Actionable Insights From APT's Retail Practice

Refining Restaurant Loyalty Programs: How to Drive Guest Signups and Engagement

July 5th, 2017 | Posted by APT in Restaurants

Loyalty programs are a growing strategy for restaurants – over 40 percent already have a loyalty program, and 27 percent plan to implement one within the year. However, restaurant executives are quickly learning that it is one thing to introduce a loyalty program, and another to build signups and engagement.

For some chains, such as coffee shops that often have daily interactions with guests, driving engagement can be a more straightforward endeavor. For brands that may have less frequent interactions with guests, however, it can be difficult to gather the consumer touchpoints necessary to build, inform, and bolster their loyalty programs.

For many restaurants, the first step becomes: How can we drive new loyalty signups? Many organizations take an incentive-driven approach, distributing special offers and outreach to entice guests to sign up. Offers can range from free items to discounts upon signup, and more. Examples include:

  1. Ruby Tuesday giving new loyalty program members an offer for a free appetizer
  2. Cinnabon offering a free “minibon” roll upon loyalty program signup
  3. Dairy Queen giving out “buy one, get one free” coupons for Blizzard treats to new loyalty program members

Other efforts, such as sales pitches at the register, marketing signage in store, and digital outreach are other common approaches to encouraging guest signup.

With the challenge of driving guest signups, how can restaurants pinpoint which offers and programs will be right for different guests and in different locations? Which guests should restaurants target with personalized outreach? For example, a guest that is already a semi-regular guest is probably more likely to engage with a signup offer than a guest who rarely eats at the chain and may redeem the promotion only for its one-time benefit.

There are many different levers restaurants can pull in their outreach efforts to acquire new loyalty program members. Testing different offers, messaging, delivery platforms, and timing with a subset of guests, and comparing their performance to that of a group of similar guests who did not receive the outreach enables restaurants to determine which acquisition efforts are most effective.

However, restaurants often face another common challenge: Once a guest has joined a loyalty program, how can the restaurant motivate them to continually engage with the brand? Leveraging smart business experiments can enable restaurants to develop an understanding of how different member segments respond to different loyalty outreach variants, as well as which loyalty member characteristics make them most likely to engage with the brand. With greater insight into patterns of guest behavior, such as spend amount and visit frequency, restaurants can tailor outreach to drive value-building redemptions, as well as increased engagement and brand loyalty.

In the future, restaurant chains will become even more innovative in their methods to increase guest engagement. While current offers are now often centered on discounts, free perks, or rewards point bonuses, in the future, some chains could even offer pre-pay, bundled deals, for example. This approach would encourage loyalty members to frequently engage with the brand, such as an offer in which the guest pays a flat fee upfront for ten lunches in the next month. An offer of this nature would not only provide value to the guest, as they would receive ten meals at a discount, but would also ensure the guest would continue to visit the chain, delivering longer-term value for the restaurant.

As with other loyalty engagement and acquisition initiatives, the most reliable way to understand whether such a program would truly drive profits and guest satisfaction is through first testing it on a smaller scale to determine its true ROI. As restaurants sharpen their focus on loyalty programs, it will be critical that they develop a complete understanding of how best to not only drive new guest signups, but motivate engagement over time.


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