The Ultimate Guide to Food & Beverage
Loyalty Software

Customer loyalty is an ongoing, two-sided relationship between a brand and a customer, influenced by several rational and/or emotional factors. The strength of a relationship is manifested by the customer's likeliness to do repeat business and engage with the particular brand over its competitors.

Together with loyalty marketing&communications and in-store execution, loyalty program software is one of three key ingredients of a successful loyalty program.

Loyalty software serves as the backbone of the program, ensuring correct calculation and presentation of the chosen loyalty mechanic, as well as set of other tools to improve program's performance. At its core, loyalty software is a database of loyalty program members, their transactions (or other participations in a program), account balances, available rewards and reward transactions. To be useful, loyalty software needs an administration interface (typically via a web-based, desktop or mobile application). The scope of loyalty program software suites differs both in "depth" and "breadth".

‣ Depth: Core loyalty software providers offer a "database" with administration and a set of APIs (programming interfaces), that brands can use to create their own custom-built (or consumer-facing channels, like websites, mobile apps etc. In contrast, full-scope loyalty software suites differ by providing also plug-and-play and fully integrated consumer-facing channels, saving loyalty program operators (brands and businesses) the trouble of building and maintaining a custom loyalty technology stack.

‣ Breadth: Narrow view of loyalty software focuses on accounts, transactions and rewards. Marketers are expected to use other tools to provide CRM (customer relationship management), CDP (customer data platform, often with marketing automation functionalities) and CMS (content management system features). Comprehensive loyalty software platforms focus on providing end-to-end features for both the administrator and the loyalty club member, including elements of CRM, CDP, CMS and other features, like venue listings, gamification, consent management etc.

In general, solutions with limited depth and breadth are better suited for largest companies with existing sprawling software setup and custom-built consumer facing channels. More comprehensive suites will better cater to brands that are starting from scratch, want to modernise legacy stacks or want to outsource the whole technology component of loyalty management to specialists.

Beyond the "scope" distinction of depth and breadth, loyalty software solutions also differ by other dimensions like:
• Industry focus: food&bev, airlines, retail, eCommerce
• Target customer size: from single store to global leaders
• Deployment mode: On-premise, hosted on customer's hardware vs cloud-based, hosted in provider's or 3rd party datacenters and accessed over the Internet

As a Food&Bev retailer, if you are in market for a loyalty software solution, we would advise to search for a suite that is geared for your needs. Invest time into researching and selecting the best solution for your needs and it will bring dividends in a better customer experience and huge functionality and productivity gains for you as the program operator.

Here's all you need to know:

1) History of loyalty program software copies the break-neck development of the whole computing & software filed over the past 50+ years. From mainframe computers churning out loyalty miles and statuses communicated via snail-mail over proprietary computer networks, to modern on-premise software in customer's data center and, finally, to cloud-based modular solutions delivered over the Internet.

2) The advent of mobile Internet, smartphones, and eCommerce brought previously unseen possibilities to create fully personalised offers, delivered to customer pockets via interactive programs at the right time.

3) Low-code and no-code solutions and advent of artificial intelligence are shifting the paradigm. You may no longer need an army of coders, designers and copywriters, but you definitely need a vision and talent and experience to leverage potential of these tools.

On one hand, technology delivered substantial efficiency gains into loyalty program management. On the other hand, the bar is now much higher than receiving a points statement in mail every 3 months. Technology on its own does not create a great loyalty program, but there is no way modern loyalty can be delivered at scale and consistently without it.

Loyalty software is a fundamental piece of any rewards program. It provides businesses with all the necessary tools to create and run a modern, secure, flexible solution that not only gives superior performance today, but also helps a business prepare itself for the anticipated changes in the future.

Software solutions, in general, are becoming a preferred choice for companies as they do not need any knowledge of coding, minimizing the additional costs associated with custom development and further operational expenses.

It also enables companies to analyze the performance of their loyalty program in real-time and respond accordingly, thus providing a more engaging, personalized customer experience tailored to individual customer segments.

In-store, POS/ERP integration. Solution for customers + administration

Check balance

Communication to customers

There are two sides to a loyalty software:

‣ Business-facing.

‣ Consumer facing.

Successful loyalty programs commonly possess these five attributes:

‣ Expertise/know-how. Loyalty software is designed and built by experienced professionals who understand the intricacies of customer engagement. With their help, businesses can gain access to a wealth of this knowledge without having to build that expertise themselves, saving both time and resources.

‣ Cost. With off-the-shelf loyalty software, you can get up and running with a program that's been proven to work for other businesses, rather than having to invest a significant amount of time and resources into developing a program from scratch. Additionally, you can take advantage of the regular updates and support that come with using a software package.

‣ Time to market. Custom development of a loyalty program is a time-consuming process that requires significant planning, design, and development. In comparison, using loyalty software saves the time gathering requirements, designing the program, testing and debugging it. Instead, it gives you access to a ready-made program that can be implemented relatively quickly, and can be able to go live in a matter of weeks or months.

‣ Derisking. Custom development is a high-risk endeavor, as it is built from scratch and you will also be responsible for maintaining and updating the program yourself, meaning that you will need to continue investing resources into it in the future. Using a platform frees your from all these responsibilities.

‣ Compliance. Loyalty software typically incorporates standards set by regulations such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), which include an individual's rights to be informed of any data that is being held, the right to request for their data to be deleted, and the option to opt out of having their data collected. This way, there is no need for you to keep up with the current legislation as all the necessary steps are taken care of for you.

‣ Security. No-code software providers typically have their own security teams that is responsible for ensuring the safety of their software and also providing regular updates and support.

‣ Stability

Traditionally, loyalty programs are ideal for any business with medium to high visit frequency, in terms of food and beverage especially these:

‣ Restaurants
‣ Cafes
‣ QSRs
‣ Pubs
‣ Delis

That does not mean that businesses with lower visit frequency can't profit form a loyalty scheme. Fine-dining restarants, for example, can build their loyalty programs around status, rather than collecting points and redeeming them for rewards.

In both cases, some of the key reasons why the food and beverage companies should use a loyalty platform include

Adding digital features (contactless payments, delivery, click&collect)

Base of customers, adding utility

Loyalty software can play a key role in driving digital transformation for businesses. Creating a customer base and collecting data about them through loyalty programs allows companies to better understand and engage with their customers, and thus can help businesses optimize their operations, and add digital features their customers crave.

A great example of digital transformation via loyalty is 7 Eleven. Soon after covid-19 hit, 7-Eleven redesigned its app to offer a safe and convenient shopping experience. The app now features mobile checkout and digital wallet options for a seamless checkout process

Loyalty programs differ in terms of their mechanics, such as the specific types of rewards offered or the criteria for earning them, as well as the channels used to deliver the rewards, such as email, mobile apps, or physical cards.

Most popular loyalty mechanics

‣ Earn and Burn (Points) programs. Customers earn points for making purchases or engaging with the brand, and then redeem the points for rewards (discounts, free products or other prizes). Customers typically see the rewards they can earn with their purchases, giving them incentive to carry on with collecting more points.

For example, a restaurant chain might offer customers one point for every dollar they spend in any of its venues or online. Customers could then redeem 100 points for a $10 discount on their next purchase.

‣ Coupon-based programs. A type of rewards program that provides customers with coupons or vouchers that can be redeemed for discounts or other incentives. The coupons can be earned through various actions such as making a purchase, visiting the store frequently, signing up for a mailing list or refer a friend.

For example, a restaurant might offer customers a stamp for each visit, and after a certain number of stamps, a coupon is earned which can be redeemed for a free meal or a discount on their next visit. Coupons can also be sent to a customer after signing up for the program, for first-time customers, or for reaching a certain purchase milestones.

‣ Tier programs. Customers are assigned to different tiers or levels based on their spending or engagement with the brand. As customers earn more points or engage more frequently with the brand, they move up the tiers and gain access to more exclusive rewards or perks. The idea behind this program is to encourage customers to spend more to reach higher levels and get better rewards.

For example, a coffee shop might have a tiered loyalty program with three levels: Bronze, Silver and Gold. Customers who make their first purchase become a bronze member, earn points on each purchase and will receive discounts on drinks. After reaching a certain number of points, bronze customers become Silver members, now eligible for additional rewards like a free pastry or an extra shot of espresso added for free to their coffee. After reaching another level of points, Silver customers become Gold members, who will be eligible for special promotions, free coffee on their birthday, or other perks.

‣ Paid programs. A type of rewards program where customers pay a membership fee in order to gain access to exclusive discounts, perks, or other benefits. It is often used by businesses that offer a wider range of products or services.

For example, a deli chain might offer a paid loyalty program where customers pay an annual fee to become a member. In return, members receive exclusive discounts on certain products, early access to sales or special deals, or free delivery.

This type of program allows companies to generate additional revenue through membership fees and can provide a stable source of income for businesses.

‣ Gamified programs. Incorporating elements of game design and mechanics, such as points, leaderboards, and challenges, to encourage customer engagement and to make the rewards program more fun and engaging by creating create a sense of competition and accomplishment.

For example, a fast food restaurant might offer a gamified loyalty program where customers earn points for each purchase, and can then redeem those points for discounts or free menu items. Additionally, the program could include leaderboards that show how customers stack up against other participants and challenges that encourage customers to try new menu items or to visit the restaurant more frequently. The program can also have levels, achievements, badges and bonuses that add an extra layer of engagement.

‣ Community-building programs. A rewards program that focuses on creating a sense of community and connection among customers, and often includes elements such as social media, user-generated content, and in-person events to encourage customers to engage both with the brand and with each other. The program also may have an online community or forum, where customers can interact with each other, share tips and advice, or post pictures of their purchases.

This type of program is beneficial for customers because it provides a sense of belonging and allows them to share their experiences and interests with others, and for businesses, it can generate valuable customer insights, user-generated content and word-of-mouth marketing.

‣ Cashback programs. Customers earn a percentage of their purchase price back in the form of cash or other incentives. This type of program is often used by businesses such as credit card companies, banks, retailers, and other merchants to encourage purchases using their own products or services.

For example, a credit card company might offer a cashback loyalty program where cardholders earn a certain percentage of cashback on all purchases made with the card. The rewards can be in the form of statement credits, direct deposits to a savings or checking account or even gift cards.

‣ Coalition programs. This type of rewards program that involves a group of businesses coming together to offer customers a single rewards program that they can participate in. In a coalition program, customers can earn points or rewards by making purchases or engaging with any of the participating businesses, and then redeem those rewards for discounts or other incentives at any of the participating businesses.

For example, a group of restaurants in a local shopping district might come together to create a coalition loyalty program. Customers who shop at any of the participating venues can earn points that can be used for discounts or free products at any of the participating businesses.

Many businesses select one main loyalty mechanics, i.e. points, coupons, or cashback, to structure their rewards program around. However, it's also possible to use a combination of different mechanics, creating a hybrid program that can be tailored to your brand's unique offerings and target customers.

‣ Hybrid programs. A hybrid loyalty program can provide a more diverse and engaging experience for customers, it can also help to match the brand image and create a concept that is unique and memorable.

For example, a restaurant can combine a tiered rewards program, where customers move up different levels based on their spending, with a cashback program that rewards customers for reaching certain milestones. This creates a program that rewards customers for both repeat business and larger purchases, providing a balance between immediate and long-term rewards.

Top loyalty Channels

‣ Emails. Email communication can be used to notify customers of available rewards, keep them updated on their progress, and make special offers or incentives. For example, a coffee shop might send an email to customers who have earned a free drink or a discount, or an e-commerce store might send an email with a personalized offer for a customer that has reached a certain purchase milestone.

It is a cost-effective way to communicate with customers, it allows for a high degree of targeting, personalization and automation and it can be easily integrated into existing systems. On the other hand, commercial emails typically have a low open rate.

‣ Physical cards. Physical or plastic cards as a loyalty program channel refers to using a tangible card that can used to track customer purchases and rewards, and can also be used as a form of identification for rewards redemption. The cards are presented at the register or swiped when making a purchase to earn points or redeem rewards.

They are easy to carry and can be used in-store and on the go. They can also serve as a physical reminder of the loyalty program and help create a sense of exclusivity. However, people often damage or lose them, which creates frustration when trying to recover points already collected.

‣ Mobile applications. Thanks to almost endless possibilities, mobile apps are some of the most popular loyalty channels nowadays. They are easily accessible, customers can carry them with them all the time, they allow for a high degree of personalization and automation and they provide real-time feedback to the customer.

Additionally, they can also provide the business with valuable data on customer behavior and preferences. Mobile applications also make it easy for customers to check their rewards, redeem them and can even send notifications to remind customers of rewards they haven't redeemed.

‣ Loyalty Websites. Loyalty websites, also known as rewards portals, are online platforms that allow customers to access and manage their loyalty program account information, redeem rewards and incentives, and view their transaction history. These websites are typically designed to be user-friendly and easy to navigate, and they typically provide customers with easy access to all of the features and benefits of a loyalty program, such as account balances, rewards, and program rules.

‣ Smart Wallet Cards. A form of digital loyalty card that can be stored on a customer's smartphone or other mobile device, in an electronic wallet application. They are convenient to carry and can be easily accessed using a smartphone. It also provides a valuable data insights into customer purchase behavior, enabling businesses to personalize rewards, offers and incentives. Smart wallet cards can also be connected with other marketing channels and it can increase the cross-selling and up-selling opportunities for businesses.

‣ Website widgets. Small, interactive tools that can be added to a website or online platform to provide customers with access to specific features or information. In the context of a loyalty program, website widgets can be used to provide customers with easy access to their loyalty program account information, rewards and incentives, and other program-related information.