Loyalty. It’s a hot topic in the restaurant industry right now. We covered it in a recent blog post and wanted to dig deeper with a live fireside chat with a restaurant loyalty expert.
So we did.
Our CEO, Abhinav, sat down with Olga to talk through top loyalty questions and answers:
What does everyone mean by “loyalty”? What definition applies to every business?
Glad you asked! We have an entire blog post dedicated to answering this question.
Short answer: it’s a way of constantly nudging guests in the direction of your brand and shortening the time between deciding you’ll place an order or make a reservation and choosing your brand.
With restaurants, nobody is ever truly loyal to a single restaurant brand like they could be loyal to a vehicle brand, a soda brand, or an airline brand. A well structured marketing program, which may or may not have a "rewards/loyalty" component, creates preference by continuously building a reason to choose a brand over alternatives.
How can marketing increase loyalty adoption and order frequency?
While there’s no silver bullet that applies across all businesses, here are a few suggestions:
What are the best channels for guest acquisition?
On-premise first, and email as second. Out of all digital channels, email marketing reigns supreme for getting first-time customers to take an action that you want them to.
What are the “must have” segments you need to be successful?
Learn more here — we’ll tell you who to target and what to say to each audience (email templates included).
How can brands differentiate?
What is a major innovation in loyalty happening right now?
Creating a direct connection between every consumer and someone at the top of your business. It’s overlooked, underused, and goes a long way in terms of effectiveness. Check out this SMS feedback text that Avocaderia sends from its owner:
It has a 23% reply rate, ensuring that more guests come back after their first order.
What is the role of a loyalty PROGRAM for a restaurant?
A loyalty program is an incremental marketing tool that allows guests to self-identify their interest in opting in to communications to a brand, and potentially their desire to receive discounts and/or save their payment information. What’s great is that it makes it easy for your marketing department to send materials to these guests. What’s not great is opt-in programs typically see a membership of anywhere from 5-20% of your total customer database, and having a “build it, and they will come” mentality is not the right frame of mind. Imagine being able to market only to 1/5th of your customer database with any marketing communication, and then wanting to segment down audiences from within that. There’s work required to wedge up the piece of the pie that your loyalty program represents out of your full database.
What are you really signing up for when you sign up for a loyalty program?
Loyalty programs give marketing access to people who are most receptive to your program in, typically the most effective way: through email marketing. It’s cheap, inboxes are always top-of-mind for consumers, and it’s easy. Loyalty programs also help you to capture transaction-level data for your guests — you give relevant offers and information in exchange for relevant data from your guests. The only caveat here is that a loyalty program is not an end-all be-all when it comes to increasing lifetime value and visit frequency for your guests. You need to focus on your non-loyalty-program customers to get them to opt in to loyalty or to continue to order from or visit from your brand in their own preferred way.
Who needs a loyalty program? What kinds of brands?
If you’re relying heavily on the ability to send offers, then a dedicated loyalty program platform might be worth it. However, many online ordering platforms have both promo codes and lightweight loyalty programs built in. Also, if your goal is to send more targeted, personalized communication to your guests, then a CRP and/or CDP might be enough for you, if you already have the guest data that you need. The key is your guests need to be reachable (aka you’ve captured an email address).
Do you have an idea of the “immediacy” with which a guest places an order after they download the app? How short does that window need to be to stay top of mind?
You want a guest to use a welcome offer immediately — within one hour of receiving it. When they do this, they stay with the brand for longer. It’s not as effective to tease out an offer that won’t arrive until later (i.e. you accumulate points with each order)
How do you measure loyalty campaign effectiveness?
To make sure you’re always improving, we recommend using control groups and variables. Does the variable you’re testing drive an increase or decrease versus the control?
Test out these elements:
What’s the typical size of the team for the brands that you work with?
This depends. Typically a smaller brand doesn’t have anyone dedicated to loyalty full-time; they may not have a CMO or head of marketing even. In this case, a loyalty consultant like Ollo does all of the digital marketing for them — activating and running a loyalty program. Typically when a loyalty team has 3 or 4 people, this is when Ollo comes in and serves as a supplemental arm to advise. Brands don’t usually have a person dedicated to loyalty full-time until they have 400 or so stores, but it’s really more about database size (when they’re pushing 1M+ guests). This is not a hard and fast rule, but a guideline based on what Olga has seen in the market.
What do the brands that leverage loyalty the best have in common? What do brands that leverage loyalty the worst have in common?
The best brands are putting in the work to understand their acquisition and retention rates are, and actively improving upon their rates by identifying weaknesses and modeling off successes. The worst are either ignoring loyalty entirely because they don’t have the budget, resources, or time and don’t realize the opportunity cost, or they have a loyalty program in palace but are taking that “we built it, now they will come” frame of mind. These are the brands that typically have less than 5-10% of guests opting into their loyalty program.
How can a CDP improve a brand’s investment in loyalty?
A CDP owns these vital functions for a successful loyalty program:
What’s one of the best loyalty tips someone can implement quickly today?
Take a look at the emails that are sending from your brand. Preview them. Are your headers and footers properly hyperlinked? Are your ordering buttons working properly? Do they bring guests to a logged in page or are they opening in a new window that creates an obstacle by forcing members to re-log-in? Make sure you know exactly how emails are landing into inboxes — whether being opened on desktop, Android, iphone, tablet, etc.
That's all for now!