The future of restaurant loyalty programs is personalized

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Loyalty programs can be complicated. Many restaurants have the tools, but they don’t know how to get the most out of them. Here’s how to build an effective loyalty program.

As restaurants enter the early days of a post-COVID era in the spring of 2022, they do so with many more digital tools at their disposal. Throughout the pandemic, the industry has witnessed a massive uptick in the adoption of digital loyalty programs, which consumers flocked to to order from and which restaurants used to drive demand in the absence of pedestrian traffic.

Now, as the cloud of pandemic uncertainty lifts, the industry finds itself in a funny place: Many restaurants have the tools, but because they adopted them so quickly, and as a band-aid against reducing foot traffic, they don’t necessarily understand how to get the most out of these tools. They lack the in-depth knowledge to create a truly effective post-pandemic loyalty program.

Want to know how to build an effective loyalty program? Here’s how.

Give consumers what they want

What do consumers expect in exchange for loyalty? Rewards and offers relevant to them. Consumers download these apps for convenience, but they come back for rewards.

Rewards don’t have to be free food. They can be non-financial, like a special experience or early access to a limited-time offer.

The financial analysis behind loyalty programs is clear: your best loyalty customers consistently earn and redeem the most points, resulting in higher spend and higher lifetime value. Guests who are more casual in cadence earn fewer points and trade less often. So, from a financial point of view, there is an undeniable advantage to running a loyalty program for a restaurant: the lion’s share of loyalty points ends up in the hands of the best customers. This is a distribution of profits that is skewed in favor of the people you want to keep.

For these less frequent customers, the points serve as an incentive to become more loyal, turning casual visitors into frequent visitors or encouraging a visit they hadn’t previously planned.

Personalization is king

Customers want seamless and integrated loyalty experiences. Every time a repeat customer orders from a brand, they want to be sure they’re earning points, whether they ordered online, through the app, or in-store. To achieve this, make sure your loyalty program is linked to your ordering solution at every touchpoint.

This allows your brand to better leverage the transactional data generated, providing more personalized upsells and cross-sells in the future.

When your loyalty program integrates with your order stack, you already know what your customer ordered the last time they came and what items they’re most likely to add to an order. Brands can use this unique and individual order information to generate a higher rate of upsells.

With better customer data integration, you can use timely information intelligently from a marketing perspective. You can target upsell offers around frequently ordered items. For example, two large pizzas are served at a reduced price but only offered in real time to the subset of visitors who traditionally order pizza.

Use your communication channels wisely

There is no shortage of ways to activate customer data in the service of coupons and loyalty promotions. But the rubber hits the road when messaging outbound through your established digital messaging channels.

Understand what types of messages are sent and to whom, via email, SMS and push notifications. Use these channels wisely and in concert to send carefully targeted loyalty program information that keeps customers informed and coming back.

Notify customers when an offer arrives in their inbox. Encourage them to come back as they get closer to their next reward. When they reach each level, celebrate them. Plus, you can even customize loyalty information and individual customer preferences in your mass messages.

Let’s say you send out a general promotion to your one million customers, offering a BOGO pizza deal. Why send the same email to everyone on your list when you can instead embed dynamic content in the email to show a customer where they are in point accrual, with offers that include the trimmings of its order history? Why press “Send all at once” when you can create campaigns that reach every customer on the day they’re most likely to order and when they’re most engaging with your brand?

Break the delivery aggregator cycle with a single solution

In a rush to set up digital programs during the pandemic, an absolute torrent of brands signed up on third-party delivery sites, which provided a quick digital solution to a looming problem.

But these sites have resulted in huge financial disadvantages for brands, squeezing already thin profit margins and excluding brands from vital customer data that will fuel the future of restaurant marketing.

No group is more trained to use these third-party delivery apps than our younger generation. The mainstream research is clear: Generation Z has not developed true habits, brand affinity and loyalty. This presents a significant opportunity to drive them away from your competitors and third-party aggregators and bring them to your brand. And you do it with tempting loyalty offers.

You incentivize customers who make the switch to skip markups, avoid fees, and access the benefits of a loyalty program powered by the same data that you, as a restaurant, can then use to offer them more promotions. enticing in direct 1:1 communication.

For brands that have avoided taking the leap for fear of the tech elevator: Consider partnering with a single digital ordering and loyalty provider who can bring pre-built and custom-deployed connectivity to set up an app, integrate mobile ordering and curbside in-store systems and layers in a customer data platform, driving a bespoke data-driven loyalty program.

The future is personalization, down market

Here’s the state of mobile apps, omnichannel loyalty programs, and smart marketing techniques to drive incremental business: top brands have already implemented these tools for the most part. Single operators, local brands and small chains probably did not. But that will change.

The migration to digital is a steady and inevitable march. Look for more mid-tier brands with 50-100 locations to start adopting these technologies in 2022 and beyond.
And at the top, programs will become increasingly sophisticated in terms of targeting and personalization, with expansions into targeted goal-based bonus opportunities. Today, these opportunities are relatively simple, like “enter today and get one hundred bonus points”. But note that big brands are increasingly personalizing bonus opportunities, where customer A gets one bonus and customer B gets another, all targeted to incentivize the activity the brand wants to see but keep the offer relevant to the customer based on their order history, platform preferences and other external factors.

Year by year, we are moving more and more towards the integration between customer data and demand generation. For larger QSRs, the goal is deeply sophisticated customization. For smaller brands, now is the time to double down on technology. Don’t be surprised by the outside as the availability of powerful restoration technology moves down the market and into your zone of opportunity.

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