How to use a loyalty program to increase a restaurants profit?
In this article, we will talk about how to correctly analyze the loyalty system in the restaurant business, what you need to pay attention to, and how to really increase the profit of the establishment with its help
Evaluation of the effectiveness of the loyalty program
In each restaurant, the loyalty program may work differently, but the same metrics will always be used to evaluate its effectiveness:
- Sales funnel . Shows how many guests made one, two or more visits to your establishment.
- Working with segments . The loyalty system divides your entire audience into several key segments united by certain characteristics, and allows you to work with each one separately.
- Average check. This metric is familiar to most companies, including those outside the restaurant business. But within the framework of the loyalty program, its meaning is that the size of the average check constantly increases, and it is predicted.
- Time between visits . The most important metric shows how often your regular visitors come back to you.
Next, we will talk in more detail about each of these metrics and tell you how to work with them correctly.
Sales funnel
The sales funnel in the loyalty program shows how many times guests visited your restaurant. It is absolutely logical that people who have come to you more than 5 times will be much less than one-time visitors.
Here we are interested in two main points: the number of visitors at each stage of the sales funnel, and the point at which the largest number of visitors is lost. You also need to understand whether this outflow can be related to the specifics of your institution's work.
After completing the analysis, you need to record the data that is relevant at the moment and think over the strategy of attracting guests precisely at the stage where you have the largest outflow. For example, if you have a large number of visitors who came twice, but did not return for the third time, you should offer guests a discount for the third visit.
What actions should be taken after the end of the promotion:
- Learn the numbers. See if the number of visits increased at the right stage of the funnel.
- See what results were obtained in numerical expression.
- If you managed to achieve success, analyze what exactly was done and think about how to expand this effect.
- If you did not succeed in achieving the goals, and this is also possible, study the actual result. Maybe you set your goals too optimistic or your proposal didn't work.
- Think of a new strategy.
- Calculate how much money you made, even if the goal of the promotion was not achieved. Remember that all funds received above the initial indicators are the merit of the loyalty program only.
- Keep working, think of new mechanics and strategies that will help you turn even one-time guests into regular and loyal visitors.
Working with segments
All restaurant visitors can be divided into five main segments:
- New - visited the restaurant for the first time in the last 3 months.
- Regulars - have visited the restaurant at least twice in the last 3 months.
- Loyal - guests who have made transactions less than 30 days in the last 3 months.
- Sleepers - came to the restaurant at least once, but did not make a single transaction in the last 3 months.
- Lost - Visited you at least once and then deleted the card.
The category of "dormant" customers is likely to be your largest, and it is to them that you need to pay the most attention, and on an ongoing basis.
But before embarking on the development of strategies to increase loyalty, we recommend collecting relevant analytical data for a specific period of time, so that in the future you have something to compare with, and you can evaluate the results of activities.
Next, based on the CA portrait, think of events, promotions or discounts that could interest your customers and motivate them to move from the "sleeping" category to the "loyal" category. A similar principle can be used when working with other audience segments.
After the campaign is over, don't forget to analyze how effective it was in quantitative and financial terms. Draw conclusions, optimize strategies and try different mechanics to keep your loyalty program always interesting for customers.
Average check
Restaurants are constantly working to increase the average check, and the main approaches here are known to most restaurateurs:
- Training waiters in sales skills and developing the right system of their motivation.
- Increasing the speed of customer service.
- Competent marketing.
- Development of a structured and convenient menu.
Using a competent loyalty system will help to increase this indicator even more. Depending on the portrait of the target audience, you can use several approaches, for example:
- Organize events and thematic evenings. Such events usually do not go unnoticed and attract a large number of guests. Most likely, one of them will want to stay longer and will bring you an additional profit.
- Develop promotional networks by combining popular offers with high-margin ones. This option is more suitable for fast food restaurants.
Work on the implementation of loyalty programs is carried out according to the same principle - first you record the current indicators, then develop and conduct the campaign, then monitor its effectiveness.
Time between visits
Another important indicator of any restaurant is how often regular guests visit it. The more often, the more money you earn. Accordingly, it would be good to think about developing loyalty strategies aimed at improving this metric.
The main mechanics that will be able to help you with this are the introduction of a burning bonus system and additional events.
In this way, you can add a few percent to your monthly turnover without investing a single penny in customer acquisition.
In the restaurant business, there are many options for implementing and developing loyalty programs. But this, of course, does not mean that you need to use all available tools at once. Start with the ones you see the most potential in, test them, analyze the results, and find the mechanics that work best with your audience.
