The benefits of having loyalty programs—particularly mobile programs—have become more noticeable due to the pandemic. Customers are prioritizing value, convenience and speed more than ever, and loyalty programs that are able to provide these perks are reaping the benefits from growing sales to more return customers. The success of these programs can be seen in the Delivering on Restaurant Rewards brief published by PYMNTS and Paytronix back in January 2021 (1). Data showed that the average monthly amount of single loyalty program user spent on food orders in 2020 was almost double compared to a non-user. This difference was even greater comparing consumers who ordered takeout from dine-in restaurants.
“Consumers’ rapid adoption of these apps may have been spurred by the pandemic, given that in-app ordering minimizes contact and time spent onsite,” said the PYMNTS report (1, 4). But “QSRs will likely continue to benefit from increased loyalty program usage in years to come.”
Here are what industry experts have to say about customer loyalty programs and how it can drive your restaurant’s marketing plan in 2021.
- Customer loyalty programs are trending (and profitable).
Customer loyalty programs offer a way for restaurants to directly engage with their customers on a regular basis. According to Kelly Beaton from the Food Institute, these programs cater to the demand for value and convenience, and restaurants in 2021 must “consider implementing loyalty programs to stay competitive” (1). For example, consider companies that have recently added a loyalty program in the past year, such as Mcdonald’s, Wendy’s, Taco Bell and White Castle. As many as “12% of QSR operators have launched a loyalty program in the past year, according to the National Restaurant Association’s 2021 State of the Industry report,” Beaton added (1, 2).
Another study by the B2B platform PYMNTS found that loyalty and mobile apps were two QSR sales channels that have become even more effective during the pandemic (3). PYMNTS also listed examples of the most profitable loyalty programs from QSRs such as Taco Bell, Chipotle Mexican Grill and Starbucks, which have seen “record-high loyalty program participation as well as high digital sales growth” (3).
- Loyalty Programs can meet customers growing demand for value.
Value has become an essential piece in brand loyalty, owing to the economic impact of the pandemic. More than ever, loyalty programs are “being looked at through a lens of value,” said Gina Fleck, senior director of strategy and insights and promotion and loyalty solutions at Merkle, Inc. (4). “Customers want to make sure that they are getting a strong return both in terms of how they earn and how they redeem.”
If your loyalty program can offer your guests this added value, your business can benefit from return guests and more sales. The best example of this is the Starbucks Loyalty Program. “Starbucks has seen huge success with its loyalty program because of the seamless app experience that makes it easy to order and pay,” Fleck said (4). From easy payment, rewards and benefits such as free refills on brewed coffee, birthday gifts, and the ability to send other members gift cards and hear about upcoming promotions, there are various benefits for the user that allows customers to stretch the program’s value. “It’s not just about the digital experience,” adds Fleck, “it’s the entire customer experience and finding ways to create value and convenience end to end.” The perceived value of your loyalty program will be a crucial component for marketing in 2021.
- Customer loyalty programs increase engagement
According to the Punchh website, a San Mateo, CA based loyalty and engagement platform for businesses, “Personalized experiences are what turns anonymous buyers to loyal super fans” (5). These experiences can be as subtle as seeing your name written on your coffee cup, getting a birthday message, or receiving recommendations based on their favorite menu items. It’s little moments like these that engage customers and build relationships. This is exactly how Punchh helps their customers develop their loyalty programs. “Building rewarding relationships with guests as they move along on the journey from anonymous buyers to loyal superfans is the key to building Customer lifecycle loyalty,” they advised (5). Operations should “prioritiz(e) convenience, safety and create customer-centric experiences that build loyalty such as delivering dynamic offers and marketing campaigns that drive Omnichannel engagement across the lifecycle.”
- Loyalty Programs provide precious data.
No longer can you discount the power of data. According to Andy Wood, the managing director of GI Insight, a full-service database marketing company based in the UK, “a loyalty program provides a sophisticated means of tracking every transaction between a customer and a brand so that the Big Data can then be analyzed to better understand the buyer’s habits and needs” (6). In fact, he calls Big Data the “secret weapon” behind loyalty programs. “In the age of Big Data, the loyalty program is fundamental for companies wanting to achieve a customer-focused approach,” Wood stated. “A full program provides your company with the information and tools it needs to retain your best and most promising customers—but it also equips you to extend those relationships by encouraging return purchases and greater spending.” One McKinsey study even found that that “executive teams that make extensive use of customer data analytics across all business decisions saw a 126% profit improvement over companies that don’t” (7).
Using the provided data to craft a message and storytelling that resonates with your target customer base, your business can launch new products that your loyal customers are more likely to enjoy. This data-driven marketing approach is key to growth, and at the end of the day, helps restaurants save time and resources.
- Customer loyalty sales bounced back during the pandemic.
Shyam Rao, Co-Founder & CEO of Punchh, recently gave a webinar with Nation’s Restaurant News reporting the sales data from his 225 customers—which combined serves 175 million consumers (8). Examining the sales data from March 2020, he found that anonymous sales dipped by 55% right after the outbreak, but loyalty sales declined less, only by 36%. Meanwhile, anonymous sales took 15 weeks to recover 90% of pre-COVID sales level, while loyalty sales took only 9 weeks to recover (8). “Loyalty sales recovered quicker and actually bounced back higher,” he said. “So this is one of the reasons why loyalty is so critical.”
Are you interested in adopting a loyalty program in your restaurant in 2021?
Here are some resources that can help you start. You can also reach us via our contact page, where we can guide you through implementing a successful loyalty program for your business.