Restaurant loyalty programs are the hottest marketing trend in the industry right now, and for good reason. They work. How do we know? We've been studying some of our clients to learn more about how exactly a loyalty program can pay off.
Granbury Restaurant Solutions has thousands of restaurant clients of all types - and we offer a loyalty program which is fully integrated with our point-of-sale systems. Customers can easily sign up with just their mobile # or e-mail at the POS, and we can then track transactions. Our loyalty program actively communicates with customers via e-mail or text, inviting them to return, sending them personalized offers and rewards. So when our clients ask us if it really works, we can share real results.
ROI #1: Enrolling More Customers
Many restaurants have been trying to capture customer data - e-mail addresses and the like - so they can communicate with customers. Most websites include an online sign up form for e-mails, and this is often promoted in-store as well. We recently converted a restaurant client from an e-mail only program, with online sign up, to our integrated loyalty solution. We found that monthly enrollments quadrupled. That's right - 4x as many customers signed up when asked by the cashier at the point-of-sale, with the added incentive of rewards. Increased customer data means more opportunities to promote your brand. And these days, an active, sizable customer list with identifiable customer demographics adds to a restaurant's value.
ROI #2: Turning New Customers into Regulars
It's the magic elixer of success for any restaurant - the ability to take a first-time customer and turn them into a regular. You've got to deliver on the service, the food, the value and the experience overall. And you've got to do something that's even harder - change a customer's habits. So we wondered, would the loyalty program help turn new customers into regulars?
We studied a 9-store pizza chain that serves a lot of slices for lunch as well as full delivery of pies. Because we have records on delivery customers, we can analyze the behavior differences between those who joined the loyalty program and those who did not. What we found was, of all the first-time customers who tried the restaurant and joined the loyalty program (receiving a welcome message with offer), 27% were back again within a short time period, and 14% ordered at least 2 more times within the 3 month study period. But for those first time customers who did NOT join the loyalty program, only 12% returned once and only 3% returned 2 or more times. Active communication by the restaurant via the rewards system appears to have had significant impact on turning these new customers into returning customers.
In another example of a 5-store chain, new customers who joined the loyalty program were 3.4 times more likely to order a 2nd time (41% of them did, vs. just 12% of non-loyalty customers) and were 5x more like to order 3 or more times (22% vs. 4%).
ROI #3: Increasing Customer Frequency
You may spend a lot of marketing dollars to attract new customers, but it's a universal marketing truth that it's much easier and more profitable to get your existing customers to just spend more. Can the loyalty program pay off in this important area? We compared loyalty members to non-loyalty members, again looking at delivery orders only so we could track customer-specific behavior. We found that loyalty members ordered, on average, .49 more in a 3 month period than did non-members. Over a year, that's 2 extra orders per member. Multiply that by 1500 members and a $25 ticket average and you've got $75,000 in ROI to play with!
ROI #4: Increasing Ticket Averages
Do loyalty members spend more than non-members? Or do all those rewards and offers cost me money? We set out to find out. In one 4-store study, we found that across all order types (dine in, delivery, to go and pick up) the loyalty members spent an average of $2.14 more per transaction, even after accounting for all the discounts or rewards they may have applied to the order. In a 2nd study, we found that even with an aggressive welcome offer worth $9, loyalty members had a ticket average of just $.77 less than non-members. With a small adjustment to the offer value these members would also be spending more.
Conclusion: Loyalty Pays!
It's common sense - getting to know your customers, nurturing them, communicating with them, keeping in touch - it's bound to pay off, right? Turns out we have solid evidence that it does pay off, with increased conversions, increased frequency and increased ticket averages. To learn more about successful loyalty practices, download our free guide. Interested in a fully automated e-mail & text based loyalty rewards solution? Learn more about GRS SalesBuilder!