When customers are spoilt for choice, how can casual dining and franchise restaurants attract customers and maintain their loyalty?
The casual dining sector is constrained by low profit margins, meaning that cutting prices would have to shave pennies from those already at their lowest — and theses small savings seem unlikely to sway consumers. Rather than enticing consumers with low costs (which, eventually, will be undercut or won’t be feasible in the long-term) it is much more effective to focus on maintaining the loyalty of existing customers.
One customer through the door is not the same as another: Loyal customers are driving sales, with one study claiming that loyalty creates 67% more sales than one-time visitors.
#1: Loyalty Points per Purchase
This February, Subway announced that it would be bringing loyalty points — or tokens — to its US and Canadian customers. Consumers will receive four tokens for every dollar they spend in the franchise, with a $2 voucher available to spend on any menu item once they have collected 200 tokens (spent $50).
Receiving points for every dollar spent is the loyalty scheme favored by millennial consumers, with 35% choosing this option over receiving discounts on products (26%), earning points per visit (21%), and earning points for purchasing a specific product (14%). In fact, the study found that only 5% of millennial shoppers would prefer no loyalty program at all, suggesting that customers could still be tempted by savings, however small.
#2: Loyalty Points Per Visit
In an effort to recover popularity and customer confidence after two health scares, Chipotle revealed in February that it would be using a new loyalty scheme, which would see customers rewarded every time they visited the store rather than in proportion to how much money they spent. This is similar to another short-lived yet popular Chiptopia loyalty scheme, which ran in the summer of 2016. The previous scheme gave free meals after a set number of visits, as well as other freebies once a customer earned enough points.
#3: Freebies at Every Visit
Chili’s is simplifying the rewards scheme by offering free options on every visit. The Tex-Mex chain said, “We heard the feedback loud and clear that loyalty programs feel too complicated, so what would keep them coming back is to make things simple.”
With a guaranteed reward simply for placing an order — no accumulation of points or discount codes — consumers develop preferences for those brands that seem to care more about their experience than in pushing profits.
#4: Creating Engagement Beyond the Restaurant
Likes and shares on social media is one way of building a relationship with consumers, particularly with humorous posts that “go viral”, but beware of relying on catchy yet superficial taglines, which do little to drive sales. Consumers are looking to support chains that offer them something more substantial than discounts, particularly with something that aligns with their worldview.
Millennials, in particular, are looking to engage with socially conscious brands that are concerned with more than product-making, such as representing diversity, paying the living wage, promoting environmental sustainability, and using local ingredients. Engaging with these brands is seen as not simply giving up money for food but promoting an ethical standpoint and investing in wider issues.
Social media platforms are also a great way of receiving honest and constructive feedback that can inform strategies and then be implemented. Not only are flaws being identified and fixed, but it demonstrates a relationship with the customer and an interest in their concerns.
#5: Make Ordering Easy
The convenience of casual dining is tempered by queuing to order at the till. Chains such as Chick-fil-A have seen success with their app that allows users to order directly from their smart phone, pay online, and even have employees bring food to the car: The entire transaction could take place without speaking to anyone or even setting foot in the restaurant.
Following their prediction of, once again, little or no traffic growth for restaurants except for quick-service providers, NPD analyst Bonnie Rigs has claimed in this year’s forecast that “Convenience and price will trump all.” While it is impractical to lower prices any further, companies can certainly do more to provide convenience, whether that’s an app to pre-order, a self-service machine, or introducing home delivery.
#6: Personalisation
Personalisation is a heavy factor in consumer satisfaction, with research showing that users who rated themselves as very satisfied with the level of loyalty program personalisation were eight times more likely to be satisfied with the loyalty program overall.
Customers are willing to exchange data for more personalisation, which can be valuable in promoting relevant content, such as deals for a customer’s favourite items, opportunity to pre-book at busy times when data shows the customer likes to visit, or a prompt of how many loyalty points are needed to claim the next reward.
#7: Multi-Channel Integration
Perhaps the most important aspect of any loyalty program is the customer’s interaction with it. Is it awkward to carry a physical points card, or to remember it at all? Is the website updated, or difficult to navigate from a mobile device? Are offers coming through via email, which are often ignored or deleted without reading? The user experience is paramount, not just with the loyalty program itself but in using technology to access other information about the brand, such as opening times, previewing menus, and finding the nearest branch.
An integrated approach of a website optimised for both mobiles and tablets is the first step, but the development of a dedicated app brings the brand up to the next level. Push notifications, which appear directly on the user’s screen rather than in an inbox, are more likely to be opened, and the app’s presence on a home screen is a prompt to remember the brand, perhaps even to open it and see what deals are available or if there is a branch nearby, as well as providing a personalised space for customers to view the current rewards.
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