How Important Is A Digital Loyalty Platform

During the late 80s and early 90s, customer loyalty and reward programs were viewed as a cheap marketing method with a limited lifespan. Some 30-odd years later, loyalty programs have become a restaurant industry mainstay, providing invaluable insights to their brands— on top of developing and increasing profit margins. 

How Important is Loyalty In Restaurants? 

In today's information age, maintaining customer attention is much more complex than it used to be. Loyalty programs can bridge that gap and help keep you top of mind— and keep your customers coming back time and time again. 

What's the value of a repeat customer? Frederick Reichheld and W. Earl Sasser, Jr. stated in Harvard Business Review's "Quality Comes to Services" (September-October 1990 that "A company's most loyal customers are also its most profitable. With each additional year of a relationship, customers become less costly to serve. Over time, as the loyalty life cycle plays out, loyal customers even become business builders: buying more, paying premium prices, and bringing in new customers through referrals."

In the 33 years since that has only become more true. In a study by Incentivio (hey, that's us), we found that loyalists spend over 4x more than strangers to your brand. Loyalists are usually the most significant part of a restaurant's recurring revenue, accounting for 10-20%. 

Building loyalty isn't easy, though— everyone is a stranger in a new restaurant or market. As a people, we're creatures of habit, and even after a great visit to a new restaurant, we don't necessarily incorporate that into our daily routines. Having plans and methods to retarget after a first visit is vital to building lasting loyalty to a brand. 

Do Digital Loyalty Platforms Affect Customer Performance

Clearly, loyalty is important and should be a priority for restaurants. But do loyalty programs build lasting loyalty, or are they simply a cheap marketing gimmick?

Loyalty programs act as a catalyst or accelerant to the loyalty life cycle. They can turn new customers into regulars if the loyalty program is well implemented. Simply having a program is not enough. You must ensure that your customers are continually informed and educated about your rewards program and that it's worth their while.

Maximizing Your Digital Loyalty Platform

So, how do you get the most out of your digital loyalty platform? There are plenty of details to optimize in your loyalty platform, but here are some overarching best practices to set your restaurant up for success. 

Best Value To Best Customers

You want your loyalty program to work for you— you'll receive far more value if you're incentivizing your customers to purchase items with a heavily positive contribution margin. 

For example, if you're offering points for every dollar spent on sandwiches, you'll receive more value from your loyalty than if your offers are tied to your appetizers or salads. 

Benefits Should Outweigh The Cost

This one is a no-brainer— your loyalty program's value should outweigh the cost. Of course, this applies to the monetary investment, but it also transfers to the time and effort cost. There are many ways to weigh this equation in your favor, including integrating your loyalty program directly with your POS system. 

Simplifying your tech stack can have exponential benefits for your productivity. By moving towards an all-in-one system, you're buying yourself more time in the day to manage your restaurants and your team. 

Become Customer Led

Rather than force customers down what you envision as the ideal path, look at what your current superstar customers are already doing. A lot of times, loyalists to your brand have already identified the most efficient way to become invested, and setting up your loyalty program becomes more about ushering people through that same journey. 

This becomes much easier when fed with data from your current customer base. The best loyalty plans will also gather data for your CDP, allowing your decisions to be data-driven and customer-led.

The Importance of Loyalty

Building long-lasting relationships is the easiest way to achieve stable growth in today's economy. Get it right the first time, and work with a loyalty program you can trust.