Top Benefits of Restaurant Rewards Programs Everyone Should Know

Lauren Christiansen10/7/2021

What is restaurant rewards ?

The average American eats out an average of four times a week. That adds up to around $2,000 a year on food alone. But how do you know if you're getting the best deal? Restaurant rewards programs help you do just that. How does it work? These programs offer rewards like a free drink or appetizer for a certain amount spent at the restaurant. This increases restaurant sales and helps to expand the customer base.

What are Restaurant Rewards Programs?

Frequent diner programs (much like frequent flyer programs) are a marketing strategy designed to retain customers. Rewards programs are also commonly referred to as loyalty programs. They offer perks such as free food, discounts, coupons, and gifts to guests who frequently eat at a particular restaurant. Restaurant owners implement diner programs to increase their customer base and build brand loyalty. For customers, staying up-to-date with these programs is a fantastic way to save money on the brands they love.

So, how exactly do loyalty programs work? Thankfully, they don't require any fancy cashier skills. Essentially, restaurants track each member's spending and then give out points for each purchase. There may be a tiered level of points, in which customers receive certain promotions for each tier.

For example, Starbucks and Sephora give out free items once a customer reaches a certain tier level. As customers acquire more points, they can receive more desirable free items or discounts. Examples include a free pizza or a gift card for a set amount. Other restaurant rewards programs provide more flexibility in how customers use their points. It simply depends on the brand and what they believe customers are looking for in a rewards program.

Why are Restaurant Rewards Programs Important?

Restaurant rewards programs offer a variety of benefits for frequent guests. They can be a great way to save money on dining costs, collect points for a free stay at a hotel, or get discount offers from a specific retailer. What's more, they often offer a sense of community with other diners that may not be available at your neighborhood restaurant. Some of these benefits may sound more appealing than others. But the truth is the program that's best for you will depend on your personal needs and preferences.

Rewards programs are a very critical component of a successful marketing strategy. While owners may be wary of giving free items away, the return on investment is well worth it. Compared to other outreach strategies, loyalty programs are relatively inexpensive and require little to no maintenance. Over time, customer spend increases and so do your profits.

A rewards app also brings back repeat customers and improves brand satisfaction. You are providing a more customized, unique experience to patrons, who appreciate your efforts. It also establishes a surefire way to connect with customers directly, which is always great for building relationships.

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Top Benefits of Restaurant Rewards Programs

If you've ever dined out, you've probably had the experience of being asked to sign up for a rewards card. Here you are, trying to enjoy a meal, and you're being asked to write down all your personal information. It's a lot to ask, but that's not all. You have to use the card to get points, and they expire if you don't use them up.

These rewards programs provide a whole host of benefits to business owners as well. Companies have doubled profits simply from implementing a reward program in-store or through a mobile app. And other small business owners are noticing these profit increases. Nowadays, rewards programs are unique and customizable to align with each customer's needs. Still not sure if a rewards program is right for your business? Read ahead to learn how implementing a loyalty program will help you gain a competitive edge.

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1. Higher Customer Spend

All business owners know that retention is critical. It costs way more to bring in new customers than it does to sell items to existing customers. Furthermore, loyal customers tend to spend more money. They are also more likely to share brand information with friends and family.

Then that the most important benefit of a rewards program is an increase in customer retention. This occurs organically each time you reward customers with points when they make a purchase. Now they have a motive to return. They can move into that next loyalty tier or use saved-up points to finally get that free coffee or bakery item.

Even old-school loyalty programs such as gas station coffee stamp cards have been shown to increase customer retention. Why wouldn't a loyalty program on a mobile app with customization features do the same? But don't take our word for it. Studies show that modern loyalty programs create more frequent shoppers, increase customer spend, and improve retention by at least 5%.

With a greater number of return visits and higher customer spend, restaurants are bound to increase sales with a loyalty program. Again, you may be cautious of loyalty programs because it requires you to give things away for free. The thing is, you are only giving away free items or gift cards after the customer has made several other purchases. These are purchases that the customer would probably not make if the loyalty program didn't exist.

Customers are also happier that they have a more personalized, enjoyable shopping experience. This makes them more likely to share the news as well as solidify their brand choices. Offering a loyalty program is probably one of the best things you can do to increase profits and help grow your business.

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2. Gain Access to Crucial Customer Data

Back in the day, business owners had to do a lot of leg work to get to know their customers. It required a lot of guesswork, receipt analysis, and talking to guests. While these practices still occur, they are not nearly as effective as data insights. A rewards program integrated with a POS system generate reports and valuable analytics. This can help business owners get to know their customers and what they like to buy.

You can use reporting features to learn customer preferences, optimize inventory management, improve pricing, and enhance future marketing campaigns. You can also track the success of existing loyalty program campaigns or other promotions. This will help to increase sales, save money, and optimize the menu so it meets customer needs.

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3. Discover Top Customers

While it's always important to accommodate all customers, it helps to know who your top customers are. Restaurants waste a lot of money marketing to customers who don't buy that much, or who don't come in very often. Though marketing to these individuals is still worthwhile, why not discover who the profitable customers are? You can use data insights to discern who spends the most money and then consider implementing a marketing campaign just for them. Or, you can ensure that customer service is top-notch when these diners come in to eat.

This helps make sure that loyal customers feel appreciated for their loyalty. It also helps participating restaurants save a lot of money on unnecessary marketing expenses. Furthermore, you can run feedback campaigns on unprofitable customers to find out what services they may want. This will help you get back service from unprofitable customers without breaking the bank. There are so many options available as a result of good reporting features and loyalty program data.

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4. Communicate Better With Customers

Good reward programs provide a direct channel to patrons, which enhances external communications. Not only can you announce a new menu item or other exclusive offers, but you can also share brand information and social media profiles. Geo-fencing technology can pinpoint different franchise locations to customers so they know where and when to make their next stop.

There are so many subtle ways to market yourself through a rewards program without making the customer feel bombarded. The best part is that it requires very little work from staff members or management. Restaurant owners only need to purchase and customize loyalty program software to maximize communication and help customers earn rewards.

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