09 December 19

The Importance of Customer Loyalty Programs

Loyalty Card

Saria | Hospitality Business

The hospitality business is getting more complex and harder to compete with. We look for new market niches all the time. In past comments we have made reference on how difficult it is to gain market share and hold on to it.  We have looked at iPads, mobile terminals, and now we want to look at the latest trend, which is using Loyalty, to gain market share.

Buy Five, and get one free. Get your “Coffee card” and mark it with the coffee you have just purchased. Today, everyone seems to have a Loyalty system of some description. It may be specific to this site, or it may be a corporate card which can operate across all sites. The difficulty is most Loyalty systems that are implemented only reach a fraction of their true potential. They are restricted to operating as a discount card system. E.g. reward the customer when he gets 5 sales – the fifth one will be free. How many of these loyalty systems do you see each day?

Loyalty systems bring with them a number of questions: How will you maintain the database? Do you maintain the database?  A good loyalty system will have a pre-conceived view of how we will maintain the database. Email addresses are most common. They change as regularly as we all drink a coffee. Maintaining the accuracy of the data is MORE important than the loyalty system itself. So rule one, find a loyalty system that has an easy method of maintaining data.

Rule 2 Use the data that you have captured. Loyalty is NOT a discount card system, to give away as an extra discount. You need to stay in touch with your customers through the Loyalty system. To capture the number of visits and to get the customer back to your shop who has not been visiting recently. This means the loyalty system must keep track of visits.

How about how much the customer spends ? This can be very valuable information, but surprisingly very few Loyalty systems capture this information.

Let’s look at the information a typical check will capture . We have Customer number, Product, Receipt number, Amount of transaction and Loyalty Reference number.

With all of this information being able to be recorded we can see what this customer prefers to eat, drink etc. We can see how much he spends each visit. This is incredibly valuable information. Birthdays are always good days to reward a customer. “Happy birthday Bert” takes the impersonal nature of the purchase out of the transaction. Knowing what the customer likes and dislikes is very valuable information. But can you use it? You need to have someone using the loyalty data with marketing campaigns that make the information meaningful. This is where a lot of Loyalty systems  break down.

Campaigns can be run on

  • Product
  • Time of day (Happy Hour)
  • Number of visits
  • Birthdays
  • Amount spent

Rule 3 Don’t let the information become lost or redundant. Capturing he information is one thing, using the information is an entirely different thing. Nando’s and most of the larger chains employ marketing people to promote their products. Nando’s use “near marketing experience” which means if you are within a certain proximity of the store a “special” will be displayed on your phone.

Rule 4 “specials “ are a means of promoting a sale without gaining any Loyalty information. Influencing , a customers choices by promoting a special price is another way of running a Loyalty system. Price discounting is the most common way of gaining loyalty, just consider McDonald’s Meal Deal, or Hungry Jacks “free drink”. All of these methods have been used as a means of attracting Loyalty customers and keeping the average spend up. Of course, managing the use of Loyalty systems can become important, as most of us can get very “sick and tired” of being bombarded with email messages.  So management is a key thing to look after- not too many emails, but not too few either.

Aloha is one of the most advanced and developed Loyalty systems in the States today. It not only has all of the marketing features, we have described, but it has many more to add as well. It is one of the feature products that we would promote to be able to manage your POS system, ensure customers are getting “Value for money” and are not loosing control of their customers.

Customers can be asked to maintain their own loyalty information by browser or phone. Campaigns can be recorded and monitored. One campaign may not work while another will be wildly successful. You need to replicate the successful ones and eliminate the unsuccessful ones. Having a Loyalty campaign running can be a waste of time without the necessary tools to monitor the success of each campaign. All loyalty systems are not the same. Some are just discount card systems – buy five get one free, while others are the “real deal” Choose carefully.

Loyalty creates success, just look at McDonald’s..