The challenges of creating customer loyalty in the restaurant business – especially the quick serve sector – are many. Businesses with high frequency visit environments lend themselves to traditional loyalty program structures, but a small average transaction size means that awarding a customer with a 1-5% rebate doesn’t add up to much. That’s part of the reason so many restaurant chains still rely on a punch card style solution for customer loyalty. Add in the complexities of a franchise system, where multiple business owners have to be convinced of the same customer engagement and retention plan, and even the a well prepared strategy can run into low adoption rates across the business.
Given the challenges, it was heartening to read the results of the LoyaltyPulse survey, which tracked consumer attitudes towards loyalty programs in the dining sector. The report was sponsored by Loyalogy, a provider of loyalty program consulting services and its principal, Dennis Duffy, is a highly credible source of knowledge and experience in the industry.
To sum up the impact of the survey, Dennis was quoted in a press release by saying ”the LoyaltyPulse study provides clear evidence directly from consumers regarding the effectiveness of restaurant rewards programs and the value associated with using the rewards program data to tailor and target guest e-mail communication.”
Survey respondents estimated that the presence of a restaurant rewards programs would increase their visit rate by an average of 35%, and 65% said they would recommend a restaurant more to others if that restaurant offered an appealing rewards program. In the age of the digital connected consumer, willingness to recommend is a powerful asset for any brand. Tasti D-Lite found this to be true when it launched the first ever points-based loyalty program which also rewarded points for members with opt-in to allow Tweets, Facebook updates and Foursquare check-ins as part of their store visit.
The report contains lots of information and you can find a copy here. Two other tidbits stood out to me. First, almost 50% of those surveyed expressed willingness to pay a fee to join a restaurant loyalty program as long as there was “adequate value” offered. Hopefully this does not mean that the respondents wanted to eat free every day, but the finding is at the least a sign that fee based programs are on the rebound. In the past year, we’ve seen Amazon and AMC Theaters launch fee based programs (Prime and Stubs, respectively) and Barnes and Noble continues to operate with an annual membership fee.
The last finding that I’ll share here is that consumers surveyed expressed their interest in a coalition style program, as 73% said they would be interested in a program that awarded for patronage across multiple restaurant brands. The overall enthusiasm expressed by consumers for loyalty programs in this survey is good news for marketers, and the coalition response provides a peek into how restaurants might want to consider structuring the future of their loyalty programs.