Loyalty rewards programs are helping to create a new wave in restaurant marketing — an age of zero-party data, where brands can engage with customers on a 1:1 level while maintaining privacy
More than ever, restaurant concepts are recognizing the value of loyalty programs. The truth of the matter is that operators are finally starting to realize that the merit of a loyalty program is not only its direct and tangible benefits for the restaurant but also that it rewards customers and generates brand awareness.
Loyalty rewards programs are helping to create a new wave in restaurant marketing — an age of zero-party data, where brands can engage with customers on a 1:1 level while maintaining privacy. Zero-party data is data a consumer proactively shares with a brand and may lend insights into preferences, purchase intentions, personal context, and the ways the individual wants the brand to recognize them. In fact,79% of consumers would rather brands invest in loyalty programs than social media advertising. This is because consumers have become more willing to exchange their data for personalized offers and a more authentic engagement with brands they love.
According to research by marketing firm Kantar Worldpanel, nearly half (47%) of U.S. consumers have used some sort of loyalty program. And while these numbers may seem small, they represent an important shift from just a few years ago when less than one quarter (24%) had ever heard about such programs. Today, nearly two-thirds (65%) say they’ve tried at least once or twice to earn points with a loyalty program.
The results of this latest research underscore how rapidly the market is moving toward loyalty programs and the potential for their use to enhance customer loyalty and drive brand visibility. This shift is due in large part to the popularity of mobile devices and branded apps, which has created an opportunity for restaurants to build on this trend, and this reliance continues to grow post-pandemic as screen time grows for consumers.
But that doesn’t mean customers don’t have expectations from brands when they join a loyalty program. Customers want engagement, and they want to feel like they are getting value from the program. While first-party data is rich with behavioral data and implied interest, zero-party data can provide insights into explicit interest and preferences — and you must use it to improve the value you provide to consumers.
79% of customers will only consider shopping with brands that show they understand and care about them.”
So what do customers really want from restaurant loyalty programs? The first thing they want is an enticing offer, something that makes them feel special but also provides perceived cost savings. About50% of consumers say their primary reason for joining a loyalty program is to earn rewards on everyday purchases. The best solution is to create a tiered rewards system with small, obtainable rewards that customers can achieve easily. Another option is to provide exclusivity to the offerings or priority services, such as branded swag or experiential dining opportunities. Exclusivity makes customers feel that their loyalty is being rewarded, and retaining loyalists is sometimes as challenging as capturing them. The average consumer belongs to 14.8 loyalty programs but is only active in 6.7 of them.
What is clear is that companies that offer loyalty programs are outperforming brands that don’t have a loyalty program in terms of sales and customer satisfaction. It is not about the size of the loyalty program; it is about the frequency with which customers interact with it.
Increasing your loyalty following just 5%increases profits by 25% to 95%. Loyalty programs can build a relationship between brands and customers. If done correctly, a brand can gain invaluable insight into their customers’ preferences and behaviors, as well as deliver the value that the consumers seek.
Brittany Maroney is the Sr. Product Marketing Manager for the premier loyalty software solution, Punchh. With 15 years of experience in the restaurant industry, Brittany brings unique insight into the challenges and opportunities of restaurateurs nationally. Based in Scottsdale, AZ has been a published author for over a decade, often contributing thought leadership to national publications and industry trade journals.
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