Customer loyalty is a core element of your business. It provides a regular profit as loyal customers tend to return more often, and offer you a word-of-mouth marketing channel helping to build your restaurant’s reputation among your community. A recent study has shown that “Keeping customers is important. High retention is correlated with high profitability. Petrick (2004) has proposed that loyal customers are good visitors as they are likely to visit in the future and provide free advertising. As the restaurant industry matures and competition becomes strong, customer loyalty is of primary importance.”
Given the fact that acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one and that a 5% increase in customer retention produces more than a 25% increase in profit, restaurateurs need to consider building a Customer Loyalty Program.
What is customer loyalty?
Customer loyalty is defined as a feeling of attachment to or affection for a company’s products, services, and people. Loyalty is a long-term commitment to repurchase involving both repeated patronage and a favorable attitude. In the restaurants’ industry, loyalty can be defined as a customer’s commitment to dining in and order from a particular restaurant, purchasing their dishes and menu elements repeatedly, and recommending the services and meals to other people. Not to mention that loyalty truly exists when the customer resists pressures to switch to another restaurant brand.
Why Is Customer Loyalty Program Important For Your Restaurant?
- More Revenues: Regular customers keep your income steady since they come to eat on a regular basis.
- Free Marketing Channel: Regular customers tell others about your restaurant, where people do trust a Word of Mouth.
- Upselling: The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20%.
- A key for improvements: Regular customers are more willing to be honest about your business and can give you a clear insight into your business.
How would Restaurant Build Customer Loyalty?
A study, conducted to point out factors affecting Customer Loyalty in the Restaurant Service Industry in Kuwait City, has shown that there is a strong and positive relationship between customer loyalty, and service quality, brand image, and customer value.
Deliver a high-quality exceptional customer service:
The majority of customers will never visit a restaurant after one negative incident since “quality comes first.” Accordingly, you shall deliver a high-quality service that exceeds your customers’ expectations that are formed based on reviews or the information on your website. A customer journey map would help you identify customers’ expectations.
To encourage customers to join your loyalty program, try calling them by their names and you know their preferences. They also like to have a consistent experience, so you have to consistently deliver an experience that matches their previous experiences or exceeds them.
Moreover, the highest customer retention is related to the best employee retention. Treating servers like customers will encourage them to stay with the business and it will influence the way they treat guests. Whereas, if you poorly treat them, this will affect the service they provide ruin your marketing efforts.
You might be thinking of competing on price, not quality. However, it is better to compete on quality. Since competing on price is an option for those who can sell a massive volume of products.
Offer a distinctive digital loyalty program:
An effective loyalty program can really drive your sales. Here is how an effective one should look like:
1. Create a special program:
Customers do not care about public loyalty programs that can be interchangeable with your competitors’ programs. Make sure you create a special program and do not just give the customer points every time they visit for a discount later that is earned in another visit. Offer different levels for different purchases, or make offers for kids. You can reward customers with points for sharing your restaurant’s posts on social media, or have special events and offer sales open only to program members. Think outside the box so that you find ways to make your customer loyalty program special.
2. Offer attainable rewards:
The conditions of your loyalty program should not be too tasking or complicated for the customer. If the rewards take too long to accrue, customers would quit the loyalty program. Keep the conditions simple, fun and accessible.
3. Offer a digital loyalty program
Introducing the Digital Loyalty Program ensures you can collect customers’ information the first time they visit your restaurant so you can communicate with them after they leave.
To offer a simple program for your customers, try just requesting an email address or phone number to sign up. Make sure that the rewards you offer are appropriate and attractive to your customers. The two main reasons consumers engage in loyalty programs are that they are easy to understand and that rewards and offers are relevant. Nevertheless, in order for your customers to sign up for your loyalty program, they need to know that it exists.
You can promote your loyalty program by saying to your customers, for example:
- “You can join our loyalty program for free, and you’ll get a free pie after just 5 visits! You can sign up with just your phone number.”
- “Our loyal customers are rewarded with unique experiences! You can get a free meal for you and 3 friends after just 10 purchases!”