Loyalty expert shares tips for ensuring rewards programs drive strong results.

Sponsored by Paytronix.

Loyalty programs have the power to transform a restaurant’s business. Not only do they drive sales, but they provide restaurants with new channels to interact with guests and stay top of mind when dining decisions are made. But these programs are only effective when a brand makes its loyalty program a company-wide focus.

“A lot of restaurants launch loyalty programs with good intentions,” says Lee Barnes, head of data insights at Paytronix. “They talk about the benefits and train staff to explain those benefits to guests, but then they stop training. After three or four months new employees aren’t talking about the program with guests.”

When the focus shifts from the program, registrations taper off and restaurants stop seeing positive results. Additionally, if restaurants aren’t continuously collecting guest data and using it to inform their promotions, discounts become less effective. By giving all guests the same discounts as those used to attract new business or less-frequent business, restaurants lose money on sales that would have been made anyway.

“You have to attract medium- and low-frequency diners to win wallet share,” Barnes says. “If you make loyalty programs an operational focus and aim to register as many guests as possible, you can target the guests you need to reach to move the needle.”

Take Peet’s Coffee for example. Just six months after this national chain re-launched its Peetnik Rewards program in partnership with Paytronix, membership increased by 350 percent. Meanwhile, the number of checks tied to a loyalty account increased by 47 percent, and a single top-performing rewards offer was responsible for driving more than 1.5 percent of the brand’s retail sales.

The previous approach had been less refined, as Lisa Regelman, director of loyalty for Peet’s, explains, “Peet’s was guessing at offers and had minimal insight into its loyalty program performance. With Paytronix, Peet’s tests and measures everything with control groups, and we talk with our team about how best to structure offers. We can see how frequently customers come in and what they like to buy, and then target campaigns in a more one-to-one manner based on their lifecycle stage and behavior.”

So how can other restaurants ensure their programs are working? Barnes says one major step is to focus on increasing registrations.

“We’ve done a ton of analysis and found people who join loyalty programs visit restaurants 20 percent more often and spend 20 percent more than they would if they hadn’t joined,” he says. “The more people you have in the program, the more difference it’s making for your top line.”

However, driving new registrations relies on consistent emphasis throughout the organization. Leaders should make the loyalty program a top priority and talk about it frequently.

After establishing a broad base of guests, restaurants can focus on fine-tuning their offers to maximize return visits and ROI. Program design is also crucial. Offering the right incentives at the right times can make the difference in where people decide to eat.

“At Paytronix, we do a lot of work helping restaurants design programs that make sense for their customers,” Barnes says. “What works for one restaurant may not work for another, so we help our clients develop unique, interesting loyalty programs while helping them collect the necessary data. It needs to be easy for the restaurant from end-to-end. Simple, effective loyalty programs are a great way to attract customers, get to know them, and drive sales.”

By Peggy Carouthers

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