Loyalty programs have become a popular part of companies, whether retail or restaurants. A typical loyalty program from a restaurant includes discount coupons or free desserts or appetizers. There's a central question that needs to be asked to gauge the success of your loyalty program — is it helping to make loyal customers that increase business or just encouraging bargain grabbing customers that can drain your business? Consider a different approach to creating loyalty in your customers.
If you constantly offer discounts and freebies you run the risk of customers who only come in for those offers. Discounts and freebies cost you money just by their nature and many discount seekers are out to get their deal at the least amount of effort. In other words, many will try to spend the least amount of money possible to get the deal. Therefore, you really didn't gain anything and could have lost money from their coming in.
Another consideration is constantly offering the same discount and the perception it can convey. An example: A well known national chain regularly sends out emails offering $10 off your meal if you spend $30. What message does that send? To many it says that the menu must be priced on the high side in order to compensate for offering this discount every month.
Realize that offering discounts on a regular basis can devalue your product or brand in your customers’ minds. They may also choose to wait for the next promotion, instead of just coming in.
It's time to consider a different approach. The goal is to pamper and treat guests in such a way that they won't want to go anywhere else to dine. You want them to love your restaurant so much that they bring all their friends and family in without being enticed with discounts and freebies.
That's not to say freebies don't come into play. Instead of sending a coupon for a free appetizer to get them in the door, consider them coming in for dinner on their own, you recognize them (whether a regular, returning guest, or newcomer), and then give them the free appetizer on your own. What signal does that send the guest? It makes them feel special and appreciated — a feeling they will remember and encourage them to return. You may still be out an appetizer, but consider the impact from the different approaches.
What changes can you make to actually create loyalty versus attracting deal grabbers? We'll cover that in our next post.
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