Over half of recently surveyed customers said loyalty programme perks would interest them in a business. Here’s what you should consider when creating a loyalty programme for your restaurant and how to get started.
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As a restaurant owner or manager, building a successful restaurant business is your priority. But serving up delicious meals is only one part of making that reality. You have to attract and maintain a steady stream of customers to keep your business afloat, plus find ways to continuously delight and stay connected with them.
Many owners choose to start a loyalty programme to engage customers and boost retention. A loyalty programme is a marketing strategy where customers are rewarded for their purchases and continued engagement with a brand. The rewards may include discounts, free products or services, or points that can be redeemed toward purchases. While 42% of restaurant leaders surveyed in the 2024 Future of Restaurants report said they offer digital customer rewards programmes to build loyalty, 61% of customers said loyalty programme perks would interest them in a business, making it the perfect time to start one. Here are the benefits and how you can get started.
Why do loyalty programmes matter?
Loyalty programmes are important because they offer a number of benefits to businesses. These benefits include:
1. Improved customer experience and a sense of community
Rewarding loyalty helps customers feel valued and appreciated. For Wicklow-based café and shop Happy Pear, community is everything. With Square Loyalty, they can reward loyal customers while preserving the welcoming neighbourhood atmosphere that underpins their brand.
“Happy Pear is based on community and it is really important for us to reward our customers”, says Project Manager, Conor Savage. “Square Loyalty allows us to pick ways that we can give back to our regular customers. It is so easy for customers to enrol from the screen on the register, and there are so many ways in which we can personalise our loyalty programme.”
2. Higher customer retention and increased revenue
Research has shown that acquiring new customers can be a lot harder and up to 25 times more expensive than retaining existing ones. That’s more than enough reason to prioritise customer retention. But the numbers get even more interesting: If you increase customer retention by just 5%, you can produce a 25% increase in profits.
A brand’s loyal customers are not only more likely to continue buying from the brand, but they are also more receptive to new products from the brand. On average, loyalty programmes boost repeat business by 40%. And they are often cheaper to manage in the long run compared to the cost of acquiring new customers.
A well-executed loyalty programme can also be a self-sustaining system. Once you have established the rewards process, customers can continue to earn and redeem those rewards in perpetuity or until you discontinue the programme.
3. Valuable business insight
Loyalty programmes can uncover a wealth of data for your business, especially when they are backed by the right technology. You can gain key insights into your customers’ needs and preferences to optimise your offerings.
“The ability to group your customers according to what is most relevant to them, whether it’s the time since their last visit, their ordering history by item or category, or their total average sales, can be compelling,” says Rajat Deva, product marketing manager for Square for Restaurants
With Square Loyalty, for instance, you can track sales and gain insight into your loyalty programme’s impact on sales. For example, you can compare average spending and visits from customers enrolled in your programme versus those not.
How to start a loyalty programme
Creating a successful loyalty programme requires careful planning and the right tools to power the rewards system. Below are two of the most important steps to start a loyalty programme.
Step 1: Create meaningful rewards.
The first step is to understand what your customers want and create rewards that will be meaningful to them.
Two of the most common loyalty programme rewards are:
Points-based rewards
In point-based loyalty programmes, customers earn points when they make a purchase or perform certain activities, such as participating in a survey. These points can be exchanged for menu items, coupons or gift cards. For example, by signing up for your restaurant’s newsletter, the customer could earn enough points for a free coffee.
Tiered rewards
A tiered rewards system helps to create a sense of exclusivity. Each tier can have exclusive benefits, such as early access to sales or new products or access to invite-only events or experiences. Customers unlock these benefits when they reach specific purchase milestones or collect a specified number of points.
Step 2: Set up the rewards process.
Creating attractive rewards is only one piece of the puzzle. The next step is to set up the process for customers to earn and redeem those rewards. While the process could be manual, implementing technology to automate rewards and integrate them into other parts of your business, such as marketing, is crucial to delivering a seamless customer experience.
What kinds of loyalty programmes do customers really want?
Download Square’s 2024 Future of Customers report for innovative strategies to engage customers, from loyalty programmes to new payment options.
The value of loyalty programmes
While many businesses view loyalty programmes only as a rewards system, loyalty programmes can serve as much more. They can be an important way to build a deeper relationship with customers and keep them continuously engaged. The entire rewards process presents opportunities for your business to delight and stay connected with customers.
The right loyalty programme can help your business build customer trust, deliver a memorable customer experience, and deepen customers’ commitment to your brand.