For ages, customer loyalty programs meant you got a little punch card to tally your purchases so you could eventually be awarded with a free coffee, car wash or sandwich.
In the early 1980s, American Airlines decided it wanted to take the idea of nurturing its customer base a big step forward and give fliers something extra special. The airline created the first frequent flyer programs that allowed travelers to accrue miles for future flights — as long as they kept flying with American Airlines, of course. The program was one of the first widely accepted customer loyalty programs in the country, and it set up a framework that became a standard not just for the entire industry, but also for what customers expect from airlines. Today, customers are accustomed to seeing rewards in myriad forms at businesses large and small. Popular examples include special coupon discounts from grocery stores, Amazon's Prime program, Zappos VIP membership, and numerous discount cards at retailers like Aeropostale and Barnes and Noble. Your credit card also probably offers you some payback the more you spend. Companies spend more than $2 billion on loyalty programs a year, and statistics show the average American household belongs to about 14 different rewards programs, even if they're only active in six.
'They want to protect the customer relationship,' says Chris Cottle, vice president of marketing and products at Allegiance, which has provided customer feedback services to 1-800-CONTACTS and several banks, and is based in South Jordan, Utah. 'It's so easy for customers who are price-sensitive to slip away or go to a competitor. One of the ways you can make your customer relationship more sticky is through a well-planned and well-executed reward program.'
Today, companies have new technologies to enhance the experience, from social media platforms that celebrate customers who promote your business to data mining tools that help target your customers, and help keep them coming through the doors for years to come. Customer loyalty experts offer the following tips on how to start your own program.
One retail concept that has grown popular over the years is the points-based loyalty program. It is attractive to customers because the points that they earn from purchase can be converted to cash. The point system. The point system is one of the simplest reward programs. It’s based on a simple principle: spend more to get more. Every time a customer makes a purchase on your website (or in your brick and mortar store), they get a certain amount of points depending on the size of their purchase. Community based loyalty program’s strengths lie in their ability to tether together people in a specific community with like-minded behavior while sometimes rewarding the group as a whole with spread rewards points. Coalition Programs. A coalition type of loyalty program forges relationships with several brands or companies. Perkville is a great customer loyalty program software for membership-based businesses because it integrates with point-of-sale systems and allows businesses to create custom loyalty programs that reward customers for different types of actions. Visit the Perkville website to schedule a free demo.
Starting a Customer Rewards Program: Is it Right for You?
Does it make sense for your business to offer a loyalty program? It depends on what industry you're in. For retail stores, restaurants, and travel companies, maintaining a customer rewards program is almost a necessity to stay competitive because programs are so widespread in those sectors, Cottle says. A business that deals with customers on an infrequent basis, such as a repair service or landscaper, might not be able to pull in enough return visits to warrant offering a discount or other loyalty bonus, says Donovan Neale-May, executive director of the Chief Marketing Officer Council, a clearinghouse for ideas on relationship building and leadership among major marketing leaders, which is based in Palo Alto, California. But return traffic isn't the only purpose of a loyalty program. A tax attorney, for instance, can use a rewards program or loyalty discount to encourage customers to refer more clients, Neale-May says. 'In some cases, referral may be more relevant than loyalty,' he says. Your company should have a little bit of data on your customers already before deciding to start a loyalty program. How much are your best customers spending on average? How often do they use your services? Most companies first identify their most loyal customers, who are usually the top 10 percent most frequent or profitable patrons. Targeting them makes more sense than offering something like a broad discount for all patrons, experts say. 'They're probably worth five or six times more than everyone else, the other 90 percent,' says Bob Konsewicz, a strategic consultant for Maritz Loyalty, which has worked with AT&T, Bank of America and General Motors. 'When you design those programs, you really want to design it for your best customers.' Dig Deeper: Thinking Through Customer Loyalty Starting a Customer Rewards Program: What Should You Offer? Now you need to figure out what kind of incentives you are going to offer customers. Will it be a club card that provides a discount with every purchase? A points program that lets patrons cash in their loyalty for goods and prizes? Upgraded shipping? Should it be something free or an item or service only available through a paid subscription? The kind of program varies depending on your type of business, but experts say some general tips apply to everyone. They advise against limiting your rewards program to just discounts, because discounts don't have a lasting impact on customers' memories. Physical prizes or earned bonuses like frequent flyer trips resonate much more, Konsewicz says. 'If you get a discount, it's kind of over and done with,' he says. The ultimate goal of your program should be to underline your overall brand strategy. Starbucks, for instance, is able to lure people into its shops on a regular basis thanks to its ambiance of sociability, and a rewards card that accumulates points with each purchase. 'The ultimate brand experience is: you will go and buy something from this company even if you don't need it,' Cottle says. You should figure out which relationships are most important for your business and design a rewards program that cultivates those customers, says Michael Hemsey, president of Kobie Marketing, which has worked with Verizon, Samsung and Lucasfilm. Is customer tenure that's most valuable? What about dollar-value of purchases? Would you rather be a company that delights clients with surprise bonuses or upgrades? Two other big issues should shape your decision: What your competitors are doing, and how much your company can afford to spend on the program. Neale-May recommends researching your competitors and creating a program that either mirrors others, or one that distinguishes itself by offering something unique. This works even for smaller businesses: an independent print shop could look at the Max Perks program offered by Office Max and imitate it on a smaller scale, he says. Programs where customers earn points are best suited for services where lots of transactions are involved, such as a credit card, Hemsey says. Restaurants that might see the same patron once every month or so are better off just offering a free drink or instant discount to loyal customers, he says. Some companies, such as Barnes and Noble, charge a fee for reward membership programs. But a program that comes with a sign up cost has to have a clear and appealing set of rewards, like flight upgrades for airlines or access to VIP events for retailers. Otherwise, customers won't participate. 'If it's a strong enough offering, there's no reason in the world they shouldn't charge for it,' Neale-May says. Dig Deeper: How to Build Personal Relationships With Customers Starting a Customer Rewards Program: Communicating With Customers Making sure customers know about your program is a key factor to its success. At most retail stores, cashiers will ask customers if they want to participate. That kind of model doesn't work well in a high-turnover sales environment where it could back up the line, such as a supermarket. Professionals say companies should use the full extent of their communication arms to spread the word, through e-mail, newsletters, and website updates. Your employees should be ambassadors for the program too, Hemsey says. They should understand the program fully and be able to relate its value to customers. Customers want to see results as well: high-end consumers expect to be able to redeem rewards within three to six months, Konsewicz says. 'That's the biggest reason customers get out of loyalty programs,' he says. 'They can't see the light at the end of the tunnel.' Claiming rewards shouldn't be overly complicated either. And, when you do reward loyalty, make sure the customer knows it. Too often, Konsewicz says, a customer will get a reward in the mail — a book or gift card, maybe — without a note from the company explaining why. Companies should be making that a much more meaningful interaction for the customer to make them feel special. 'Make it a little bit more of an experience rather than a process they go through,' he says. Dig Deeper: Managing Smart E-mail Campaigns Starting a Customer Rewards Program: Using Social Media Customer loyalty programs began with simple punch cards you kept in your pocket, and now they're evolving through something else in your pocket: the smart phone. While larger companies are still slightly nervous about using social media, the hospitality industry has really embraced it as way to identify loyal customers, Konsewicz says. A lot of that has come by offering rewards through FourSquare, the social media platform that lets users check in at locations with their devices. The Brooklyn Museum, for example, will award a free yearlong membership to the 'mayor' (the person with the most check-ins at that location) on certain days. Zicam, the cold remedy manufacturer, has used Twitter to send coupons to people who mention their products on short messaging service. Using social media is a much more effective way to reach the coveted 18- to 24-year-old demographic, who are less responsive to traditional advertising, experts say. Dig Deeper: How to Use Location-Based Social Networks for Your Business Starting a Customer Rewards Program: Using Your Loyalty Data Loyalty programs aren't just used to keep patrons happy. They can also help you gather important purchasing information on the buying habits of the customer base that can help you shape your business strategy. Using a club card or a system that requires users to provide basic information can help you learn patterns and trends that an anonymous punch card can't uncover. The data from rewards programs is a rich gold mine that's often times untapped, Cottle says. Supermarkets use this information to know which promotional messages to send you. Travel companies use it to know which deals you might be interested in. Companies can also use this to cross-promote or up sell: a customer that buys a lot of cookies at your bakery might be interested in a coupon for the dairy down the street, for instance. 'It's more about getting insight into your customer and leveraging that customer insight,' Neale-May says. Using purchasing habits to personally target consumers has been a successful strategy for Amazon and Google, and it's one even smaller companies should adopt to eliminate waste in their advertising efforts, Cottle says. 'As a consumer, generally I am excited to give those sorts of permissions,' he says. 'If the company I'm giving it to is smart, that means I get less marketing and more targeted marketing.' Dig Deeper: How to Send E-Mail Your Customers Will Love Starting a Customer Rewards Program: Additional Resources Buying Loyalty, a white paper from Allegiance. Think Ultimately; Act Proximately, a white paper from Maritz.
Many restaurateurs—perhaps yourself included—simply don’t have time to think critically and strategically about what type of loyalty program is right for their business.
The lack of support for loyalty programs is no surprise, considering that56 percent of single-location restaurants don’t have a POS system in place.
Adopting a point-of-sale (POS) system is a fundamental first step on the road to implementing your restaurant loyalty program. Successful loyalty programs are built on customer data, and POS systems are essential in collecting and analyzing that data (especially mPOS systems that enable customers to input contact info right at their table).
So, once your POS system is in place, what are the next steps for creating an effective loyalty program?
To help answer this question, we conducted research on millennial customer loyalty preferences and spoke with experts in this space.
The following tips can help you select the loyalty program that’s right for your business. They will also help you ensure that, regardless of which loyalty program or platform you choose, it meets the needs of your targeted customers.
Here’s what we’ll cover:1. Know Your Options2. Look Beyond Monetary Rewards 3. Actively Listen and Seek Feedback 4. Sustain Engagement With Loyalty Members 5. Offer Mobile Accessibility for Loyalty Programs 1. Know Your Options
There are many loyalty program options available, but we advise choosing a program supported by your POS system. The advantage such programs offer over others is that they run on the same system you use to manage the rest of your restaurant.
For example, you could tie your food delivery business into your loyalty program so customers are rewarded for every interaction with your restaurant. This allows you to review valuable customer data and update loyalty offerings without having to move into a different software system.
POS-enabled loyalty programs typically offer several options for operating the program and rewarding customers. This is helpful, given that our research finds millennials are somewhat split in their preferences:
Loyalty programs that award points per the amount of dollars spent are most preferred by millennials, at 35 percent. This is followed by programs in which customers opt-in and receive discounts.
App Based Loyalty Programs
A loyalty program that combines these two—where points can be spent on a variety of items, while sporadic discounts are offered—is most likely to be popular among millennial customers.
For those who decide to operate their loyalty program independently of a POS system, there are other great options to choose from, as well. Here are some of the details of these programs:
Employee Loyalty ProgramsAdditional Loyalty Program Options
Regardless of which loyalty program you choose, it should have a positive impact on your bottom line. These programs need to bolster your revenue, never drain it.
2. Look Beyond Monetary Rewards
It’s important to be forward-thinking when implementing your loyalty program—regarding both the impact the program will have on your revenue as well as the shared values of your customers. Download backyard baseball 2001 mac. Egnyte mac download legacy version.
“What we see is [that millennials], especially on the restaurant side, do have a great deal of loyalty,” says Mark Johnson, CEO and CMO at Loyalty360, a professional loyalty marketing association. “They want to have a very unique relationship [with,] and more emotional attachments to, brands.”
You may consider aligning your brand with causes many millennials support to encourage them to join your loyalty program.
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This can be anything from serving locally sourced ingredients to taking a stand on a social issue. Building loyalty in these ways can help reduce the amount of discounts and other monetary rewards you offer.
Minimizing monetary rewards is advisable, according to Cheryl Parsons, vice president of marketing at Rewards Network (a financial and marketing firm that consults restaurants about loyalty programs). The typical restaurant’s profit margins of 3 to 5 percent are small enough, she notes, without awarding free giveaways to loyalty members on top of that.
Duane Owens, business development manager at Restaurant Manager POS—a restaurant point-of-sale software vendor—suggests exclusive perks in place of monetary rewards to encourage loyalty. These can include:
Not only do these help your bottom line, they are also great ways to cultivate the unique brand relationship millennials seek. But how do you determine which rewards, monetary or otherwise, will have the greatest impact on your customers?
The answer is actually quite simple.
3. Actively Listen and Seek Feedback
Successful loyalty programs require active participation from both parties: Not only do customers have to participate, you and your staff must also be active in listening to their needs and desires.
“Just ask customers what kind of rewards they’d like to get,” says Jenny Beightol, director of brand communications with Belly, a loyalty platform that integrates with POS systems. “Millennials have no problem providing feedback.”
Millennials, as a group, tend to be active on social media—so invite your customers to leave comments and recommendations about your loyalty program via a Facebook page or Twitter account.
Some POS systems even offer marketing modules that integrate with these social media channels, which can be an effective way to manage various accounts in one place.
The chart below perfectly illustrates the importance of actively listening to your millennial customers:
Our data shows that the top reasons millennials abandon loyalty programs are because rewards take too long to accrue and they’re not deemed valuable enough for the effort required to earn them. These insights are great examples of what you can learn about your loyalty program by simply asking its members.
A survey or poll is an effective way to gather this information. Many POS systems offer marketing modules that allow you to send targeted email campaigns—which can include surveys—to loyalty members.
Alternatively, you can utilize your loyalty member contact information and a survey creator (e.g., SurveyMonkey) to gather feedback. With either option, you can even incentivize them to complete the survey by offering extra points or some other (preferably non-monetary) reward.
You can see the importance in gathering these insights: They can be used to optimize your loyalty program so that you can keep members coming back.
4. Sustain Engagement With Loyalty Members
Though it’s no small feat, gaining members is not the crowning achievement of successful restaurant loyalty programs: The real value of a loyalty program is the ability it enables to sustain engagement with valuable customers. To explore this further, we asked millennials about the factors that most encourage them to participate in loyalty programs.
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Our data shows that the speed with which points and awards can be gained has the greatest impact on millennials’ likelihood to participate in a restaurant’s loyalty program (43 percent). Thus, a best practice might be to offer an initial reward for enrolling in the program and/or for the first visit as a loyalty member. Indeed, Beightol says this type of engagement tactic works at Belly to get members engaged early on.
“Belly uses the theory of ‘Goal Gradient’ to keep customers engaged,” Beightol says. “After a customer’s first visit, they’ll receive a ‘First Visit Boost’ and earn triple Belly Points—15 points—instead of the standard five points for their visit. This will put them even closer to a reward, which has been scientifically proven to prompt the customer to return even sooner.”
And while the gradient method works well for initial visits, what about long-term engagement? Hack samsung passcode. David Grant, director of developer marketplace at Revel Systems, recommends employing loyalty tiers to give members something to work toward.
With this system, Grant explains, “if you earn a certain amount of points at a restaurant [by coming in a certain number of times], then you get placed into a higher tier. And perhaps by being in this tier, you get double points … to incentivize you to keep coming back.”
A program such as this lets members accrue points quickly, which can be great for driving engagement. There’s even an element of gamification involved with “leveling up” to the next tier. To encourage participation, it’s a good idea to offer loyalty members a way to check their points and see how many they need to upgrade. But what’s the best way to do this?
5. Offer Mobile Accessibility for Loyalty Programs
As you may have expected, mobile apps are king. Our research shows that most millennials prefer to use specia
lized apps on their smartphones or tablets to earn, track and redeem loyalty rewards (38 percent).
Point Based Loyalty Programs
Fortunately, most third-party loyalty programs offer consumer-facing mobile apps for doing just that. Some POS systems, including Revel, also offer open APIs so that you can create your own loyalty app.
Best Loyalty Card Programs
We also asked millennials what activities they’d do most often on a loyalty app. Use the following information to determine what functionality your app absolutely needs to have.
Our research finds that millennials would most want to use a loyalty app to receive and redeem their points in exchange for rewards (35 percent). Another one-third of millennials (33 percent) would most want to view their rewards balances (33 percent). This gamification is precisely the chord you want to strike with a loyalty app-enable rewards program.
One thing to consider is the complexity of the app. You’ll want to make sure your staff members are well-versed in the workings of the app, as they’ll be the ones your customers ask if they have any questions.
Point Based Loyalty ProgramsFinal Takeaways
To reiterate, be sure to do your research and decide which loyalty program is best for you. Stay fluid and creative with your rewards to avoid lessening your margins. Ensure your loyalty platform or POS system has the ability to manage social media channels, so you can listen to and engage with customers. Consider how best to maintain consistent engagement with your loyalty members. And if you go with a mobile app, be sure it supports the activities customers most want to use it for.
And again, before implementing a loyalty program, you should have a fully functional restaurant POS system in place. Not only are these systems essential for managing and analyzing customer data, they also enable you and your staff to deliver greater customer experiences by saving time and streamlining daily operations. Strong customer experiences are the foundation of any successful restaurant, not to mention its loyalty program.
If you’re interested in learning more about POS systems or need help choosing the best system for your restaurant, we’re here to help.
Click the “Compare Software” box to your right or just give us a call at 888-918-2746 and one of our POS experts will help you determine the best solutions for you business.
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