Last Updated: February 2024
Who doesn’t like a free cola or beverage along with a meal they just ordered? The F&B industry is slowly getting back on its feet after the disruption caused by COVID-19, and restaurant owners are keen on recovering their losses. While there is a lot of enthusiasm, there are also legitimate concerns about the future. F&B margins are razor-thin at the moment and many restaurant owners are looking for ways to cut costs.
However, competition is at an all-time high, and loyalty programs are coming under increased scrutiny. After all, discounts and VIP benefits all cost money and brands are looking for innovative ways to adapt their rewards to the realities of the new normal.
There is no denying that loyalty programs work. In fact, a recent study showed that 66% of customers didn’t mind buying more to get extra points. However, customers want restaurant brands to look beyond tiers and vouchers. They are demanding greater personalization in terms of rewards that can add to their experience. This trend is something that restaurant owners can certainly capitalize on.
After all, a lot is changing in terms of dining preferences with customers forced to order-in. There are dozens of loyalty programs out there that offer some combination of incremental benefits to customers. However, the majority of them are unable to create engagement or generate returns.
For example, if you currently assign points on a per-visit basis, your costs would more or less be the same with the average revenue declining over time. This is why you may need to pivot to a spend-based structure.
The reason: re-aligning to a spend-based model could improve the bottom line significantly. This is exactly what Starbucks found when it revamped its rewards program a few years ago.
5 Strategies to Optimize Your F&B Customer Loyalty Programs
Here are some of the proven ideas you can use to optimize your F&B loyalty program for the future:
1. Focus on what the data is telling you:
It is a fact that customer preferences cannot be predicted. However, with the help of data, you can certainly spot them faster than ever before. The moment a customer places an order online, a steady stream of data is generated. This data can be exploited to understand customer preferences. Integrating customer data is incidentally one of the top challenges faced by F&B businesses today.
A survey found that 30% of customers reported facing issues with customer data management. However, it is really a function of using the right technology stack. For example, if you have a CRM system connected to POS, you can create data-driven customer personas that closely match your target audience.
The result: Customized offers and discounts, with increased conversion potential.
2. Relevant rewards:
If the rewards you offer are not interesting enough, there’s a good chance your F&B loyalty program won’t bear fruit. In the new normal, discounts and offers alone aren’t sufficient to create customer loyalty. But keeping up with the trends can help.
Customers are increasingly buying from brands that share the same values as theirs. For example, contributing a percentage of each order to a charitable cause or sponsoring community events based on loyalty points can be an excellent way to increase customer loyalty.
Fast-food chain B.GOOD is a fine example of this strategy, it lets customers redeem their points on meals or cash donations to underprivileged families.
3. Keep it simple:
Complicated rules go against the idea of a loyalty program. Ask your staff: Is it really easy for customers to understand how to qualify for an upgrade or get access to off-the-menu items? If the majority answer is no, simplify the terms and conditions. Brands are making a conscious attempt to make it easier for customers to earn rewards.
For example, in 2016, Starbucks announced new changes to its rewards program. It slashed the number of levels from three to two and began to offer 2 points per dollar spent. Every 125 stars, customers could get a free drink or meal while 300 points qualify them for an upgrade to Gold.
You can offer points for actions like posting online reviews, downloading your app, or referring a friend or colleague. While you’re at it, you can also make exceptions to the usual rewards policy.
For example, allow customers more time to redeem points that may have expired over the past year. This gesture is likely to be appreciated by customers in the post-pandemic scenario
4. Flexible redemption
Is the redemption rate or the percentage of points redeemed out of the total points issued for your program lower than it should be? If yes, this calls for simplifying the redemption process of your loyalty program. Sending real-time balance notifications to customers via personalized SMS or app notifications can be a good first step.
Replacing coupons and vouchers with digital discount coupons is another. They can trigger an impulsive purchase and even lead to repeat sales in the future.
5. Faster Rewards
Delivery services have registered double-digit growth since the pandemic and F&B brands are keen to cash in. This is a priority area for them as in-store sales continue to decline. Leading brands like McDonald’s and Burger King are incentivizing digital orders and in-store purchases. New benefits include free refills and upsizing orders in addition to the usual birthday specials and take-away discounts.
By increasing the frequency and type of rewards, you can increase customer engagement and loyalty over a period of time.
The F&B industry is at a crossroads with major shifts in customer behavior and market conditions. To survive and thrive in such challenging conditions, fast food chains and restaurants need to double down on customer experience. Small businesses may find themselves at a disadvantage given that they have limited resources.
However, customer service can help level the playing field for them. An experienced customer support provider like Helplama can help small F&B businesses develop a sustainable strategy for growth in the new normal. Our services can be scaled to suit any need and budget. We do not insist on long-term contracts either which provides you greater flexibility in terms of cash flow.
Alternatively, if you are planning to improve the efficiency of your customer service team, equip them with Saufter. With its features like automated workflows, marketing automation, etc., your team can save the time invested in repetitive tasks. Additionally, it also offers customized pricing plans.
So, what are you waiting for?