By Frederick Szydlowski, CMO and co-founder, Embargo (www.embargoapp.com)
The hospitality sector has historically taken a curious approach to customer loyalty. Despite repeat business from loyal customers being the lifeblood of this industry, many establishments have historically been very poor at identifying, incentivising and rewarding such individuals.
A recent poll from YouGov revealed that 47% of UK consumers are more likely to spend with a brand of whose loyalty scheme they are a part of. However, the majority of hospitality businesses still seem to struggle with developing and implementing an effective loyalty scheme; instead relying on outdated, flawed systems such as front of house staff manually identifying ‘regulars’, or paper loyalty cards enticing people to come back.
However, with the sector reporting losses of almost £30 billion during the lockdown period, bars, restaurants and coffee shops are now realising that there is no room for complacency when it comes to customer loyalty. Indeed, for many businesses, building a base of loyal regulars could be the key to their survival in the months ahead.
The question, then, is where do they begin?
KEEP IT SIMPLE
First and foremost, businesses must identify which type of loyalty program best suits their needs. As a rule of thumb, the simplicity of a system should be the deciding factor; restaurants, bars and coffee shops must choose a scheme that is easy for both customers and staff to understand.
From employees’ perspective, a simple system will be easier to explain to customers, ensuring more people sign up.What’s more, a scheme without complex on-boarding and rules will make it more convenient for customers to claim their rewards, thereby encouraging repeat use.
There are plenty of schemes to choose from. For example, membership programmes can be effective in encouraging customer loyalty. Signing up as a member to a bar, restaurant or café allows customers to enjoy personalised treatment, such as exclusive discounts, dishes and even events, which are not available to non-members.
Alternatively, points-based systems are equally popular.These schemes offer customers the opportunity to collect points for every time they make a purchase at a certain venue.The points all add up to offer rewards; these can range from a complimentary cup of coffee to a bottle of champagne.
Each system has its own merits, and each will naturally be better suited to one hospitality business over another. The key to encouraging customers to use them, however, lies in how they impact the overall customer experience.
MEETING THE NEED FOR CONVENIENCE
Of course, the friendliness of staff, quality of produce and ambiance of a venue all remain vital components in encouraging customer loyalty. However, it is becoming increasingly clear that the role of digital customer loyalty schemes is growing. In fact, a recent study revealed that 59% of 25 to 34 year olds believe their customer experience would be enhanced if brands offered some form of digital loyalty scheme.
Why is this the case? Put simply, digital loyalty schemes are much more convenient for the modern consumer. Rather than using a physical card, which can easily be damaged or lost, or signing up to a generic mailing list, which can result in a torrent of spam; digital schemes can be easily accessed by logging onto a website, or better still, via an app.The rewards are much easier to access and redeem.
Digital loyalty systems, such as apps, also make it far easier for consumers to track their rewards and offers. For example, a loyalty app may provide useful pop-up reminders to users that one more visit to their local coffee shop will mean they are entitled to a free cup of coffee, gently encouraging repeat custom. Such reminders will gradually encourage loyalty without inconveniencing the customer.
THE PERSONALISED EXPERIENCE
However, it is not just about convenience. Digital programmes enable hospitality businesses to provide a unique experience and communication for each individual customer. And indeed, a personalised experience is becoming increasingly important to consumers, with 62% of consumers willing to recommend a brand that offered them a tailored service.
A digital and mobile presence will allow hospitality businesses to gather invaluable data analytics about their customers and enable them to create a personalised experience. Contactless loyalty apps can link up to the venue’s customer relationship management (CRM), to help venues better under- stand customer behaviours and use that information to communicate to key consumers instead of mass advertisement..This way businesses will be able to realise when a group of regulars stop returning and, rather than spamming them with generic information, provide those customers with a special reward to invite them back.
For the customer, loyalty schemes must be easy to use, and they must actually deliver rewards that appeal. For the business, the scheme must provide genuine insight that can inform a better marketing strategy, rather than relying on more clumsy or costly approaches.
Ultimately, if implemented correctly, loyalty systems are incredibly valuable to hospitality businesses.The key is to keep the system simple.The simpler the system, the easier it will be to implement into long-term strategies and improve the customer experience.This will, in turn, enable restaurants, bars and coffee shops to create a tailored experience for individual consumers, thereby creating a loyal and valued (not to mention valuable) customer-base.
Frederick Szydlowski is the co-founder and CMO of Embargo, a loyalty platform that allows restaurants, bars, and coffee shops to recognise and reward their customers through the use of pioneering technology. Launched in 2017, Embargo is helping hospitality businesses embrace digital transformation by connecting them directly with their customers delivering bespoke loyalty rewards and enabling communication.