Marketing

Future of restaurant loyalty programs is personalized

Loyalty programs can be complicated. Many restaurants have the tools, but they don't know how to get the most out of them. Here's how to build an effective loyalty program.

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June 27, 2022 by Adam Morse — Senior Director of Marketing, Tillster

As restaurants move forward into the early days of a post-COVID era in the spring of 2022, they do so with many more digital tools at their disposal. Throughout the pandemic, the industry witnessed a massive uptick in the adoption of digital loyalty programs, which consumers flocked to for ordering and which restaurants used to drive demand in the absence of foot traffic.

Today, as the cloud of pandemic uncertainty recedes, the industry finds itself in a funny place: a lot of restaurants out there have the tools, but because they adopted them so quickly, and as a band-aid against reduced foot traffic, they don't necessarily understand how to get the most out of these tools. They lack the depth of understanding to build a truly effective post-pandemic loyalty program.

Want to know how to build an effective loyalty program? Here's how.

Give consumers what they want

What do consumers expect in exchange for loyalty? Rewards and offerings that are relevant to them. Consumers download these apps for convenience, but they come back for rewards.

Rewards don't necessarily need to be free food. They can be non-financial, like a special experience or early access to a limited time offer.

The financial analysis behind loyalty programs is clear: your best loyalty customers consistently earn and redeem the most points, leading to higher spend and higher lifetime value. Those guests that are more occasional in cadence earn fewer points and redeem less often. So, from a financial perspective, there's a definite upside to running a loyalty program for a restaurant: the lion's share of loyalty points wind up in the hands of the best customers. It's a distribution of benefits skewed towards the people you want to keep.

For those less frequent customers, points serve as an incentive to become more loyal, turning occasional visitors into frequent ones or encouraging a visit they previously hadn't planned.

Personalization is king

Customers want seamless, integrated loyalty experiences. Whenever a regular customer orders from a brand, they want to be certain they're accumulating points, regardless of whether they've ordered online, through the app or in-store. To achieve that, ensure that your loyalty program is paired with your ordering solution at every touchpoint.

Doing so allows your brand to better leverage the transactional data generated, serving back more personalized upsells and cross-sells in the future.

When your loyalty program integrates with your ordering stack, you already know what your customer ordered last time they came in and what items they are most likely to add to an order. Brands can use this unique, individual ordering information to drive a higher rate on upsells.

With better customer data integration, you can use timely information in smart ways from a marketing perspective. You can target upsell offers around frequently ordered items. For example, two large pizzas are served at a discount but offered only in real-time to the subset of visitors who traditionally order one pizza pie.

Use your communications channels wisely

There is no shortage of ways to activate customer data in the service of coupons and loyalty promotions. But the rubber hits the road at outbound messaging through your established digital messaging channels.

Understand what kinds of messages go out and to whom, across email, SMS and push notifications. Use these channels wisely and in concert to carefully message targeted information about the loyalty program that keeps customers up to speed and coming back.

Tell customers when an offer hits their inbox. Encourage them to come back as they inch closer to their next reward. When they reach each tier, celebrate them. What's more, you can even personalize loyalty information and individual customer preferences into your mass messages.

Let's say that you're sending a general promotion out to your one million customers, offering a BOGO pizza deal. Why send the same email to every person on your list when you can instead integrate dynamic content into the email to show a customer where they stand in points accumulation, with offers that include the toppings from their order history? Why press send all at once when you can build campaigns that reach each customer on the day they are most likely to order and when they most typically engage with your brand?

Break the delivery aggregator cycle with a one-stop solution

In a rush to stand up digital programs during the pandemic, an absolute torrent of brands signed onto the third-party delivery sites, which provided a fast digital solution to an imminent problem.

But those sites came with tremendous financial downsides for brands, cutting into already thin profit margins and locking brands out from the vital customer data that will power the future of restaurant marketing.

No group is more trained to use these third-party delivery apps than our youngest generation. The prevailing research is clear: Gen Z hasn't built up true habits, brand affinities and loyalties. This presents a significant opportunity to wrestle them away from your competition and third-party aggregators and bring them to your brand. And you do this with enticing loyalty offerings.

You're incentivizing those customers who make the switch to skip the markups, avoid the fees and gain access to the benefits of a loyalty program powered by the same data that you, as the restaurant, can then use to serve them more tantalizing promotions in direct 1:1 communication.

For those brands who've avoided making the leap for fear of the technological lift: consider partnering with a single digital ordering and loyalty vendor who can bring prebuilt, custom-deployed connectivity to stand up an app, integrate mobile ordering and curbside within store systems and layer in a customer data platform, driving a tailored loyalty program based on data.

The future is personalization, down market

Here's the state of mobile apps and omnichannel loyalty programs and smart marketing techniques to drive incremental business: the top tier brands have already implemented these tools for the most part. The single operators, the local brands and the smaller chains probably haven't. But that's going to change.

The migration to digital is a steady and inevitable march. Look for more mid-tier brands with 50-100 locations to begin adopting these technologies in 2022 and beyond.
And at the top, programs will become ever more sophisticated in terms of targeting and personalization, with expansions into targeted objective-based bonus opportunities. Today those opportunities are relatively simple, like "come in today and get a hundred bonus points." But notice that top brands are increasingly personalizing bonus opportunities, where Customer A gets one bonus and Customer B gets a different one, all targeted to incentivize the activity that the brand wants to see but keeping the offer relevant to the guest based on their ordering history, platform preferences and other external factors.

With every passing year, we're heading deeper and deeper into the integration between customer data and demand generation. For the larger QSRs, the goal is deeply sophisticated personalization. For smaller brands, the time to double down on technology is now. Don't get caught on the outside looking in as the availability of powerful restaurant technology shifts down market and into your opportunity zone.

About Adam Morse

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In this role, he works to demonstrate success in planning and executing marketing strategies and programs that increase customer acquisition, engagement and profitability. Prior to this current role, Morse held several marketing-focused titles within Tillster. Before joining Tillster, he also held marketing positions at CityGrid Media and Aramark Uniform Services.

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