72% Loyalty Programs Fail. Period.

McDonald's has tried it for years with McExtra Card, McRewards, and even McDeals, but none gained traction, despite the use of the latest technology.

On the other hand, Starbucks and Panera Bread are winning on reward programs - reporting a significant increase in loyalty members, 25% and 40% respectively.

So what factors affect the effectiveness of a loyalty program so much so that some work tremendously well over others? What are the factors that you, as a restauranteur, should look for when designing a loyalty program for your restaurant business?

In this article, we’ll talk about some important mistakes that restaurants make when designing loyalty programs and how they can fix them.

5 loyalty program mistakes that restaurants make.

Programs that don’t engage

This is one of the biggest mistakes made by restaurant brands when selecting or designing loyalty programs. More often than not, they don’t take into account the engagement attribute of a loyalty program. When customers don’t enjoy collaboration activities or find it too difficult to engage with the program - they tend to start ignoring it which results in utter failure.

How to fix: New-age customers like to invest their time and money on loyalty programs that are experiential. Some restaurant brands invite their high-tier rewards program members to special events like wine tasting, making your own burger day, cooking with the chefs, etc. Such experienced not only encourage non-members to join the community but also intrigue existing members to keep collecting points through repeated purchases.  

Lack Notifications & Regular Updates

The next biggest mistake that you could be making is not updating the reward program members about their membership status, a summary of points, available offers, and so on - on a regular basis. If your loyal customers don’t even know where they stand on the spectrum of their loyalty hierarchy, you are surely going to lose their interest, and eventually their loyalty.  

How to fix it? Look for a loyalty program platform that offers features that automate the process of sending push notifications, tailored texts, emails, and push notifications based on a customer’s loyalty status.

So for example: if your loyalty program revolves around collecting coins, you can set up a system where the customer who is just 100 coins away to become a top-tier member and hasn’t made a purchase in over a month can receive a notification reminding them of how close they are. You can even gamify the process with loyalty badges and leader boards.

Missing out on the power of personalization

Unless you’ve had your head deep inside the earth’s crust, you must know that personalization has recently emerged as one of the most effective marketing strategies, and brands that aren’t paying attention to this development are putting themselves up for a major failure in the near future. Knowing your customers is very important and making them feel valued for the time they spend interacting with your brand is a sure-fire way to earn their loyalty forever.

According to the Forbes article, Personalization is the holy grail of Loyalty Programs. Restaurants can build a personalization program using the customer data that provide details on what the customer like most ordered menu items,  how much they typically spend, whether they prefer to place online orders or dine-in, and numerous other data points. This kind of data provides the building blocks a brand needs to have strong loyalty programs.

How to fix: Hook your reward strategy to tailored approaches where personalized offers are tied to redemption opportunities to make it most relevant for individual customers.

Overcomplicating Things

A lot of restaurant brands are guilty of this one - they either add too many layers to the program that make it difficult to navigate, or they make it too generous in the beginning only to add restrictions later on, which usually upsets the customers. In either case, the brand ends up losing loyalty, as well as the customer.

How to fix: Before introducing the loyalty program to your customers, it’s highly recommended to test it internally. Test the features, navigation flow, and different logic to ensure that it isn’t too complicated for a layman to understand and participate. Most importantly, don’t put too many restrictions or make it too complex for customers to elevate their status in the members' hierarchy

Signing up process should be quick and easy. The information on how the program works should be communicated in a simple and uncluttered format. Do A and you’ll get B. The more you do A, the more you’ll get B. As simple as day.

Forgetting about Referrals

Do we forget to implement the referral system or do we think it doesn’t matter? Either way, you are missing out on tons of customer data that can otherwise help you define and redefine your marketing strategy. Customers always value the inputs from friends and family more than social media campaigns and influencer marketing. Using a referral program will ensure better conversions and high retention that’s going to be really valuable for your restaurant business.

How to fix: The more people a member invites, the better the rewards they receive. You can even announce some additional benefits, like free delivery or additional discounts on meals, for members who invite a certain number of people. It’s worth noting that increasing the value of your rewards once in a while to nudge customers to share referral invites is going to help meet the goal effectively.

The Biggest Mistake of All: Choosing an Online Ordering System that doesn't integrate with a third-party loyalty program platform

If you are outsourcing your loyalty program, it is very important to ensure that the platform integrates with your current POS, online ordering software as well as payment gateways. Having a loyalty program that doesn't integrate with either or all is like Ann Frank’s drum kit. Most importantly it should be custom branded so your customers don’t feel lost as soon as they land on the page.

Restolabs, the #1 trusted online ordering software in the US and Canada, integrates with all major third-party loyalty programs that you’d need to take your marketing efforts to the next level. Speak to our experts today to see for yourself how the integrations work seamlessly at our platform.

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