Having advised on the launch of dozens of restaurant loyalty programs, I’ve witnessed the transformative power of a well-executed loyalty strategy. However, based on my experience on the brand side, developing and starting a loyalty program is a significant endeavor that requires thoughtful planning, execution and a solid brand commitment. This process involves buy-in from various departments, including IT, finance, operations, legal, franchises and guest relations. Launching a loyalty program is particularly daunting without the data-backed insights essential for key decision-making, like understanding customer preferences, predicting behavior patterns and optimizing program features.
If a brand is considering whether a loyalty program is the right investment before rolling out a full loyalty program, specific tactics to cultivate their customer base while reaching more people is a great place to start. Some of these strategies include digitizing coupons, personalizing offers and providing avenues for digital communications through mobile apps and emails. Why? Because within one year alone, 177.9 million Americans (68.2 percent of adults) redeemed digital coupons. Brands can’t afford to pass up on this opportunity—77 percent rely on purchase discounts and 61 percent on loyalty program points to drive customer retention and loyalty.
While these strategies don’t require having an established loyalty program — which is a great way to leverage customer data, maximize customer engagement and drive long-term loyalty and retention — they can certainly pave the way for future loyalty success by gathering valuable guest data and insights without a significant upfront investment in restaurant technology.
Building a strong foundation for successful loyalty programs
The most successful loyalty programs are built on data-driven insights. In our loyalty design strategy workshops, we ask brands for data about their customer behavior, visit frequency, average check size, engagement with emails, mobile apps, SMS, other channels and customer purchases. We use all this data to design a loyalty program that appeals to their specific customer base while driving incremental sales.
Without a loyalty program, brands may lack access to worthwhile consumer insights. While benchmarks exist across restaurant types, the most valuable source often lies within the brand’s own data. This reality highlights the need for digital offers and coupons, a practical step to start collecting and leveraging this data. Demonstrating the potential benefits of a loyalty program and demand for one from a company’s customer base can effectively garner support from leadership before committing to a comprehensive loyalty program.
Gaining customer insights through digital offers
By analyzing the effectiveness of early offers and coupon codes, brands can better understand their customers because these promotions show how they influence customer behavior, preferences and engagement patterns. This strategy isn’t just about tracking redemption rates—brands can (and should) see the bigger picture regarding the broader impact of such decisions on their target diners.
Brands can begin their journey by investing in a platform that facilitates offer generation while tracking and analyzing the resulting data. These platforms are a solid foundation for future endeavors, whether scaling up to a comprehensive loyalty program or integrating additional features based on evolving business needs and customer demands. It’s essential to choose a platform with capabilities, such as detailed analytics, fraud prevention and personalized offer customization to ensure effective customer engagement and build a rewarding loyalty program experience.
Approximately 90 percent of consumers in the U.S. have used coupons before. Digital coupons are so much more than just discounts; they’re a powerful tool for engaging customers and driving sales. With the right platform, coupon codes can support various initiatives, such as:
- Driving foot traffic to new store openings by targeting individuals who have redeemed offers near the store’s location.
- Supporting fundraisers by providing school groups and nonprofits custom coupon codes to track donations.
- Generating buzz and publicity by participating in major national food days and using coupons to attract new customers.
- Establishing an influencer program, enabling influencers to distribute coupon codes and track sales driven by their audience.
A seamless transition to loyalty
Once a brand has gathered data from its digital coupons and promos program, it’s primed to seamlessly transition its customers to a full-fledged loyalty program. This loyalty framework incentivizes members to provide information about their favorite items, visit times and preferred communication channels.
Armed with this detailed customer information, brands can create highly personalized offers, tailored outreach and engaging digital experiences that increase revenue and foster genuine customer loyalty. This transition represents a significant step forward in building lasting relationships with customers and maximizing their lifetime value to the brand.
Additionally, loyalty programs allow brands to reward customers for their continued patronage while further incentivizing repeat visits. More than half (53 percent) of consumers pay to participate in a loyalty program, up from 32 percent in 2022 and 17 percent in 2021. By offering exclusive perks, discounts and rewards based on individual customer preferences and behaviors, brands can enhance the overall customer experience and strengthen their relationship with their audience.
These programs also provide a platform for ongoing engagement, enabling brands to communicate with their customers regularly, solicit feedback and tailor their offerings to better meet their needs and desires. This continuous interaction helps to solidify customer loyalty and drive long-term business success.
My extensive experience—spanning brand management and advisory roles in loyalty programs—illustrates a well-crafted loyalty program’s incredible impact on a restaurant’s relationship with its customers. The initial use of offers and coupon codes is a critical first step, providing the insights necessary to build a loyalty program that resonates with customers and drives long-term engagement. Finding a loyalty platform provider supportive of a brand’s journey—from early engagements to a comprehensive loyalty strategy—is essential. With these components in place, brands can swiftly launch a coupons and promos program while concurrently laying the groundwork for a robust loyalty program.
Savneet Singh is the President & CEO of PAR Technology Corp. (NYSE:PAR), one of the largest restaurant technology companies in the world. After taking the helm at PAR, Savneet restructured and recapitalized the business from near bankruptcy to a market cap of over $1 billion.
Mr. Singh is also a partner of CoVenture, LLC, a $2.5b multi-asset manager with funds in venture capital, direct lending, and cryptocurrency. In 2009, Mr. Singh co-founded GBI, a large financial software platform that allows investors to buy, trade and store physical precious metals. Prior to GBI Savneet worked in the investment banking department of Morgan Stanley.
Mr. Singh has served on the Boards of a number of public and private companies including the Boards of CDON (NASDAQ OMX: CDON), TCGPlayer and PAR Technology (NYSE:PAR). Mr. Singh received his B.S. in Applied Economics and Management from Cornell University and received numerous awards including the Forbes 30 under 30 and Crains 40 under 40.
