“Restaurants, pubs and bars have long known the old adage that it’s easier and cheaper to keep the customers you’ve got than to go out and get new ones,” says Olivia FitzGerald, marketing technologies managing director at Zonal. “As a result, we’ve witnessed loyalty solutions ranging from the coffee stamp card with its tantalising promise of a free hot drink, to the restaurant membership scheme that gives your loyal customers money off their orders.”
That free cup of coffee may have been a tantalising offer at one time, but in what FitzGerald describes as the “brave new world of data and customer demand for personalisation”, such an offer no longer cuts the mustard.
“Loyalty today is about so much more than waving a discount card. Or it should be. The smartest brands and companies in our data-driven age are using customer insights to drive loyalty, engagement, and revenue. Think about some of the common online services we use: Netflix, YouTube, Spotify, Amazon. All of these brands have mastered the art of the personalised recommendation.”
Recent research by Zonal and CGA found that only 64% of consumers consider themselves to be loyal to at least one brand. According to Zonal, if a customer feels valued they are three times more likely to regularly return to a restaurant. The research also found that there is still a place for instant offers when signing up new loyalty club members, with 79% of those surveyed favouring this approach. Thereafter, restaurants need to court loyalty and build a genuine relationship through personalised campaigns, it says, with 40% of consumers citing this as key to driving loyalty.
Know your customers
To drive loyalty, restaurants must first understand their customers, and this is where new technology can help. US company Paytronix, which claims to be the leader in restaurant reward and guest engagement programmes in North America, recently entered the UK restaurant sector. Nando’s is one of its first UK customers, with the chicken restaurant chain running the Paytronix platform within its 384 UK and Ireland restaurants.
Developed specifically to give restaurant and retail operators a greater understanding of their customer base, the Paytronix platform also helps motivate increased traffic and spending and further differentiate brands in highly competitive markets, says the company. In the case of Nando’s, millions of its Nando’s Card reward programme accounts were migrated to the Paytronix platform. Guests can pick up a Nando’s Card at any restaurant and start earning rewards called ‘chillies’. Diners add a new chilli to their ‘chilli wheel’ for every bill of £7 or more and the further they move around the wheel, the better rewards they can receive. To claim a reward, guests need to register their card online or via the Nando’s mobile app.
New technology can drive repeat business
Loyal customers spend more, visit more, and talk about your brand more than your average guests, according to Paytronix, which says its systems enable its restaurant partners to create strong loyalty schemes.“Nando’s was able to take advantage of our proven technology and process to seamlessly migrate millions of customer accounts on to the Paytronix Rewards platform. Now Nando’s has a reliable service that is always available to its guests, anytime, anywhere,” says Andrew Robbins, president at Paytronix Systems.
Paytronix also says that by using its software, restaurants can strengthen customer relationships and create rich customer profiles.
FitzGerald also stresses the importance of creating reliable customer profiles in order to encourage them to make return visits. “To achieve an accurate view of your customer means bringing together all the data that you have about them, such as demographics, booking history, basket data and purchasing preferences into one single record,” she says. “This rich data enables you to target your customers more effectively with timely, relevant messages that add value.”
Using Zonal’s various integrated tools, FitzGerald says customers leave a data footprint covering their restaurant journey, from how they booked and what they ordered to how frequently they visit a restaurant, what their average spend is and how they like to pay. “It’s this data that paints a portrait of that customer. This gives us the ability to provide detailed customer behaviour and insight which, in turn, enables our clients to effectively laser target their customers with personalised marketing campaigns and offers, instead of sending out generic bulk promotions that cost money.”
The casual-dining sector has seen a saturation in promotions with customers constantly searching for the best deals, according to digital marketing company Eagle Eye. It says the key challenges the sector needs to overcome include a lack of accurate customer data, low tracking of customer activity across campaigns and fraud from traditional paper coupons.
It believes not enough restaurants are taking advantage of digital marketing to overcome these challenges. “In the UK, promotional marketing is worth £55bn per year. So far only a small fraction of this spend – less than 5% – has moved to digital promotions,” says Helen Slaven, Eagle Eye’s chief commercial officer. “This represents a real missed opportunity for the restaurant industry to encourage brand loyalty and improve the customer experience.
“Consumer behaviour is changing rapidly in the digital era, and companies should capitalise on this by tapping into new dining habits.”
According to Eagle Eye, 23% of consumers now use their smartphones in restaurants, suggesting a growing sub-culture of casual dining where phones are welcome at the table.
23% of diners now use their smartphone in a restaurant
The bespoke approach
Too many restaurants are still using the bulk promotion approach, despite its ineffectiveness, says Mike Rich, global marketing director at loyalty app provider the ENTERTAINER.
“We are not yet in a place where all restaurant operators are actively driving loyalty and many are missing a trick,” he says. “Competition on the high street is fierce; consumers have more choice than ever before when choosing to eat and drink out of home. Furthermore, real household income in the UK fell by 1.4% in the first three months of 2017, following falls of 0.3% in the third quarter of 2016 and 0.4% in the fourth quarter.
“As a result, consumers are less likely to try new places and run the risk of spending their hard-earned money on what could be a bad experience. It is, therefore, imperative that restaurant operators do more to encourage loyalty in the sector as a means of acquiring and retaining new customers.”
Like FitzGerald, Rich says paper discount vouchers are no longer relevant in today’s digital society. “Consumers want a seamless and modern experience. Gone are the days of not wanting to be seen in public using a paper voucher. Through an app, consumers get a seamless, branded experience while maintaining their street cred.”