You may be researching a loyalty app or have already implemented one, but it has not very successful. In this blog, we are going to review the steps required to create a successful loyalty app for your restaurant brand.
So let’s break this down from start to finish. We will start with;
- Defining your objectives and end goal
- Integration and roll out of the program
- Brand awareness and marketing of the new loyalty program
- Monetization and Return on Investment
Then we will cover some common mistakes to avoid when implementing a loyalty program.
Step 1: Defining your objectives
The very first thing that you must do is to define your objective and your end goal. As it is famously said, “not planning is planning to fail,” so start with clear, concise, and measurable goals. Why are you trying to implement a loyalty app? What is the end result that you are looking for? Is it to increase sales and revenues? If so, how would you accomplish that through the loyalty app? Is it to learn customer behavior? If so, why is that customer behavior so important? Do you know how to monetize the customer data if you had all of your customers’ data today?
Understanding your goals will help you design a loyalty program that aligns with your business objectives, otherwise you will be following the herd and will make the same mistake as everyone else. We’ll get into those details later.
If you are like most restaurant owners, you are trying to implement a loyalty program in order to increase sales and revenues by getting your customers email or phone number in order to bring them into the restaurant more frequently, however, there is a better way and we will discuss that towards the end here, so stay tuned for that
Step 2: Integration into your other systems
Implementing loyalty apps within the restaurant will not always have the desired outcome one may expect. Rolling out a loyalty app is not as easy as releasing an app and all of a sudden, you will have a line of people waiting to download the app. In the current environment, many customers are not willing to give an email or download yet another app that they will use once a week in order to get a $5 discount.
If you are implementing a loyalty app but simply are using it as a digital coupon book, it will not have the desired outcome that it once had a decade ago. Plus you will devalue your brand and attract the wrong audience, i.e. the bargain hunters.
The next challenge in the implementation of a loyalty app is to ensure you get a complete picture of the customers’ data. This means your loyalty app must communicate with your POS, online ordering, customer feedback, waitlist and reservations, and most importantly to your customer data platform within your restaurant, otherwise, the data is incomplete and therefore not actionable. So choosing a solution that plugs into your Customer Data Platform is extremely important. If you need to learn more about Customer Data Platform, we have a great article that you can read here.
Step 3: Marketing your loyalty app
Once a loyalty program has been implemented, the hard work begins, convincing customers to join your loyalty program. Without proper marketing, your loyalty app will just simply be a flop. Assuming you are Starbucks and you have hundreds of millions of dollars to spend on your loyalty app, You will convince about 15 to 20% of your customers to join your loyalty program, so communicating and marketing your loyalty program is just as important as any other step, however, don’t expect more than 20% of your customers to join.
Once your loyalty program is up and running, it’s important to effectively communicate it to your customers. This includes making sure employees are trained on the program and can explain it to customers, as well as using in-store signage, email marketing, and social media to promote the program.
It is important to note that the majority of your customers will not join your loyalty app, so do not focus strictly on your loyalty customers because you will miss out on a majority of your customers. Again taking Starbucks as an example, they have about 15 to 20% of its customers in its Starbuks Rewards program.
Step 4: Monetization
The last step is to ensure you have the proper resources in order to monetize the data you are gathering from your customers. Many small and even large brands gather the information, turn around, and mass market to those customers regardless of their purchase behavior. This is the absolute worst thing that you can do. You’ve spent countless amount of time, money and resources to implement the program, market it and to convince your customers to join your loyalty program to then turn around and mass market to them irrespective of their preferences. This is absurd, so don’t fall in this category. If you do not have the proper resources to monetize your customers’ data, do not burn your money and implement a loyalty program, it will be a catastrophic failure.
Successful monetization of any loyalty program is absolutely dependent on the personalization of your marketing messages to each individual customer. You must have the resources to analyze your customer’s data and purchase history, for example, favorite items, locations they visit, how often they dine in, their satisfaction score with your brand and etc in order to personalize your offers and promotions to each individual customer.
Again, we highly encourage you to read about Customer Data Platform so you understand the value of actionable transactional data and how to monetize it effectively.
Mistakes to avoid when implementing a restaurant loyalty program
Devaluing your brand
A loyalty app should not be about discounting, couponing, and devaluing your brand. Remember that there is a time and place for everything including coupons and discounts, Think of creative ideas that you would want if you were the customer of your own restaurant. For example, if you are a difficult restaurant to get a reservation for, an excellent loyalty perk is to allow those high spenders to bypass the typical reservation blocks and get a reservation. Another example is to allow the loyalty customers to skip the line during busy times, sort of like having priority pass or TSA PreCheck at the airport. There are many ways to create experiences to elevate the customer experience using loyalty programs and they do not have to always include free stuff, just amazing experiences.
Let me give you a great example. We used to visit this mexican restaurant and each time we walked in, the manager woud immediately seat us and by the time we sat down, there would be a flight of queso, guac and salsa on the table on the house. Yes it may have cost them a few bucks, but we spent at least $100 dollars a visit. But more importantly, when we wanted to go to mexican restaurant, we always preferred to go there because we knew we would get a VIP treatment. After some time, the manager was moved to a different location, our VIP treatment disappeared and I have not been there for at least 6 months, they became just another restaurant to choose from. This goes to show you the power of amazing experiences and enabling your frontline workers to create those experiences.
With today’s technology, mass marketing is absolutely unacceptable. As mentioned before, put yourself in the shoes of your own customers. You have no kids, yet you are receiving kids eat free offers, you are a vegetarian and you consistently get meat specials, how long would it be before you unsubscribe and leave that loyalty program? If you have never ordered alcohol but you are consistently bombarded with alcohol specials, how would you feel?
The idea of implementing a loyalty app is to learn the behavior of your customer and personalize your messaging, remember, the right message at the right time, using the right channel. This is the key to a successful marketing campaign. You have to use the right message, one that is personalized for that recipient, at the right time, a birthday message 2 months early or late, is useless, and send it through the right channel, that is email, text or push notification depending on the recipient’s preferences.
Not sharing the data with your front-line staff
This is an enormous mistake that many brands make, that is to closely guard that customer data and not putting it in the hands of the frontline workers where it can be used to elevate your customers’ experience.
A great example is when a brand is aware of a customer’s peanut allergy but they do not make that information available to the hostess using the waitlist and reservation app. You have to make the information available to your front-line workers and give them the tools they need in order to treat every customer like a VIP customer.
The better way
If your objective is to increase sales and profits using your existing customers, you must look for a Customer Data Platform instead of a loyalty program. A powerful customer data platform, would consist of actionable transactional data of all of your customers, regardless of loyalty status. If you are unfamiliar with Customer Data Platforms, read this article and learn more about it.
A loyalty app is a small piece of the overall picture of operating a restaurant. Any source of data gathering must be transactional and even more importantly it must be actionable. So be sure your loyalty app integrates to all of your systems, be sure you communicate it effectively, never use customer data to mass market and lastly, put that information in the hands of your front-line workers and give them the tools they need to treat every customer like a VIP customer.
By the way, Milagro has solved the complex problem of implementing a loyalty app that deeply integrates with all other systems running within the restaurant to give you a complete overview of your customer while making that data available to those making the decisions. Contact us to schedule a demo.
Unlock valuable information by reading our blog how to set up loyalty programs.