• Cheryl Teo

Why are Customer Loyalty Programs Important and How to Run a Successful One?




Whаt іs а Сustоmеr Lоуаltу Рrоgrаm?

Customer Loyalty Program is a series of activities run by a company that offers benefits to frequent customers. Those benefits may be in the form of free products, discounts, or other promotions. An effective Customer Loyalty Program rewards customers who buy from a business regularly, encouraging the customer to return frequently by offering them various rewards.


Why Loyalty Programs?

The main aim of loyalty programs is to attract the right customers and create profitable long-term relationships with them. Businesses often offer loyalty programs and rewards to their most loyal customers as an appreciation for doing repeat business.


These programs encourage your customers to be loyal by offering bonuses and rewards in order for them to do repeat business with you.


Types of Loyalty Programs


  • Points Loyalty Program - The most common form of loyalty programs. Points are earned by doing various activities like buying a meal or drink, visiting stores, or downloading a mobile app.

  • Tiered Loyalty Program - Buyers get more rewards when they buy more products.

  • Value-Based Loyalty Program - There are intended for those who focus on charities.

  • Coalition Loyalty Program - Users receive relevant bids and benefits created according to their buying habits and needs.

  • Non-Monetary Loyalty Program - They are loyalty programs that do not offer monetary incentives. Rather, they offer value-centered incentives that entice customers to buy their products or service.


Benefits of Customer Loyalty Programs to F&B Businesses


Reduce Marketing Costs

Once you are able to retain customers through loyalty programs, you won't have to spend too much on marketing and advertising again. Moreso, since the customer database provides all the information required to connect directly with them, you are able to reduce a significant amount of your marketing costs.


Increased Revenue

Since loyal customers already have trust in your brand, they are likely to spend more. Customer Loyalty Programs can boost revenues by as much as 25% to 95%.


Better Communication

With loyalty programs, you easily communicate directly with your customers anytime. You can also use these programs to showcase your new products to them, food items that you believe they'll be interested in and promote sales.


Make Your Customers Feel Appreciated

Every customer wants to be treated with extra attention each time they walk into your restaurant. A personalized loyalty program will make your customers feel like there's a special connection between them and your brand. You can show appreciation towards your customers by holding events for certain occasions such as birthdays, anniversaries, weddings etc.


Retaining Customers

While retaining your existing customers is less expensive than acquiring new ones, maybe it's high time to try something different? Loyalty programs are the most cost-effective way to drive customer retention and customer satisfaction. Apart from retaining customers, loyalty programs also help F&B businesses to expand their customer base.


Access to Customer Data

One key goal of setting up a loyalty program is to learn more about your customers. When a customer joins your program, you will be able to capture relevant information about them (such as emails, phone numbers) that you might otherwise not have. You can even use such information to wish customers well during their birthdays or anniversaries.


Acquisition of New Customers

One area that you can look at, is to combine a referral system together with your loyalty reward program. This works wonders in acquiring new customers.


Win Your Customers Back

One way or another, you might have lost a couple of loyal customers due to unforeseen circumstances or irreconcilable differences. However, by running a customer-oriented loyalty program, chances are that you will be able to win back the hearts of some of them. Put in place a reward system that makes them overlook what happened in the past and decide to dine at your restaurant again.


Loyalty programs have proven to be extremely successful for many types of businesses.


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Examples of Successful F&B Business Loyalty Programs


Starbucks Loyalty Program


Image from Starbucks Singapore


The Starbucks' loyalty program simply known as "My Starbucks Rewards" features a mobile app that enables customers to pay for their coffee with the help of built-in payment methods. In order to earn loyalty points (or stars), customer must order or pay with the Starbucks app. Customers can easily pay for their coffee wherever they are.


Starbucks rewards these customers with discounts and loyalty points. Through this program, Starbucks has not only retained its customers but also expanded its customer base.


Domino's Pizza Points


Image from Domino’s


Domino's "Piece of the Pie" rewards program allows customers to increase their loyalty points using their pizza profiles and exchange those points for free pizza, through every available point-of-sale (word-of-mouth, Twitter, SMS, in-store purchases, web and mobile channels). They also have a mobile game where users earn points by signing in with their pizza profile credentials and complete in-game challenges. As a result of this innovation, Domino's stock rose to an all-time high within 10 years.


My Chili's Rewards


Image from Chili’s


Chili's loyalty programs offers members free chips and salsa or a non-alcoholic beverage with every purchase for just being a registered member. To receive their complimentary food and drink, customers are expected to log in using a phone number when ordering online or through their stores.


Meanwhile, members of Chili's Rewards program can redeem the points they have obtained at the restaurant or at partner stores. Chili's has witnessed increased program membership since the introduction of this amazing offer in 2018.


Tips on Implementing a Successful Customer Loyalty Program

  • Research and understand your customer base

  • Know the costs of implementing a Customer Loyalty Program and your likely profit

  • Train your staff on how to handle the program from registration to troubleshooting problems

  • Make sure your business delivers what was promised in the Customer Loyalty Program

  • Be prepared for anything

  • Monitor the progress of your loyalty program


Key Takeaway

Do you want to give customers a reason to return to your restaurant or bar? Take a proactive approach and think about offering loyalty programs.


But before you jump straight into action, spend some time thinking about how you're going to make your loyalty program interesting. Loyalty fatigue truly exists. You don't want to become just another app on a phone or card in another customer's wallet.


With greater competition in the increasingly saturated F&B market space, brands need to choose a unique loyalty program that can set them apart from the rest.


As F&B businesses look to gain a competitive advantage, loyalty programs will continue to greatly expand. While the benefits vary among brands, those who roll them out with strategic planning won't reap the same benefits as those who undertake the proper market analysis required to launch it.


Creating a Customer Loyalty Program doesn't need to be a massive project but thorough and extensive market research can do wonders for the results it has on your F&B ventures.



Besides Customer Loyalty Programs how do you ensure that your restaurant has the technology to survive in this competitive industry? Here are 8 tools and apps that you can take a look at.


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