How effective loyalty program can help restaurants beat the next COVID-19 wave

Loyalty is crucial in the restaurant industry. A restaurant is likely to get 2 to 3 orders a week from its loyal customers. Based on this fact if a small restaurant has 100 loyal customers, it can expect about 200-300 orders a week. Now assuming that each customer spends about $50 per order, the total revenue generated at the end of the week would be between $1000 and $1500. Even better if you can direct your customers to your own website/app to place orders. Not bad, right? 

In 2021, when everything under the sun seems uncertain, the only certainty that restaurants can find is in their loyal customers - the customers who love ordering food from them. The customers who wouldn’t mind spending a few extra minutes navigating through their native website to ensure that their favorite restaurants stay afloat and remain open during tough times. 

But loyalty needs to be earned, and once earned must be retained for long-term benefits. How would you do that in 2021 and beyond is what we would discuss in this article? 

Earning Customer Loyalty for Restaurants 101

Let’s start with the basics - what is customer loyalty? Any customer that consistently chooses your restaurant over your competitors is a loyal customer. So if you own a Pizzeria in Kent, Seattle, and receive 2-3 orders per week from Customer A, especially during family gatherings or friend get-together, you can consider him or her loyal to your brand. Such customer has consciously chosen your brand for certain factors - quality and price usually topping the list. 

But having a few loyal customers don’t really cut it if you want to make your business profitable in the long run. We need more customers that do not mind paying more if they have to for the quality and service that you have to offer. So how do we get new loyal customers? 

Quality and Price: It’s hard to earn loyalty if you fail to provide quality food at competitive prices. With fierce competition these days, restaurants are required to keep innovating their offerings from time to time to stay relevant to the current market. 

Loyalty Programs: Loyalty Programs when done right can help you take your restaurant to the next level in terms of customer loyalty and consistent revenue. Dig into the trends of loyalty programs, compare them with the most successful ones in the industry and find out the one that would work best for your and your customers. It’s always advised to entice your customers to become loyal by offering rewards that feel naturally beneficial to them. Read more on creating effective loyalty programs here. 

Focus on Word of Mouth: Brands become contagious when their customers start talking about them at every social interaction. 49% of U.S. consumers agreed that friends and family are their top sources of brand awareness. One offline word-of-mouth impression can drives five times more sales than a paid impression. So provide your customers with something that they can talk about. 

For instance; Barclay Prime’s $100 Steak made the brand contagious. It was something new, conversation-worthy, and exciting enough to entice people from far away lands to plan a special trip to the restaurant to experience the offering first-hand. Try to come up with a signature dish, a signature discount deal or perhaps, an activity that’s exclusive to your brand and becomes a conversation-starter in social gatherings. 

Get Socially Active: In today’s time and age, if you are not spending a considerable amount of time planning and strategizing your social media pages, you’re losing out on a plethora of business opportunities. All your customers are online, browsing for food options on their Instagram feeds, and some even placing orders directly from the restaurant’s Facebook Page. So get moving in this department if you still haven’t, and start building a strong, engaging, and fun social media presence that your target audience would love to interact with. 

Retaining Customer Loyalty for Restaurants 101

So now that you have managed to acquire loyal customers through marketing strategies, it’s time to chart out a plan for retaining these customers. New Customer Acquisition cost, on average, five times as much as retaining an existing one, and given the erratic nature of the restaurant industry, it can cost up to 30 times as much to acquire a new customer in comparison to retaining an existing customer! 

Increasing customer loyalty by just 5% can increase your profit by 25% to 95%. Most restaurants don’t realize how important winning and retaining loyalty is and keep focusing more on new customer acquisition. The tips below will help you retain customer loyalty effectively. 

Stay competitive: Let’s take the Pizzeria example again. So if you have been running BOGO on all days of the week, most of your customers would not hesitate to order from you every day if they have to. But if the Pizzeria next door, promising the same quality and price, suddenly starts offering Free Garlic Bread and a Coke with each order - what do you think will happen? At least half of the loyal customers who may not be interested in having a free second Pizza may want to try this new place. So how do you ensure that your customers stay loyal to your brand? Keep innovating! Try to come up with offers, deals, and promotions that are exclusive to your brand. Keep giving your customers not one, but many reasons to order from you. Adding new flavors, dishes can also do the trick if launched with great pricing at the right time. Most importantly, keep yourself abreast with what your competitors are offering at any given time and try to bear that offer if your margins allow. 

Deliver exemplary customer service: Without a doubt, your customers want to feel valued, loved, and taken care of. They are trusting you for the most important thing in their life - the food that they ingest without any doubt. Hence, allow them to trust your brand and offering by maintaining utmost hygiene standards. And while you are doing that make sure you communicate all of it with your customers using newsletters and social media. They must be made aware of the efforts that you and your team put into preparing and delivering great food. If taking delivery orders, make sure to use packaging that’s eco-friendly and efficient. At the end of the day, a happy customer is all you need to be on top of their mind when they decide to eat out the next time. 

Offer flexible ordering options: COVID or No COVID, offering your customers the flexibility to order from multiple channels can help retain their loyalty. The tech-savvy customers of today have become habituated to fulfilling their needs on their mobile devices - for which it is imperative for a restaurant to have a branded menu ordering system in place that customers can use to place orders for delivery, takeaway, and dine-in. If budget is not a constraint and you’d like to be just a fingertip away from your customers, invest in a mobile ordering app. Mobile Ordering has already become the most popular medium for customers to place food orders. According to a report, 73% of online orders were made from a mobile device in 2020. Read how Online Ordering can help restaurants revive in 2021.

How to create an effective Customer Loyalty Program in 2021

Due to COVID, there’s a paradigm shift in people’s expectations, purchasing power, and most of all, habits. 

Restaurant owners must identify these changes and create a new go-to-market loyalty strategy to stay relevant to their best customers.

Let’s look at five actions you should take to make your loyalty program effective in 2021

Observe what your competitors are doing and figure out how to offer benefits that are unique to your customers. Simply using existing loyalty program templates won’t cut in 2021. You must be aware of your customers’ needs, their expectations from your brand and create a loyalty program that would love to be a part of and encourage others to join as well. 

Go beyond discounts and rewards. It is important to make customers feel valued and connected. How can you make their connection with the brand fun and engaging through your loyalty program? One way is to combine transactional and experiential elements in your loyalty program like members can create their own dish from the available ingredients once a month. 

Add a VIP tier to your loyalty program to encourage customers to order more and spend more so they can enjoy the enhanced benefits of the top category member. According to Clarus Commerce, it has been observed that 70% of consumers would pay to join a premium loyalty program if their favorite restaurant one and the benefits were valuable.

All in all, when designing a new loyalty program strategy keep in mind this is the medium to show that you truly care about your customers and want them to save more while enjoying the brand’s offerings. After all, the success of the program depends on the response you get from your customers. Support your program with effective implementation of customer data and marketing campaigns to gain maximum ROI. 

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