In the competitive landscape of the restaurant industry, loyalty programs have become a vital tool for driving traffic, fostering customer loyalty, and encouraging direct orders. However, selecting the right technology to support your brand’s business goals requires careful consideration beyond just specific features. The real business impact delivered is what matters most.
Here are eight crucial questions to ask before investing in or switching to a new loyalty platform:
- Track Record of Success: The primary goal of any loyalty program is to create sustained customer loyalty. Ask the platform provider how their system has positively impacted frequency, customer retention, and profitability for other restaurants similar to yours. Can they share specific examples?
- Customer Activation Tools: Activation of new customers is a key challenge for many loyalty programs. Inquire about the platform’s tools for encouraging new loyalty members to be active in the program. What customer activation rate (% of customers who make at least 3 purchases in the first 120 days) should you expect to achieve in the first year?
- Retention Strategies: Despite the high retention rates in the quick-service restaurant (QSR) industry, focusing on retention is crucial. Ask if the platform has features to drive retention and encourage the return of lapsed guests. What retention rate (% of customers who were previously active and have purchased in the last 180 days) can you expect to achieve in the first year?
- Flexible Loyalty Structure: Loyalty programs should offer the highest value to the most valuable customers. Ensure the platform allows for adjustments to the program at any time, breaking the sense of entitlement to fixed discounts. How does the platform track and monitor the cost of rewards, and can you fine-tune the cost-to-value ratio?
- Non-Discount Rewards: Integrate non-discount-based rewards into your loyalty program to reduce the Effective Discount Rate (EDR). Ask about the types of non-discount rewards customers can redeem and the impact on the EDR. Can they provide examples and outcomes?
- Integration with Online Ordering: Loyalty programs can significantly impact digital revenue when integrated correctly. Inquire about how the loyalty program integrates with online ordering and delivery services. What lift in digital revenue can you expect, and can they provide case studies or testimonials?
- Seamless Transition: Moving away from legacy loyalty platforms can have hidden costs if the transition is not well managed. Ask about the step-by-step process for transitioning an existing loyalty program. What percentage of active customers can you expect to transition, and is there monitoring and reporting for the transition?
- Ongoing Marketing Strategies: Loyalty programs require ongoing engagement through omni-channel marketing. Inquire if the platform allows for A/B testing of both one-time and automated marketing campaigns. What is the process for A/B testing, and what revenue impact can you expect?
Understanding how a loyalty platform delivers business impact is essential for effective competition and meaningful impact on your business. Analyzing the answers to these eight questions will help you find the loyalty platform that aligns best with your business goals and customer expectations.
Curious to explore more about restaurant loyalty software? Dive into our comprehensive guide to restaurant loyalty platforms, featuring 100 questions you should ask before making your investment.