How many times has this happened to you? You’re at your local coffee shop, bakery, or cafe, and the cashier pulls out a frequent buyer card. She uses a hole punch to mark your purchase and hands it over. “Nine more purchases and then you get a free one!”
You smile, tuck the card into the back of your wallet, and completely forget about it at your next visit.
Sound familiar? It’s a common scenario. Many operators are still clinging to woefully outdated customer loyalty and rewards program models. The old card-punch routine made sense in the days of Central Perk but there are better ways to delight guests these days with updated restaurant loyalty programs.
Before we dig into how credit card-linked loyalty programs work, it’s worth taking a step back to consider what a loyalty program can do for you restaurant business.
A loyalty program that combines appealing incentives with a simple path to participation can:
Let’s break these three down.
Customers enrolled in loyalty programs tend to have higher check averages overall as they approach their reward. Boston-based mobile payments platform, LevelUp, describes this effect as the "points pressure mechanism." Guests are more motivated by the reward as they get closer to it causing a spike in spending to achieve the freebie. One study found the effect to result in spending 39% more than usual.
In addition to spending more per visit, an attractive loyalty program can increase the frequency of visits. In a study conducted by Loyalogy, consumers said they’d increase their visit rate by 35% if offered a loyalty program that appealed to them. Targeting low-frequency guests with your loyalty program is a smart strategy according to restaurant loyalty and rewards platform Paytronix, as these guests offer the greatest revenue-generating potential.
Peer recommendations and social validation are always powerful in the age of Instagram. Shareable and brag-worthy reward experiences are more likely to get your customers talking and posting about your restaurant - i.e. advertising to their networks. In the same Loyalogy survey, 65% of respondents said they’d recommend a restaurant to others based on a buzzworthy loyalty program.
It’s clear a robust loyalty program has the potential to pay big dividends. Next, we’re going to dive into why card-linked loyalty can specifically help you achieve the results described above.
Credit card-linked loyalty is just what it sounds like: it's a loyalty program that tracks rewards and points based on a customer’s credit card use. Guests are asked to opt-in to the loyalty program once. From there on out, their point and reward accumulation is automated.
The old punch-card method we described above puts the entire bonus to earn rewards on guests and is laden with pitfalls.
Each time a customer visits an establishment, they need to both have their card on them and remember to present it. If their card goes through the wash before they’ve redeemed their reward, they rewind back to zero.
With credit card-linked loyalty, guests opt in only once and the rest is automated. Here’s how it works with Toast's restaurant loyalty program:
This automation makes earning rewards a seamless part of each interaction for both customers and restaurant staff. Neither party needs to remember to initiate the loyalty transaction - it just happens.
Besides creating an improved guest experience, credit card-linked loyalty programs provide businesses valuable customer insights. Data for all your loyalty participants can be aggregated to paint a holistic portrait of customer buying habits, trends, and rewards that drive spending.
Stuart Ward, owner of Moonie’s Burger House in Cedar Park, Texas shares, “My colleagues who have struggled with adoption of loyalty programs in the past are really impressed with Toast’s loyalty module. I can easily pull up our most loyal customers and see that they have spent $1,200 at our restaurant this year and have redeemed all those rewards!
Having a loyalty program integrated into the POS system really improves adoption. We have 3,000 rewards accounts who love it. We even have a customer who has redeemed twelve free burgers."
Recent research suggests that millennials are using cards more frequently than older generations, even for small ($5 and under) purchases. This trend coupled with the boom in tech-enabled checkout experiences make it a ripe time to consider upgrading to a credit card-linked loyalty program. You’ll delight customers by making it effortless to earn rewards and capture valuable insights along the way.