Assuming your coupon strategy is working, and you are attracting new customers, the next phase of your purchase incentive program should be a way to reward your regulars. In a 2020 survey performed jointly by Paytronix (a loyalty and engagement services company) and PYMNTS (a business media company), 47% of respondents indicated that they were members of at least one restaurant loyalty program And membership has been growing as more restaurant companies roll out new or improved programs.

We tend to think of loyalty programs as being something that restaurants have adopted from airlines and big box retailers but really, it’s the other way around: restaurants have long known the value of repeat purchasers. Sending out a special dessert to recognize a regular’s birthday, making sure a guest gets her favorite table when she comes in for lunch, or even stamping that coffee club punch card are all forms of loyalty programs that restaurants have used, well, forever.

Of course, there are good financial reasons for encouraging your customers to come back again and again. Repeat customers spend more – as much as two-thirds more – than a new customer. Just a 5% increase in repeat business can grow your profits by 25% or more because there is some evidence that repeat customers have higher check averages. And it costs at least five times more to attract a new customer than it does to keep a current one. That’s why we have to really recognize our regulars in ways that resonate with them and with the kind of operation you are.

Best Practices for Restaurant Loyalty Programs

• Use emotionally resonant language to describe the program. Calling it a “rewards” program puts the emphasis on the transaction, whereas names like “Insiders Club” or “Friends of…” focuses on a deeper relationship between you and your members.
• Get to rewards quickly. Guests are more likely to purchase again if they know that they are close to earning a benefit. Reduce the number of points needed to earn a free item so that it’s feasible to get a reward on every third or fourth purchase. Offer accelerants like “double points” days.
• Show progress toward the next goal. After every purchase, notify members that their visit has earned them a specific number of points. Show them how close they are to achieving the next benefit available to them.
• Consider rewards that go beyond free food. Benefits like getting first dibs for high-demand reservations or being invited to a members-only event are powerful ways to create a loyal guest and are more likely to drive positive word-of-mouth.
• Customize your rewards. Many POS systems allow you to tailor your messages and rewards to different categories of customers. Aim to “delight and surprise” by making rewards match or complement your members’ individual purchase behaviors.
• Let members know you appreciate them. Birthday messages are nice but those are table stakes. Send a thank you message after each member purchase and vary the message to reflect that member’s behavior.
• Ensure your staff is thoroughly trained. Any employee who comes into contact with guests needs to be very well-versed in the program and know what to do when a guest wants to claim a reward.

Best Practices for Restaurant Coupon Promotions

• Never offer discounts. Discounts train your customer to pay a lower price which suggests your offering isn’t worth as much as you are charging at full price. And bargain hunters will only visit if they get a discount which drags down your profits and your servers’ tips.
• Instead, offer a freebie. There is plenty of research showing that people prefer getting something for free rather than getting a discount, even if the absolute value of the discount is greater. In other words, giving a guest a free bag of chips along with their sandwich is much more valuable to them than saving fifty cents on their purchase.
• Encourage increased spending. Coupons with offers like “buy two get one free” are smart – they often push up the check average more than the value of the coupon because they can increase party size and drive sales of add-ons like beverages.
• Don’t offer what you can’t deliver. Make sure you have the supply chain, equipment, and staffing to make good on whatever you are promoting through a coupon campaign.
• Don’t issue more than one coupon type at a time. Decide on which particular behavior you want to encourage for a given coupon promotion, such as driving demand during a slow period. Then issue a coupon tailored to that behavior (“Come in on Mondays to get two chicken sandwiches for the price of one.”)
• Don’t issue coupons too frequently. There’s no set rule of thumb for how often to send out a coupon promotion, but you want coupons to be infrequent enough that they grab your potential customers’ attention. If guests learn to expect a coupon every couple of weeks, they won’t feel any urgency to visit you.
• Track your results. Use digital coupons through your POS or a third-party provider so you can measure the redemption rate and see how successful your promotion has been.

You Have to Promote It

Once your purchase incentive program is in place, you need to promote it. Use social media tools to push messages to your current guests and consider using email as well if your customer base is older. (Hands up, those of us Boomers and Gen Xers who still use email every day). To attract new customers, note that 77% of people are more likely to try a new place if a friend or family member recommends it, so consider ways to reward loyalty program members who share positive word-of-mouth.

With any purchase incentive program, you want to shift your customers from having a purely transactional relationship with you to one that engages them emotionally and creates a lasting connection. Of course, you need to offer concrete benefits like freebies or savings as the base of your program but including experiential and emotional rewards will make all the difference to growing your business.

Source: RestaurantOwner.com