Restaurant Marketing 101 – Loyalty Marketing

Loyalty Marketing For Your Food Business

As promised the first and one of the most important items in my Local Store Marketing guide is customer loyalty programs.

Loyalty programs are any means a business uses to grow sales and customer base through repeat business from existing customers. This can also be used to gain new customers but once they step into your establishment hopefully they become repeat or existing customers.

Start by offering the customer an incentive to use your services rather than your competitor. This incentive must be strong enough to outweigh the convenience of a nearer competitor or even a competitor with a superior or better priced product.

This normally takes the shape of a deal that allows a customer to gain a reduced price, an addition product, or other long term incentive. The trick to any loyalty program is to make that incentive available after several visits to your establishment.

The most successful loyalty program for the restaurant and QSR business in my opinion is the “Buy 10 get one free” or “Buy 5 get one free”, it doesn’t matter what the amount is but it does matter that your profit margins on the program should still be healthy and that any loss for the give-away is more than matched by the increase in sales on a daily basis. This is particularly suitable for coffee shops, bakeries, fast food or any business where the price of the main item is between $1 and $10.

Take a coffee shop for example. Average price for a coffee is about $4 depending upon where you are. Most working people in reasonable sized cities have a coffee at least once a week, some have several a day. The customer walks or drives by many coffee shops on their way to work every morning and many large office buildings have their own coffee shops. So how to you compete with all this choice?

A Loyalty Card.

The best way to handle the mechanics of this program is to get cards printed with your logo and a place for the customer’s name and email address as well as room around the outside to punch 10 holes. You should have a unique hole punch made that is only found at your business. I have had a custom hole punch made for less than $40. Make the design of the hole something to do with your logo or something unusual. Many coffee shops are using a hole punch in the shape of a coffee cup so try to stay away from that design. Be sure to have the place for the customer’s contact details.

The collected information can be used in many ways, emails with new offers or products, contacting them if you haven’t seen them for a while, (you or a team member may have upset them) additional loyalty programs for your best customers; for example a draw of used cards for “Free Coffee For a Week”.

When the customer places an order the server asks if they have a loyalty card. If they don’t they ask if they would like one and explain the offer. The customer orders a coffee and the server punches a hole in the card.

When the customer has all 10 holes punched the server can tell them that their next one is free when they bring back the fully punched card. How you handle it is up to you – it may be that you wish to give them their 10th coffee free. Fully punched cards are then collected and a new one given to the customer.

Note: The cards should be small enough to be carried in a wallet or purse ( business card sized) and if a customer has more than one card with, lets say, 4 holes on one card and 6 on the other, then you must honor the 10 holes. Also if you see a customer with two or three cards, offer to consolidate the number of punches onto a new card and discard the old ones.

The coffee shop idea can be adapted to many different types of businesses and is not exclusively for low ticket average products. I know of higher end restaurants that use it too. Office workers will offer to get coffee for their co workers so they get a free one for their trouble. And I know of more than one boss that buys his/her entire team coffee on a Friday and enjoys his free one with his spouse on the weekend.

Be creative in your local store marketing, look at what your competitors are doing and how they are making their customers more loyal to their business. Adapt ideas that you see, not only from the food industry but from any type of business and get started.

With Back -to-School around the corner, next week I’ll talk about some ways to get your product out in front of the students and kids…


Local Store Marketing for Your Franchise Restaurant – The Loyalty Program

Loyalty programLSM Tip #3

The Loyalty Program

The most effective way to drive sales from existing customers and to gain new customers is with some sort of loyalty program.

Which type of loyalty program is dependant on the concept that you have. A pizza restaurant or fast casual restaurant would have to be significantly more careful about the type and cost of a loyalty program than say a coffee shop.

Most of the larger grocery chains have some form of loyalty program as do most coffee shops and many small businesses, food related or not. Your airline frequent flyer program is an example of a loyalty program. All of these companies and many more have seen the benefit of a program that ties your customer to your business and makes them think twice before going to a competitor, even if they are closer and of the same quality.

Loyalty programs are a cost to your business but it is a cost that you must be willing to pay without hesitation. Look at a loyalty program as a marketing tool that will offer instant results and something that will drive your business. The quickest way to ruin your loyalty program and drive away your customers is not promoting  it to the utmost of your ability.

The easiest way to implement  a loyalty program is with a loyalty card.

There are a few ways to do the loyalty card; the cheap way and the expensive way. The cheap way is to get a large amount of loyalty cards made with your logo, the terms and conditions of the loyalty cards, a place for your customers name and address and space to punch ten( or however many) times. You then have a punch made that is specific to your concept/store i.e) coffee cup, burger, logo, etc.

The expensive way is to get your loyalty cards made with computer chips embedded in them so that your POS system can read and manage. This method gives you a lot of information that can be used to market your products and your store but the price per card can be prohibitive and will probably only be used by large concepts or supermarkets where the average check is high enough to warrant the cost.

Time and time again I have seen franchisees complain about the cost of a loyalty program and the hassles that go with it. This attitude always permeates to the team and pretty soon this attitude will get to your customers. A couple of tips to ensure the smooth running and success of your loyalty program.

  1. If you are using a card that you punch, ensure the punch is hard to duplicate and has something to do with your business. Look in the yellow pages for punch manufacturers.
  2. Train your team to ask every customer if they have a loyalty card and if not explain the benefits to them and hand them one.
  3. If people have multiple cards offer to consolidate them onto one card even if it means giving a free drink.
  4. Take the loyalty cards of your competitors and exchange them for your own. Give them a free punch or two on your card. You have just stolen a competitors customer. How good is that!!
  5. Pick your slowest day and make a double punch day. Give two punches for every product sold. This should help increase your sales on your slowest day or have a double punch happy hour to do the same for those quiet afternoons.
  6. Never argue about a card that looks as if it has been tampered with. Just take it and move on. You cannot afford to make a loyal customer think you do not trust them.
  7. Once the card is redeemed for their free or discounted product keep the card and automatically give them a new one.
  8. If you have their name and address on the card you can start a data base of your customers. Use this for mail outs and promotions. To help to get your customers to put their contact details on the card set up a monthly competition where old cards will be drawn for a free meal or other product prizes.
  9. Keep it going. This is a promotion that should never stop. Keep building your customer base with new and more loyal existing customers.

I am sure that you can come up with a myriad of ways to adapt this simple idea to your store or concept. Let us know how it works for you.

To Higher Profits