn points each time they physically visit your restaurant. Deelioz is a free service to the restaurant and allows you to create your own reward system. The benefit of a system such as Deelioz is that it allows the customer to search for restaurants and establishments within a certain locality that offer loyalty programs. Deelioz allows the restaurant to not only reward patrons for their own visits, but also for referrals. Additionally, solutions such as Deelioz require no proprietary hardware for the restaurant, making implementation quick and inexpensive.
Another app based service, Punchh (www.punchh.com)serves as a virtual punch card, allowing the restaurant to set up their own validations, rules, and reward systems. Furthermore, Punchh allows your customers to earn punches by referring their friends, further pushing the reach of your loyalty program. “Customers make food decisions with friends, family, and colleagues,” says Punchh Co-Founder Sastry Penumarthy. Word of mouth advertising is becoming more and more powerful, especially when tied in with social media tools. Punchh also facilitates cross marketing as well as reward gifting, further extending the reach of your loyalty program. With Punchh, restaurants can amplify the word of mouth by having loyal customers post reviews. Punchh also facilitates reward gifting between customers, group rewards, and cause marketing, thereby extending the reach of loyalty programs into rewarding social behaviors such as group dining and cause marketing.
Utilizing the power of a virtual reward program such as Punchh or Deelioz can help not only create loyalty, but draw attention to your restaurant and attract new customers.
The travel industry has long seen the benefits of rewards programs. As restaurants begin grasping the value and importance of incentives and rewards for their best customers, it will be key to find yourself at the top of this growing trend rather than lagging behind. Your willingness to thank your customers, even in what may seem in a trivial manner, will pay off greatly in the future as the economy strengthens and restaurants see new growth. Implementing a technology solution for your reward program will give you the power to tap into not only the current generation of technology savvy consumers, but will extend your reach far more than a plastic card in a patron’s wallet.
Shawna Simpson is the President and Co-Founder of Diner Connection. Shawna has 15 years of experience in management and consulting in the hospitality industries, specifically in the area of implementing successful technology solutions.