How Loyalty Programs Boost Dining & Entertainment Sales
Did you know that acquiring a new customer costs a business about 5-10 times more than it does to sell to an existing one? On top of that, the average current customer tends to spend 67% more than new ones. While every dining and entertainment business needs to focus on procuring new clients, don’t commit the cardinal sin by ignoring the potential money right under your nose: your already loyal customer base.
With notable statistics like these, it’s essential to consider what your company is doing to keep your existing customers coming back for more. And, if you’re like millions of marketers, your business has implemented a customer loyalty program.
Loyalty programs aren’t just a way to give out free bowling games, or half-off appetizers anymore. When used effectively, they can be a powerful marketing tool that both benefit your customer and the business by increasing your ROI, harboring brand loyalty, and attracting a new client base. Let’s talk about why loyalty programs are great for business and how you can create one that meets your customers’ needs.
Benefits of Loyalty Cards
Perhaps the greatest thing about rewards programs is that they truly benefit everyone involved; the customers are rewarded and/or motivated to come back time after time, and retailers maintain valuable clients.
Creating a compelling customer loyalty program also provides more interaction and engagement between the salesperson and their customers. The salesperson is likely the first to explain the loyalty program to the client, so make sure they’re excited about it, too. If the salesperson represents your brand well, the client is more inclined to be passionate about it as well.
You probably won’t be the only New York style pizza joint in town. In light of that, offering customer loyalty cards shows clients how much you value their business and appreciate the fact that they choose you over the Anthony’s Pizza down the street. These are golden opportunities to nurture relationships with new and existing customers. A simple loyalty card such as “buy four large pizzas, get the 5th free” really doesn’t cost you much, but not having a rewards program, and losing them to Anthony’s who does, will absolutely affect your bottom line.
Having a loyalty rewards program is also easy, and doesn’t cost much to implement. Of course, you’ll need to choose the best method for your business whether the program be accessed via their mobile device, a physical punch card, available on the web, or tracked internally. You’ll also need to examine ways you’re going to promote these loyalty programs. Will it be at the point of sale? Will there be signage in your business prompting customers to inquire? What about incorporating it in with your current advertising campaign such as a direct mail program?
Loyalty Cards and Your Bottom Line
The simple fact is companies that use customer loyalty programs thrive. Why? It’s a simple and inexpensive initiative that creates a win-win situation for everyone. Loyalty programs for small businesses offer incentives for customers to return to your establishment over competitors.
Happy customers, and loyalty card holders, can also become your brand advocates, increasing your exposure and boosting your reputation by word-of-mouth marketing. Take, for example, Celeste, bowling with a group of friends. When everyone goes up to the counter to pay, Celeste gets a free game because she hit her 9th punch, and the 10th game was free! Her friends, also looking for a free game, will likely sign up for your rewards program. Not only do you now have Celeste’s repeat business, you have her friends coming back to bowl as well! That’s what we like to call a strike!
Additionally, loyalty cards have been proven to boost sales. As a matter of fact, “Growth Hackers,” a group developed by tech startups, uses creativity and analytical thinking to sell products and gain exposure. They use loyalty programs as their traditional business model to expand a company. They knew customer loyalty was a surefire way to grow any business, and used that idea to create a solid foundation for any business model.
Furthermore, and we highly suggest this, using specific loyalty programs that require customers to “sign up” opens up worlds of opportunities for database growth and to further market your business to them. According to Jenn Reichenbacher, Senior Director of Corporate and Channel Marketing at Merchant Warehouse, members of a loyalty program are 40% more likely to open your promotional email and 20% more likely to click on the links within the email to access your website. Since these customers willingly gave you their information, they’re more likely to be OK with you reaching out to them from time to time. After all, they clearly find value in your company, and you’ll probably have some great promotions in those newsletters!
Loyalty Program Best Practices
With technology today, everything we need is at our fingertips. While not a deal breaker, it’s worth considering getting a loyalty card app or a way for customers to access your loyalty program on their phones. The bottom line is: you should really have a mobile friendly or responsive website, or you’ll be missing out on some serious business.
The 2015 AudienceSCAN report found that entertainment seekers are 57% more likely to own a tablet, 56% more likely to look up a business and its location via a mobile device and 24% more likely to research a product or service via a smartphone. As you may infer from these numbers, some of the best loyalty programs have a mobile presence, as it can be imperative to the customer’s path to purchase.
It’s also necessary to have a structure in place for tracking your program and validating points. Make sure that all employees are held accountable for their actions and customers are earning their benefits fairly. For example, you want to avoid making it easy for customers to punch holes in loyalty cards themselves. Many companies have custom stamps or hole punchers to evade this issue.
A great way successful loyalty programs remain active is to allow the reward to be applied to purchases made online, in person, or both. To see which tactic is right for your business, take a look at where most of your sales are coming from. If you have noticed that most sales are from those shopping online, strengthen your online rewards system. On the contrary, if most business is conducted in person, an in-store program may be the best fit. If, however, you’ve discovered about half of your sales are derived from the internet and half from in-store purchases, you may want to come up with a loyalty program that can integrate rewards for both point of purchases.
As you’ll see below, we’ve uncovered some great stats about the dining and entertainment industry as it relates to consumers and smartphones.
Dining customers tend to respond strongly to ads and coupons when making a decision. Many diners are already out and about when they decide to eat at a restaurant. According to a 2015 AudienceSCAN report, 34% of restaurant goers who access information via a mobile device purchase immediately, and 30% purchase within the hour. Having a website that is mobile-friendly is crucial to getting those hungry consumers!
We’re also not surprised by the findings that customers looking for entertainment react positively to ads and coupons when making a decision. Think of all the families looking for inexpensive things to do to keep their kids busy. A family of four planning to spend an afternoon at the arcade can rack up quite a bill; decision makers of the house will always be looking for ways to save money for their household. Remember, entertainment is a luxury, not a necessity. If you don’t give consumers a compelling reason to enter your arcade — chances are, they won’t.
Loyalty Program Examples
According to the 2015 Colloquy Customer Loyalty Census, 3.3 billion U.S. customers are part of a loyalty program. On average, that is 29 programs per household. The dark side of this census is that most members are only active in 12 of those. While it can be inexpensive to implement, if no one uses your program, it’s a waste of time! We’ve outlined a few successful loyalty programs and ideas you may want to mirror when creating the foundation for your own customer loyalty program.
Use a Point System
This is the most common loyalty program on the market. Customers earn points with every purchase and eventually get to redeem those points for a discount or freebie. One thing to remember is to keep it intuitive.
“Every 25 points equal one dollar, and every dollar you earn gets you 35% off your purchase, but you have to use the discount within two months…”
…that’s more of a headache than a reward!
If you’re looking to do a points based program, make sure the conversion is simple. A great example of a successful points based system is the My Starbucks Rewards program. In fact, Starbucks attributed their rewards program to a 26% jump in profit and 11% rise in total revenue in 2013.
Make It a Game
Who doesn’t love a great game? GrubHub, a leading food delivery service offers their customers a 1 in 4 chance to win free food (and even free food for a year) with every three GrubHub orders. Their Yummy Rummy Sweepstakes has been a driving force in customer retention and satisfaction since 2011.
Local businesses that may not have the technical capabilities to execute something like Yummy Rummy can still turn their rewards program into a game. What if, for every three purchases, customers had one shot at a dart board full of freebies and discounts, letting the flight of the dart choose the fate of the reward? Not only is this fun and interactive — other customers in the building will see client participation in the game and want to get involved themselves.
Partner With Similar Companies
Partnership programs (also known as coalition programs) can be a wonderful way to keep a customer’s business local. But finding a strategic partner requires understanding your customers’ lives and their purchasing habits.
American Express’ Plenti program launched just a few months ago, partnering with big name brands such as Hulu, Macy’s and AT&T. The program allows spenders to pool their points from shopping at partnering stores and redeem those points at other stores. For example, you can use the points you earned from shopping at Macy’s to pay your Hulu bill.
In town, there’s a pizza store and italian ice cream shop right next to one another. And It’s kind of turned into a tradition; if you’re going to get pizza at Lazy Moon, you’re getting dessert at Jeremiah’s. Why they never implemented a coalition program is befuddling to us. It’s a golden opportunity to keep customers coming back. For example, Karen has plans to get the famous Scoop Froggy Frog at Jeremiah’s with her friend Karlee Tuesday after class. Karlee, instantly connecting Jeremiah’s with Lazy Moon, suggests that before they do dessert, they get some pizza and will then have a discount for the Scoop Froggy Frog.
Not only do these programs offer customers value for something that’s relevant to them, but beyond the scope of what your company alone can offer, they also help you grow your network to reach your partners’ customers, too. What better way to show them you understand and care about their ice cream needs?
It’s no secret that every business needs to acquire new customers. We just don’t want you to neglect your easiest and most predictable source of revenue; you’re current and loyal customers! With the cost of acquiring new customers growing, it’s time to put some energy into growing and maintaining the relationships you’ve already started with a customer loyalty program. The reality of it all is: targeting already-loyal shoppers with exclusive offers based on their buying habits is a win for everyone involved.
Steps to Start Your Loyalty Program
Has your team attempted a loyalty program before? If so, identify the pros, cons and ways in which you can improve. Take note of what worked, and what didn’t and use that to create the foundation of a new and improved program.
- Make sure to have a reporting structure in place to track reward redemptions and completed cards.
- Analyze holes in your system, and look to make a strong program so that customers and employees cannot cheat.
- Take a look at program “sign ups” that require shoppers to fill out a form to participate.
- Having this information allows you to create a strong customer database that you can utilize to market to further.
- Research your competitors.
- What are they doing and analyze what is working for them and what you can do different or better. Come up with ways to facilitate this.
- Mobile options for rewards programs are great, if possible, but not critical.
- If you don’t have the funds or tech savvy to implement, don’t let that hold you back.
- Think about incorporating an online rewards program (if most of your sales are via the web). If you found that most clients shop in-store, maybe an in person program is all you’ll need.
- Evaluate options when it comes to rewards programs.
- What type would best benefit your customers?
- There’s a variety of programs such as a point systems, games, partner programs etc.
- What is most intuitive for your demographic, and what is a mutually beneficial program?