How Restaurants Can Use a Loyalty App to Engage Customers
A mobile app loyalty program can attract customers and encourage them to keep coming back for more. The most successful loyalty apps engage customers and reward them for continued business.
In the restaurant business, it costs significantly less to keep customers coming back than it costs to acquire new customers. Therefore, it should be a top priority for restaurants to build and sustain customer loyalty by using a mobile app. Half of smartphone owners regularly use restaurant loyalty rewards apps. And, according to a survey conducted by the National Restaurant Association, building customer loyalty and increasing customer retention through app-based rewards programs is a successful strategy. Restaurant loyalty apps provide the ideal platform to run multiple marketing strategies and target customers with different priorities. Some consumers use a restaurant app to save money while others prefer the convenience of ordering online.
Furthermore, the millennial generation likes (and expects) to interact personally with restaurants and share those experiences digitally.
Restaurants should build a loyalty app for two reasons: to gather information on customers, and to use that information to provide the best personalized experience for customers. But what makes a loyalty rewards app effective? There are four app qualities that are paramount to build customer loyalty and increase customer retention:
We discuss these four qualities, and then offer three examples of successful restaurant loyalty rewards apps.
1. Make the App Easy to Use and Fun
Loyalty apps work because they provide a far more personal experience than old-fashioned programs, like punch cards. Loyalty apps provide data and interaction through the customer’s mobile device, which hardly ever leaves their side. A restaurant’s loyalty app needs to provide a great user experience to retain customers. Common features include mobile ordering and payment, and location tracking that finds the nearest restaurant location. Digitally savvy customers love games. Loyalty apps that offer real financial or personal rewards strengthen relationships with repeat customers and potentially attract new customers.
Loyalty rewards games can include:
- Purchasing the most of a certain menu item
- Virtual reality experiences with real-world audiences
- Educating customers about culinary practices
- Testing trivia knowledge
Prizes for the games can range from discounts to free items to bonus reward points.
2. Offer Unique Rewards and Promotions
Restaurant loyalty apps should offer unique experiences that draw upon customer emotions. Choosing a unique reward that creates a memorable experience can be just as important as saving money for many guests. Tailoring the rewards will provide the best incentive for building customer loyalty. Finding a balance between attainable and desirable rewards is a challenge for most restaurants when designing loyalty apps. One way to achieve a good balance is to use a tiered system that rewards initial purchases but encourages customers to keep using the app. Successful loyalty apps give small rewards as a base offering and then encourage repeat usage by increasing the value of the rewards as the customer moves up the tiers of the program. The tiered system allows customers to extract long-term value from the loyalty app program.
3. Engage With Customers and Show Them You Care
A restaurant can ensure continued use of the loyalty app (and more purchases) through regular customer engagement. Send push notifications or emails reminding customers how close they are to earning the next free item or reaching the next tier of the rewards program. These interactions again personalize the experience and encourage repeat app usage. Truly understanding your customers means understanding their values and sense of worth, and shared values can have a huge impact on customer loyalty. The Corporate Executive Board surveyed consumers and found that customers are loyal “not to companies, but to beliefs.” Your customers may find more value in non-monetary or discounted rewards. Restaurants that can provide value to loyalty app users in ways other than dollars and cents have a unique opportunity to connect with those customers. Loyalty app users may like the opportunity to share with others, especially those who have a special need. You can reach these customers, and increase their loyalty, by devising a program that supports vulnerable groups. After a certain number of purchases through the loyalty app, a restaurant could donate money or meals to charity. This type of reward gives to those in need which, in turn, earns deserved respect from the community and your loyalty app customers.
4. Use the App to Get Feedback From Customers
One of the best parts of integrating a loyalty mobile app into your restaurant’s digital portfolio is the ability to collect mobile app reviews. After a transaction is completed, you can use the loyalty app to ask a customer to review the experience using a review site like Yelp or Google, or to share information about the experience on social media. You can even offer bonus loyalty reward points as an incentive. Getting customers to share positive experiences on social media is a great way to boost exposure and improve your public reputation, leading to increased business over time. You can also use the loyalty app to send push notifications asking customers to provide a review. The notification can even direct them to the ranking and reviews site that matters most to you at the moment.
Examples of Successful Loyalty Apps
With loyalty apps being more prevalent these days, there are plenty of models for a restaurant to use as a guide. Here are just a few of the loyalty apps that stand above the rest when it comes to best practices.
With nearly 14 million members in the U.S. alone, the “My Starbucks Rewards” app is an incredible loyalty program example. The app’s success is built off of frequent purchases, which makes it easier for Starbucks to implement a tiered reward system. The Starbucks app offers great incentives for continued use, including free drink and food items, early access to new products, and custom offers based off personal preferences. The tiered program entices customers to keep coming back, offering better incentives the more you use the app. Starbucks also creates a sense of urgency by giving users only 12 months to earn/use “stars” to reach the next tier or stay at the top tier.
Over the past few years, the Papa John’s digital and mobile channels have accounted for more than 50% of total U.S. sales. The Papa John’s loyalty app certainly helped achieve that milestone. The Papa Rewards program gives points toward free pizza when a customer orders through the app. Unlike most rewards programs, the pizza chain includes tax and delivery charges as part of the redeemable value as well. The app helps to track rewards progress using a pizza graph visual, and the app will prompt customers to redeem the points for free pizza.
The DD Perks Rewards Program was launched in 2014 as a way to reward guests with points toward free beverages for every visit they make. The program now touts more than six million members nationwide. The use of the rewards program, and the chain’s continued emphasis on digital, appears to be leading to larger ticket sizes. Dunkin’ Donuts instituted a nationwide push to offer mobile ordering capabilities at the chain’s donut and coffee shops, a bigger bet on embracing technology as it aims to keep pace with its rival Starbucks. “On-the-Go Ordering” is now available for all members of the DD Perks Rewards Program, allowing customers to order, pay in advance via a smartphone or other mobile device, and then pick up an order. Orders can be made up to 24 hours in advance. The Dunkin’ Donuts loyalty app has been shown to increase a customer’s lifetime value by 30% or more through increased visit frequency and amount spent per visit.
Loyalty Apps Can Increase Customer Engagement
For a restaurant, the goals of a loyalty app program are two-fold: the loyalty app offers customer incentives, and the restaurant is able to gather information about customers in the process. The result is value not only for the guest, but for the restaurant itself. Loyalty rewards drive many customers to return to a restaurant. Parting with their hard-earned money isn’t always easy, but getting rewarded for it lessens the sting. As restaurants look to gain a competitive advantage, loyalty apps will continue to expand. But restaurants can’t expect to launch a loyalty app program and immediately see a revenue increase. Those restaurants that undertake the analysis required to launch such an important project will reap the largest rewards. The key driver is to not focus on increasing sales in the short-term. Rather, the loyalty app should allow a better understanding of what the ideal customer looks like: when they come in, what they buy, and how much they spend. That data will allow the restaurant to build an app that builds customer loyalty and increases customer retention.