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How to build an effective reward loyalty program
Takes 5 mins to read
01/6/2018

Hospitality 101: How to build brand loyalty using customer rewards

Today’s consumers have high expectations when it comes to reward programs, especially in the fiercely competitive world of food services.

Business owners must cast a wide net if they want to catch a new breed of discerning customers – using flexible, customised rewards to forge deeper relationships and increase consumer loyalty.

In a 2016/17 Oracle Hospitality Global Consumer Survey, ‘Recipe for Engagement: Essential Ingredients for a Restaurant Loyalty Program’, 52 per cent of Australian respondents claimed to be members of at least one restaurant or ‘food and drink’ reward scheme.

Here are our top tips to help you grab a share of this lucrative rewards market.

1. Do your homework

Allow enough lead-in time when introducing your loyalty scheme. Staff need to be trained and ready to catch sales. 

Balance the value of goods or services you are likely to give away with the economic benefits of increased customer patronage, to ensure the scheme will be cost-effective.

Take a look at loyalty frameworks to help you with this. 

2. Start small and build

Get the fundamentals right and continue to trial various rewards and options until you hit a winning formula that enables you to be a reliable food service. 

Effective loyalty schemes tap into their customer base's unique desires and requirements, so keep monitoring, adjusting and listening to what your customers tell you. Oracle investigated:

  • Plastic swipe cards: Most popular method for all age groups in the study.
  • Paper stamp cards: Giving operator no access to customer data.
  • Mobile phone apps: Most popular among Millennials and Gen Xers.
  • Registered phone numbers: Least popular among respondents overall.

3. Choose the right rewards program

Participants in the Oracle study ranked their most appealing restaurant or food-based rewards as:

  • Discount on every purchase (72 per cent).
  • Free products e.g. fifth or tenth coffee free (68 per cent).
  • Birthday celebrations and personal attention (44 per cent).

Other forms of reward favoured by food service providers include:

  • VIP benefits (products, services and experiences).
  • Competitions with enticements for entering and prizes for winning.
  • Charitable donations made when customers spend a certain amount.
  • Referral rewards for customers who introduce new business.

3 things most likely to stop patrons joining a restaurant loyalty scheme:

  • Not visiting the venue often enough.
  • Being asked too many personal questions.
  • Lengthy or over-complicated sign-up process.

So, avoid complex schemes which are off-putting to customers.

4. Go digital

Linking a reward program to your Customer Relationship Management (CRM) system can capture valuable customer data, track loyalty points online and monitor the effect on sales and profit.

The Oracle study showed that more than 50 per cent of customers aged 18–50 want restaurants to run reward programs via a mobile app, with many options now available.

Also consider:

  • Building email lists for your online food service such as delivery options, pre-ordering and re ordering.
  • Encouraging customers and clients to share and review via social media pages to win prizes.
  • Creating an Instagram page to showcase chef inspiration, food and beverages.
  • Connecting with customers on Facebook and Twitter to determine the rewards that motivate them.

This helps develop a community of ‘brand ambassadors’ to promote your business, whether it be a new food delivery service or a well-known deli store – as well as accessing potential new customers.

5. Remember the Millennials

The Accenture Strategy 2017 report ‘Seeing Beyond the Loyalty Illusion’ explores what Australian Millennials or Gen Y expect loyalty programs to deliver. They reportedly prefer:

  • Customised and innovative experiences.
  • Supporting worthwhile causes.
  • Accessing exclusive offers and partnerships.
  • Celebrity endorsements.

They are also found to switch programs more frequently, have higher expectations of reward delivery and share positive experiences across multiple channels.

Determining the proportion of people born between 1980 and 2000 in your customer base will enable you to offer them tailored benefits reflecting their view of the world.

6. Carry out these ‘loyalty takeaways’

A comprehensive, well-managed loyalty program can increase overall revenue by 5–10 per cent, according to the Oracle survey.

Research showed that rewards must be relevant and easy to redeem if you want to attract members – and your program must be simple to both use and understand.

Remember to:

  • Use existing customers to help acquire new ones.
  • Go big on social media sharing, reviews and encouraging customers to attract their friends (referrals).
  • Cater for customers’ personal requirements such as 'vegan' or 'vegetarian' options. 
  • Use customer feedback to measure how you are tracking. 
  • Give customers choice of app, email or in-store engagement.

Providing the right rewards keeps the joy of food alive, while retaining customers and future-proofing your business in competitive times.

See More In this:

Relationships Matter

KEY TAKE OUTS

CONTEXT

Today’s consumers have high expectations when it comes to reward programs, especially when it comes to visiting cafes, restaurants and other food services.

PROCESS

Effective loyalty schemes tap into their customer base's unique desires and requirements, so keep monitoring, adjusting and listening to what your customers tell you.

RESULT

Providing the right rewards keeps the joy of food alive, while retaining customers and future-proofing your business in competitive times.

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