Loyalty programs can be key in the hospitality landscape to create a reliable revenue stream from returning customers on a more frequent basis. So why do so many coffee shops get loyalty all wrong?
Data suggests that 63 percent of customers make buying decisions based on the loyalty programs they participate in, and this opens the door to a significant accessible market share for businesses that build engaging, inspiring, and truly rewarding loyalty schemes.
Is your coffee shop’s loyalty program failing to attract the level of attention that you expected? Let’s explore four fundamental reasons why your strategy is failing and discover ways to overcome any lingering inefficiencies:
- Your Program is Too Opaque
Customers are receptive to clear and easy-to-follow loyalty schemes that aren’t too convoluted to understand.
Remember that the average American consumer belongs to 16.7 loyalty programs, so it’s unlikely that they’re willing to set aside more time than they need to follow your coffee shop’s terms and conditions.
As neuroscience and marketing author Roger Dooley noted in his blog back in 2012, Starbucks’ early digital loyalty program failed to deliver a coherent set of goals to consumers. Instead, the coffee chain’s varied color-coded membership levels provided different types of benefits.
Additionally, consumers were finding that they would fall down their membership levels without warning due to a lack of sufficient spending in-store.
Dooley notes that Columbia University studies into loyalty cards have shown that more consumed coffee more frequently, the closer they got to a free drink reward. This makes a simplified loyalty program where every 10th visit is rewarded with a free coffee or food far more straightforward and appealing to consumers.
- You Lack Personalization
Personalization goes a long way when it comes to implementing an engaging reward system. If you find that your coffee shop is offering meat-based menu items to vegan consumers, for instance, it can undermine the core goals of your entire loyalty program.
Fortunately, advanced coffee shop, cafe, and restaurant POS systems can support the structure of personalized loyalty schemes by utilizing real-time customer reporting to understand their purchase habits and to deliver special offers that closely align with their interests.
POS insights can also segment customers based on the frequency of their visits, helping to create special offers to encourage them to return to the shop, or ensuring by introducing long-term visitors to new products to trial.
- Nobody Knows About Your Loyalty Program
There’s no point in introducing a loyalty program for your customers if they have no way of finding out about it.
Many loyalty programs can fail due to a lack of awareness. With this in mind, it’s essential to back your scheme up with sufficient advertising and special promotions.
This means you should never introduce a half-baked loyalty program to your customers. This could see an initial flurry of use before your prospects forget it even exists. Instead, look to create special sign-up offers and advertise them online. This could involve getting a free coffee after signing up to an app, or simply a free croissant or muffin with a first purchase made using the loyalty program.
This can help to sweeten the deal and encourage more customers to remember to use the loyalty scheme in the expectation of more great offers in the future.
- You’re Rewarding Disloyal Customers
As we’ve already touched on, it can be tempting to use loyalty schemes to send special offers to customers who have churned or failed to make a purchase over a long period of time.
The prospect of winning back consumers or appealing to those who split their spend between rival coffee shops can be appealing, but it could also risk undermining the actual loyalty aspect of your loyalty scheme.
If disloyal customers are getting better rewards for making one purchase every three months, they’ll have no motivation to visit your shop more frequently. Worse still, your regular consumers could wise up to this and break away from making regular purchases.
While it’s important to focus on incentivizing winbacks, never make the offers sent to disloyal consumers more appealing than those enjoyed by your most loyal customers.
One option here is to create a more robust points system where your best customers can earn even more appealing rewards for their visits. Much like McDonald’s offering high-value rewards for frequent, high-spending customers, incentivizing loyalty ahead of disloyalty is the only sustainable way to build a successful scheme.
Utilizing Intelligent Loyalty
Too many hospitality firms blindly utilize loyalty schemes when the reality is that a more comprehensive approach can serve as a major asset in reducing customer churn and driving brand value.
By harnessing the power of an intelligent customer loyalty scheme, you can deliver tailored experiences for consumers that can accurately reward your biggest frequent spenders while inspiring more leads to choose your coffee shop to earn fulfilling rewards.
This approach will help you to form deeper ties with your customers and can supply you with all the ingredients necessary to sustain your growth efforts long into the future.
Rebecca Barnatt-Smith talks about all things technology. Writing for popular publications like Real Business and Maddyness, she writes on the power of growing your business using the latest tech innovations and how the digital world continues to change hospitality strategies across the globe.