Do Restaurant Loyalty Programs Work?

It’s not a new concept, and it’s a simple one to execute. Design and publish a box of business cards with a certain amount of boxes on them, with the plan being that customers will receive a hole punch for every time they go to your restaurant. Ten hole punches, and you get a free sub, or a free drink with every five, or even a gift card for every twenty. The numbers and rewards are up to the restaurant to decide, and while not exactly an option for high-class establishments, it’s something that works great for places where people can sneak in and grab a quick burger, shake, or sub on the way to work, the big game, or for a quick lunch with friends.

Business Insider argues that it might not be the best route for restaurants to attempt when it comes to engaging with consumers. The problem stems with them being physical goods, purely paper products that aren’t “smart” in any capacity.

Think about it this way: you know a customer has eaten, for example, ten sandwiches. Do you know what kind of sandwiches those were? Did they pair each sandwich with chips or fries? Were they consistently getting drinks with the sandwiches? How long was it between trips? Did they get ten sandwiches in ten different transactions over the course of one day or one decade?

None of that information is conveyed to the owner of the restaurant, the ones who make decisions. While you’ve definitely given customers a goal at becoming repeat ones, you’ve not taken the opportunity to better your menu. If you found out that, say, they always paired a certain drink with a certain sandwich, you might have an opportunity at making a special combo to promote this deal, or even go the opposite and encourage them to try another drink that might be easier on your costs.

What’s the answer? Technology. Either via social media avenues such as Facebook and Twitter, or even mobile apps for iPhone, Android, and Window Phone devices can all either register what the consumer has purchased or even interact with them on a more one-to-one model. In the social media situation, to brand manager can see that someone made a trip to their restaurant; they might not even have intended to get you in the conversation, but a friendly “That’s great to hear! What did you enjoy?” can start a conversation that can yield information for your database. Even more so, a “That’s great to hear! We hope you come back; here’s a coupon for a free drink next time!” can get them engaged with your brand outside of the restaurant, make a personal connection, and have a monetary reason to do such in the future.

It’s easy to whip a card out so it can get punched; it takes a bit more effort to connect via social media, but the gains for both the consumer and the company can be much greater.