Maximizing Customer Loyalty: A Guide to Digital Reward Programs for Restaurant Chains

Digital reward programs are loyalty programs that digitally incentivize and reward customers for repeat purchases. They involve customers signing up for a loyalty program through the restaurant's website or mobile app and earning points or rewards for each purchase. This guide will explore key considerations for creating and implementing a successful digital reward program for your restaurant chain.

What are the key components of a successful digital reward program?

1. Ease of Use:

The user interface should be simple, with instructions about signing up and redeeming rewards. Due to the short attention span in today’s digital age, the process should not be overcomplicated with multi-step rules and difficult achievements. The more complex a brand makes understanding the game’s rules, the more customers will stop interacting with your program. 

2. Personalization:

In an over-saturated and competitive market, personalization is vital. Implementing different strokes for different folks is key. Analyzing customer behavior from customer data will allow you to offer relevant communication and customized offers to individuals based on preferences. Customers will feel valued and appreciated.

3. Rewards:

Rewards are the most enticing element of a digital loyalty program for restaurants. They should incentivize customers to interact with your program to achieve rewards. How can you offer your loyal customers an enhanced experience of your brand? The rewards must be exciting enough to attract new customers.

Moreover, the rewards need to be achievable. You can choose from a cashback-based reward system, a product-based reward system, or a visit-based reward system. Either option you choose must be transparent about the reward tiers and redemption policies. For instance, clearly stating that customers can get a free dessert for every purchase means they know what to expect and are more inclined to participate.

What benefits do digital reward programs provide for restaurant chains?

Increased Satisfaction and Value:

Digital reward programs greatly increase customer satisfaction and value by offering personalized rewards and tailored experiences. Customers feel more valued when presented with relevant communications and incentives. This is especially true for customer groups who feel they need to be more appreciated and spoken to by most brands.

For example, consider how you might be able to tailor your rewards to a Muslim customer who celebrates Ramadan by fasting. 

Digital reward programs also reduce customer frustration by streamlining the purchasing process. For instance, Dunkin’ has a reward program called ‘DD Perks’ which allows customers to order and pay for their food and drinks through the app, skip the line, and earn extra rewards for mobile ordering. 

Learn more about our Marketing and Loyalty Features for Restaurants

Enhanced Brand Awareness:

Digital reward programs can generate brand awareness from positive customer experiences. If your program stands out and offers personalized rewards, it fosters a strong emotional connection with your customers. Feeling personally connected to a brand initiates word-of-mouth marketing, where satisfied customers recommend your restaurant chain to friends and family. Additionally, tracking the effectiveness of your digital reward program will provide useful insights to improve your overall brand strategy to be more customer-centric.

What are some best practices for designing and launching a digital reward program?

"If a digital reward program is cleverly designed, it can be leveraged to gain a lot of customer insights and feedback. This will allow you to see where the shoe hurts. For instance, your customer may be happy with the quality of your food but not the delivery. They might want to see more options on the menu. You can then implement these new insights to improve the overall customer experience."

—Christian Osmundsen, Global Head of Customer Experience at Deliverect.

Objectives and Goals:

Establishing clear objectives and goals is the first step toward designing and launching a digital reward program. These should be aligned with your restaurant’s overall business strategy and aim to increase customer engagement, loyalty, and sales. One objective could be increasing the frequency of visits from existing customers. To encourage repeat visits, you might consider launching a visits-based loyalty program where customers gain points every time they visit your store, regardless of how much they spend.

"Having a properly designed customer experience strategy behind your digital reward program so you know why you’re doing it and what you’re achieving from it is a conscientious approach to add value."

—Christian Osmundsen, Global Head of Customer Experience at Deliverect.

Customer Understanding:

For your digital reward program to meet your desired objectives, it is vital to understand your customer base. Carrying out market research, surveys, and customer feedback can help gain insight into their demographics, preferences, behaviors, and motivations. Understanding your customers’ preferences and behaviors will help identify the most appealing rewards and program features to integrate into your loyalty program. For example, suppose the target customer is a millennial. In that case, they may be more likely to respond to gamified rewards and social media promotions. In contrast, an older consumer may be more likely to react to perks like priority seating or gaining early access to menu items.

"Any loyalty program needs to be based on what customers want. Is it just cheaper food, quicker delivery, or better quality food? Ask your customers what they want, don’t assume you know what they want."

—Christian Osmundsen, Global Head of Customer Experience at Deliverect.

Platform Selection:

Your platform must be user-friendly, scalable, and easily integrated with your restaurant’s technology systems. Options include mobile apps, web-based portals, or third-party providers. One non-negotiable feature is its ability to capture data that offers insights into customer behavior and preferences.

Rewards Creation:

Rewards are the cornerstone of a digital reward program. They must be tailored to your target customer while being relevant, accessible, and desirable. The rewards are endless, from discounts to free items and exclusive experiences. However, balancing your needs as a restaurant and your customers is vital to remain cost-effective. Consider the cost implications to your restaurant when deciding the reward tiers you plan to offer.
Furthermore, gamification techniques like leaderboards and badges can be a great way to introduce competition between your customers. Most importantly, whatever reward you choose should remain within the threshold of your customer’s possible reach. If the free coffee comes after fifty other “paid” coffees, your customer can quickly lose interest and incentive. 

Promotion:

Promoting your digital reward program to see the desired results is essential. Most importantly, the benefits and rewards must be advertised to entice customers to sign up. Market the program through social media, email marketing, or in-store signage to ensure your customers know about it. Tracking your reward program’s performance through sign-ups and redemption rates will offer more insight into whether it needs to be promoted even further or on different platforms.

What are some challenges and solutions related to digital reward programs?

Measuring Success:

Measuring the success of a digital reward program can be difficult. Alongside looking at sign-ups and redemption rates, other metrics to measure the success of your program include the active engagement rate and the repeat purchase rate. The active engagement rate determines how many customers have signed up to engage with your program. It looks at what rate your reward program members earn and redeem points in a specific period. The repeat purchase rate is a long-term indicator of success as it requires measuring the number of customers who made repeat purchases over a year against the total number of customers within that period. A repeat purchase rate in the 20-40% range is successful. Building customer loyalty happens over time, so being patient is critical. Additionally, surveys will provide insights into customer satisfaction and preferences. Use this feedback to improve your program and see better results.

Updated Technology:

With technology evolving exponentially, restaurant chains must stay on top of the latest trends and innovations to have a competitive edge. This can be particularly challenging and costly for small restaurant chains. Partnering with third-party loyalty providers can be a great solution, provided it seamlessly integrates with your existing technology. Carrying out regular assessments of your program’s technological infrastructure will also enable you to identify areas for improvement. Furthermore, simply copying another restaurant chain’s loyalty program won’t work to serve you in the long run. Standing out with the latest methods and application structures will work to draw in new customers because what you’re offering isn’t the same as other programs. 

Maintaining Data Security:

Striking a balance between offering a personalized experience on your digital reward program and maintaining customer data privacy can take a lot of work. Many customers hold valid concerns over online privacy and want a personalized experience from the brands they love. To balance compliance with customer experience, it is essential to be transparent. Customers should join your loyalty program knowing they are signing up for a personalized user experience where they will feel recognized and gain access to member-exclusive perks and discounts. Sharing data in return for the benefits of a unique loyalty experience is the value exchange that they would sign up for. Loyalty programs should always be opt-in and permission-based.In this way, customers trust you to protect their data. To keep customer data secure, your restaurant chain must comply with industry regulations like GDPR and CCPA and implement security measures like encryption and firewalls.

Successful digital rewards programs are crucial for restaurant chains to increase customer retention, enhance brand awareness, and ultimately drive growth and success.