The Value of a Customer Loyalty Program

In this article we explain the value or benefit of what customer loyalty program provides for you and your customers. While such a program won’t make up for bad food or rude servers, it will give an important extra boost to an already good business.



A customer loyalty program will get your customers into your café more often

A study showed that customer loyalty programs for restaurants increase visits by an average of 35%. That’s a healthy percentage, don’t you think? If customers have a good experience in your restaurant, they look for a reason to come back again. A good customer loyalty program provides the incentive they need.



A customer loyalty program will get your customers to spend more money in your restaurant

Not only will loyal customers choose your restaurant over others when dining out, but smart incentives will get them to spend more than new customers. According to Fred Reichheld’s The Loyalty Effect, a 5% increase in customer retention can produce as much as a 100% increase in annual profit. For some businesses, repeat customers spend more than twice as much in months 24–30 of their retail relationships than they do in the first six months. That’s huge!



A customer loyalty program is a very easy way to make and keep your customers happy

With so much competition for customers, the businesses that make a little extra effort to make people feel good are the businesses people remember and go back to. Your current and potential customers are smart and they know their options. If there are two equally good Mexican restaurants and only one of them gives free chips and salsa with every order to loyalty program customers, which do you think people will choose? Customers want a restaurant they can form a relationship with, and a customer loyalty program is an easy way to gain a competitive advantage and show you care.



A customer loyalty program can improve your level of customer service

A customer loyalty program feeds into your customer relationship management (CRM) system by providing you with extra information about your customers: how long they’ve been a customer, how often and which days/times they eat in your restaurant, what their favorite dishes are, where they like to sit, and more. A CRM system also lets you keep track and respond to customer feedback (in realtime) so that you can quickly improve your service and solve problems (or learn what you’re doing right!). Not only does this enable you to compete with the big guys (if you’re running a small or medium business), but this is one area in which you can easily surpass them. This allows you to provide the kind of personalized service that your customers love and will want to keep coming back for.

 

A customer loyalty program will increase your number of loyal customers who will, in turn, bring in new customers

A happy customer is like a walking advertisement for your business. Word-of-mouth promotion of a business is by far the most effective way to get new customers, as well as the least expensive option. And when those new customers become loyal customers, the cycle continues and your business just keeps growing. If you use a CRM system, you can also create a great refer-a-friend incentive to benefit both current and new customers.



A customer loyalty program can help you win back customers you have lost

Even the best businesses can lose customers. Maybe they move to the other side of town or they have a bad experience with a server you’ll soon fire. A smart incentive offered via your customer loyalty program can win back a customer you otherwise would never be able to contact again. If a once-loyal customer has ‘defected’ to another restaurant, reaching out to them could bring them back. (One simple way to do this is to offer to match or beat a competitor’s coupon the next time they come into your restaurant.)



A customer loyalty program will improve your marketing efforts

A CRM system makes it easy to track the success of loyalty and promotion campaigns. As you learn what works and doesn’t work with your customers, you’ll be able to create better marketing campaigns and not waste money on ineffective strategies. You’ll be able to refine your campaigns so that your customers keep walking into your restaurant and keep leaving happy.



A customer loyalty program will help you refine your menu and adjust pricing

By tracking the order history of your customers, you can see what kinds of dishes they like in particular and which ones they rarely order. This is powerful information when it comes time to introduce a new menu or menu item. If your CRM system is showing a trend in healthier orders, then it might be time to reconsider the presence of that Monte Cristo on your menu. By examining purchase histories, you can see patterns emerging that indicate some of your pricing might be too high for your customers or that your customers are likely to pay more for appetizers that are a little fancier. This can help you be smart about what you offer your customers and for how much.

Honestly, we could write another ten pages about all of the benefits and full value of a customer loyalty program, but you probably get the idea by now that it’s a win-win-win situation. A customer loyalty program makes customer happy, it increases profits, and it makes more money than it costs. 

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