The Ultimate Guide to Food & Beverage Loyalty Software
Table of Contents
WHAT IS CUSTOMER LOYALTY?
Customer loyalty is an ongoing, two-sided relationship between a brand and a customer, influenced by several rational and emotional factors. The strength of a relationship is manifested by the customer's likelihood to do repeat business and engage with the particular brand over its competitors.
WHAT IS A LOYALTY PROGRAM?
Loyalty programs are structured initiatives that reward registered customers for their repeat transactions or other valued actions, such as visiting a specific location, referring friends, or sharing on social media.
This is done by providing incentives such as
· discounts,
· coupons,
· exclusive offers,
· or exclusive experiences.
The purpose of a loyalty program is to foster a deeper relationship between a brand and its members by increasing engagement, which leads to more frequent visits, higher spending, stronger brand awareness and advocacy, higher customer retention, and an increase in market share.
Another way to look at loyalty programs is through the customer's eyes: "I, the customer, will give you my attention (i.e. mindshare). I will read your content, carry your card or keep your app installed. I am making a decision to prefer your brand over other brands. In return, I expect you to treat me well, reward me for my loyalty with benefits not available to everyone and provide me with relevant content that I enjoy consuming"
WHAT IS A LOYALTY PROGRAM SOFTWARE?
Together with loyalty marketing and 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 a set of other tools to improve the program's performance. At its core, loyalty software is a database of loyalty program members, their transactions (or other participation 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 (application programming interfaces) that brands can use to create their own custom-built consumer-facing channels, like websites, mobile apps, etc.
In contrast, full-scope loyalty software suites differ by also providing 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
The 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). Sometimes, even gamification features (like contests and mini-games) are considered a separate software category.
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, and consent management.
Generally, solutions with limited depth and breadth are better suited for the largest corporations with existing, sprawling software setup and bespoke consumer-facing channels. More comprehensive suites will better cater to brands that are starting loyalty efforts from scratch, want to modernize 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 and beverage (Food & Bev), airlines, retail, eCommerce
• Target customer size: from single store to global category leaders
• Deployment mode: "On-premise", i.e. hosted on customer's hardware vs. "cloud-based", i.e. hosted in provider's or 3rd party data centers and accessed over the Internet.
As a Food and Beverage company, if you are in the market for a loyalty software solution, we would advise you 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 the form of better customer experience and huge functionality and productivity gains for you as the program operator.
WHAT IS THE HISTORY OF LOYALTY PROGRAM SOFTWARE?
Since this should be a practical guide and not a PhD thesis, here's all you really need to know:
1) The history of loyalty program software copies the break-neck development of the whole computing & software field 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 personalized offers, delivered to customer pockets via interactive programs at the right time. That, and it also made gamification legit as it is okay to play Candy Crush Saga on public transport and chase Pokemons even if you are a self-respecting adult.
3) Low-code and no-code solutions and the 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, talent and experience to leverage the potential of these tools.
On one hand, technology delivered substantial efficiency gains to loyalty program management. And 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 consistently delivered at scale without it.
WHAT ARE THE BENEFITS OF LOYALTY PROGRAM SOFTWARE FOR FOOD AND BEVERAGE INDUSTRY?
Loyalty software is the foundation of every contemporary rewards program. It provides businesses with all the necessary tools to create and run a modern, secure, flexible solution that gives superior performance today. And helps a business prepare itself for the anticipated changes in the future.
Specialized customer loyalty software solutions are becoming a preferred choice for QSRs (quick service restaurants), restaurants, and café chains, as they include additional modules like in-app orders, and digital wallets, 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.
HOW DOES LOYALTY PROGRAM SOFTWARE WORK IN THE FOOD AND BEVERAGE INDUSTRY?
Any loyalty program in principle needs to connect loyalty members with transactions (or other desired actions, like restaurant visits) and facilitate rewarding customers for this action. All modern loyalty programs also take care of content marketing and analytics.
‣ Connecting members with transactions.
Most typically, POS (point-of-sale system, also EPOS or till) will have the ability to attach a customer's loyalty number with a receipt. This can be done manually (by entering a loyalty number, phone number, or code into the POS) or automatically (when a customer uses an app or website to order, or when a customer's digital or plastic loyalty card is scanned). There are various methods of scanning - traditionally plastic cards with NFC chips or magnetic strips were used, but the advent of mobile apps and digital wallet cards required a move to scanning barcodes (like EAN13) or QR codes. Good app design, as well as proper scanning equipment, are needed to ensure reliable and smooth operation in real-life conditions (like broken phone screens and bright-lit rooms).
Alternatively, QR codes can be printed on receipts for loyalty members to scan. While this often simplifies technical integration, it creates conversion issues (easier to forget your receipt or scan it) and fraud risk (easy to scan receipts that a customer did not pay for).
Semi-manual solutions, where restaurant staff grant points (think one stamp, digital or actual, for each coffee) are also possible, especially for smaller operations. But they are prone to errors, misuse, and lack detailed and reliable data.
Alternatively, restaurants may decide to reward visits instead of, or on top of transactions. QR codes, geolocation, or Bluetooth beacon technology may be used to achieve this.
‣ Checking balance
A user-friendly interface is essential for customers to easily check their loyalty account balance. While "balance" traditionally refers to "Earn and burn" kinds of loyalty program, it can be applied to checking available coupons, progress along "challenges", number of entries in contests or number of stamps on a stamp card. This can be achieved through mobile apps, websites, or in-store kiosks. Mobile apps and websites require customers to log in with their credentials or use a unique identifier, such as an email address, phone number or card number. Once logged in, customers can view their account balance, including points earned, reward tiers, and upcoming rewards. In-store kiosks, if available, can provide balance information by scanning a customer's loyalty card or entering their phone number. Additionally, balance updates can be sent to customers via email or SMS, ensuring they stay informed about their account status and available rewards.
‣ Withdrawing rewards
Redeeming rewards should be a seamless process that encourages customers to continue participating in the loyalty program. Rewards can be redeemed through various channels, such as mobile apps, websites, or in-store transactions. Customers can choose rewards based on their point balance or tier status and apply them to their orders directly through the app or website. On-premise redemption may involve presenting a digital or physical loyalty card or providing a unique identifier, such as a phone number or code. The POS system should be integrated with the loyalty software to automatically deduct rewards from the customer's account and apply the corresponding discounts or benefits during the transaction. This brings multiple benefits, such as:
• Improved member experience
• Reduced fraud and error
• Less workload for employees
• Better and richer data
‣ Communication to customers
Effective communication with customers is vital for the success of a loyalty program. Businesses should employ a multi-channel approach to keep customers informed about their loyalty status, new promotions, and upcoming events. Email, SMS, push notifications, and in-app messages are common channels used for customer communication. Especially mobile apps offer extremely rich possibilities to showcase dynamic content - on homepage, with banners and pop-ups and as messages. Personalized content, tailored to the customer's preferences and behavior, can significantly enhance engagement and drive desired actions. Regular updates on point balance, reward availability, and special offers will keep customers interested and motivated to participate in the loyalty program. Additionally, leveraging social media channels can help create buzz around the program and attract new members.
‣ Customer support
A robust customer support system is essential for addressing any issues or inquiries customers may have about the loyalty program. This can include a dedicated support team available through phone, email, or chat, as well as an extensive FAQ section on the website or mobile app. In-app or in-store troubleshooting options can help customers resolve minor issues on their own. By offering prompt and efficient support, businesses can ensure a positive customer experience and maintain customer satisfaction, which is crucial for retaining loyal customers and fostering long-term relationships.
Customer support will benefit from a proper ticketing system to ensure all requests are addressed in a timely manner. Customer support module should also closely tied with the loyalty CRM to be able to check recent actions, balances, transactions, sometimes even mobile app version and platform (iOS or Android), to resolve any issues quickly and without asking unnecessary questions.
‣ Analytics
In-depth analytics is a critical component of any successful loyalty program, as it provides valuable insights into customer behavior, preferences, and engagement. Comprehensive loyalty software should offer a variety of analytical tools and reporting options that allow businesses to track key performance indicators (KPIs) such as customer retention, average spend, and redemption rates. Advanced data analysis can help identify customer segments, trends, and opportunities for personalized offers and promotions. By leveraging these insights, businesses can optimize their loyalty program strategies, improve customer satisfaction, and ultimately drive revenue growth. Regular reporting and ongoing analysis of program performance will enable continuous improvement and adaptation to evolving customer needs and market conditions.
WHAT ARE THE KEY FEATURES OF LOYALTY PROGRAM SOFTWARE IN THE FOOD AND BEVERAGE INDUSTRY?
The most successful loyalty programs in the food and beverage industry typically include these five essential attributes:
Versatile Loyalty Engine Supporting Various Mechanics.
Effective loyalty programs support diverse structures and incentives, such as points-based, tiered, or rewards-based systems, to promote customer engagement and loyalty. Regardless of the program's design, it must accurately associate specific customers with particular actions, such as making a purchase, opening an app, or redeeming a reward.
Comprehensive Content Management.
A unified platform should enable businesses to create, manage, and deliver diverse, visually appealing content, including personalized content, to customers. This streamlines content creation and management, enhancing customer engagement and satisfaction.
Customer Relationship Management (CRM) with Segmentation and Consent Management.
CRM functionality helps businesses collect, store, and analyze customer data, such as purchases, contact information, and program engagement. This data can be used to develop detailed customer profiles and segment customers into groups based on demographics, purchase history, and program interactions. Additionally, CRM should include consent management features, as well as handle privacy requests, such as data deletion or data access requests, ensuring compliance with data protection regulations.
Analytics.
Built-in analytics and reporting capabilities offer ready-to-use dashboards, in-depth filtering and sorting options, and the ability to create custom charts and export data as CSV or Excel files. This comprehensive approach to analytics empowers businesses to monitor key metrics and make data-driven decisions to optimize program performance.
(Optional) User-friendly Consumer-facing Channels with All-in-one Convenience.
Intuitive interfaces, including mobile applications, websites, smart wallet cards, or physical cards, allow customers to easily access and interact with the loyalty program. Solutions that offer both back-end software and consumer-facing elements provide the convenience of an all-in-one solution, but customization may be limited to what the platform supports. These solutions strike a balance between convenience and flexibility, making them an attractive option for many businesses.
ADVANTAGES OF USING LOYALTY SOFTWARE IN FOOD AND BEVERAGE, VERSUS BUILDING IT IN-HOUSE
Investing in a dedicated loyalty software solution offers several advantages over building an in-house solution for food and beverage businesses:
‣ Speed of Deployment
A pre-built loyalty software solution can be implemented quickly and efficiently, allowing businesses to launch their programs sooner and start reaping the benefits. In contrast, building a custom solution in-house often takes more time due to the development, testing, and troubleshooting phases.
‣ Expertise and Support
Loyalty software providers have specialized knowledge and experience in designing, implementing, and managing loyalty programs. This expertise ensures that businesses receive a well-crafted, effective solution. Furthermore, these providers often offer ongoing technical support, helping to address any issues that may arise throughout the program's lifecycle.
‣ Scalability and Flexibility
Dedicated loyalty software solutions are designed to accommodate a business's growth and changing needs. They offer scalability and flexibility, making it easy to expand or modify the program as the business evolves. In contrast, in-house solutions may require significant time and resources to update and scale, potentially hindering a business's ability to adapt to new opportunities or challenges.
‣ Cost-effectiveness
Using a pre-built loyalty software solution can be more cost-effective than building an in-house system, as it eliminates the need for hiring and training specialized staff, purchasing additional hardware, and dedicating resources to ongoing maintenance and updates. This allows businesses to focus their resources on other critical aspects of their operations.
‣ Stability and reliability
Loyalty software providers invest in ensuring that their platforms are stable, secure, and reliable. This commitment to quality gives businesses peace of mind and allows them to trust that their loyalty program will operate smoothly and effectively. In-house solutions, on the other hand, may require significant effort and investment to achieve the same level of stability and reliability.
‣ Ease of use
For marketing professionals, using an intuitive and user-friendly software is not only pleasant but also empowering. It encourages them to experiment with different strategies and approaches, rather than sticking to a "set and forget" mindset that is not suitable for modern loyalty programs. Easy-to-use software also allows marketing teams to accomplish tasks more efficiently, without the frustration that can accompany ad-hoc solutions or unintuitive legacy loyalty systems.
By opting for a dedicated loyalty software solution, food and beverage businesses can capitalize on the numerous advantages it offers, including speed of deployment, expert support, scalability, cost-effectiveness, stability, and ease of use. This enables them to focus on delivering exceptional customer experiences and fostering long-term customer loyalty.
WHICH TYPES OF FOOD AND BEVERAGE COMPANIES SHOULD USE LOYALTY PLATFORMS AND WHY?
Loyalty programs are particularly beneficial for food and beverage businesses with medium to high visit frequency, such as:
Restaurants
Cafes, and Delis
Quick Service Restaurants (QSRs)
Pubs and Bars
However, even businesses with lower visit frequencies, like fine-dining restaurants, can benefit from loyalty programs by focusing on status-driven rewards rather than point accumulation and redemption. For upscale establishments, a toned-down interface and discreet process of linking members with transactions would better suit their traditional, high-end atmosphere, as opposed to a flashy app and kiosk.
Food and beverage companies should consider implementing loyalty platforms for the following key reasons:
1. Improved Customer Engagement
A loyalty platform enables businesses to engage customers effectively through personalized rewards, incentives, and offers tailored to their specific preferences, as well as providing customer support to address any concerns or inquiries.
2. Increased Revenue
Offering customers rewards and incentives encourages repeat purchases, leading to higher revenue over time. Additionally, data collected through the platform can be used to identify cross-selling and up-selling opportunities and encourage cost-conscious guests to trade up.
3. Better Customer Insights
Gathering customer data through loyalty platforms provides valuable insights into customer preferences and spending patterns. Adding a "clienteling" feature allows front-of-house staff to access information about customer preferences, upcoming birthdays, and more, which enhances personalized service and, somewhat paradoxically, improves personal interactions.
4. Cost-effective Marketing
Loyalty platforms offer a more cost-effective and efficient alternative to traditional marketing methods. They enable businesses to target customers with the right message through the right channel and at the right time, such as "Hi Joe, it's lunchtime, and we'd like to invite you to check out our new menu with this great deal."
5. Increased Retention
Creating a sense of exclusivity and appreciation through loyalty programs helps keep businesses top of mind and improves customer retention. Additionally, monitoring changes in usage can predict "churn risk," and "winback offers" can be deployed to ensure customer satisfaction.
6. Enhanced Brand Awareness
Encouraging customers to interact with the brand frequently and in various ways, such as signing up for an account or making repeat purchases, increases brand visibility and familiarity. Having your brand logo and messages on customers' mobile phones is invaluable in driving up awareness and consideration.
HOW CAN LOYALTY SOFTWARE DRIVE DIGITAL TRANSFORMATION?
Loyalty software is the cornerstone of digital transformation for customer-centric businesses, as it encompasses Customer Relationship Management (CRM) and revolves around data and actions related to customers. By establishing a customer base and collecting data through loyalty programs, companies can better understand and engage with their customers, optimize operations, and implement digital features their customers desire.
Integrating digital features like contactless payments, delivery, and click & collect services streamlines the customer experience and enhances satisfaction. Loyalty software's ability to facilitate this transformation demonstrates its importance in the food and beverage industry.
A prime example of digital transformation driven by loyalty is 7-Eleven. In response to the COVID-19 pandemic, 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. This showcases how loyalty programs can play a pivotal role in facilitating digital transformation within the food and beverage industry.
WHAT KIND OF LOYALTY PROGRAMS ARE THERE?
Loyalty programs vary in terms of mechanics, rewards offered, criteria for earning rewards, and channels for delivering rewards, such as email, mobile apps, or physical cards.
Some popular loyalty program mechanics include:
‣ Earn and Burn (Points) programs
Customers earn points for making purchases or engaging with the brand, then redeem points for rewards. For example, a restaurant chain might offer customers one point for every dollar they spend in any of its venues or online, and customers could redeem 100 points for a $10 discount on their next purchase. Starbucks® Rewards is an example of a points-based program.
‣ Coupon-based Programs
Customers receive coupons or vouchers earned through various actions like making purchases, visiting the store frequently, signing up for a mailing list, or referring 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.
‣ Tier Programs
Customers are assigned to different tiers based on their spending or engagement with the brand. As customers earn more points or engage more frequently, they move up tiers and gain access to more exclusive rewards or perks. For example, a coffee shop might have a tiered loyalty program with three levels: Bronze, Silver, and Gold, where customers earn points and receive discounts or other perks as they progress through the tiers. Sephora's Beauty Insider program is an example of a tiered program.
‣ Paid Programs
Customers pay a membership fee to access exclusive discounts, perks, or other benefits. For example, a deli chain might offer a paid loyalty program where customers pay an annual fee to become a member and, in return, receive exclusive discounts on certain products, early access to sales or special deals, or free delivery. Kroger's Boost program is an example of a paid program.
‣ Gamified Programs
These programs incorporate game design elements, such as points, leaderboards, and challenges, to encourage customer engagement and 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 redeem points for discounts or free menu items, with leaderboards and challenges to encourage additional engagement.
‣ Community-building Programs
Focusing on creating a sense of community and connection among customers, these programs often include elements like social media, user-generated content, and in-person events to encourage engagement with the brand and other customers. These programs may have an online community or forum where customers can interact with each other, share tips and advice, or post pictures of their purchases.
‣ Cashback Programs
Customers earn a percentage of their purchase price back in the form of cash or other incentives. 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, with rewards in the form of statement credits, direct deposits to a savings or checking account, or gift cards.
‣ Coalition Programs
These rewards programs involve a group of businesses coming together to offer customers a single rewards 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 participating business. For example, a group of restaurants in a local shopping district might create a coalition loyalty program where customers earn points redeemable at any participating venue.
Many businesses select one main loyalty mechanic, such as 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 while also helping 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.
WHAT ARE THE MOST POPULAR LOYALTY PROGRAM CHANNELS?
Understanding various loyalty channels is essential for a successful loyalty program. Here are some popular channels businesses use to engage customers:
‣ Emails
Email communication is a cost-effective method for notifying customers of available rewards, updating them on their progress, and offering special incentives. For example, a restaurant chain may inform customers about reaching a new tier or the upcoming end of a premium paid membership. Despite its advantages, commercial emails typically have low open rates.
‣ Text Messages
Text messages, or SMS, can be a very effective marketing channel with high open and read rates. However, they are substantially more expensive (roughly 2-10c per message per customer) and can be seen as more personal and potentially intrusive. Therefore, SMS should be used in cases where customers will likely feel the information was worth receiving through this high engagement channel, not for blast marketing.
‣ Physical Cards
Physical cards track customer purchases and rewards, serving as identification for reward redemption. They are easy to carry, act as a constant reminder of the loyalty program, and can create a sense of exclusivity. Customers often lose or damage them, leading to frustration when trying to recover collected points, or forget the card and miss out on points or rewards. Backup mechanisms should be in place. Cards can have active features besides the customer number, barcode, or QR code, such as magnetic strips or NFC chips for added capabilities.
‣ Mobile Applications
Mobile apps are popular loyalty channels due to their accessibility, personalization, and real-time feedback. They also provide businesses with valuable data on customer behavior and preferences, allowing for targeted rewards and offers. Mobile apps can also have many other relevant features like lists and maps of venues, online ordering and payment, and customer support access. Mobile apps are a high engagement channel and should be used by high engagement brands or in combination with other channels catering to the "long tail" of less-engaged customers.
‣ Loyalty Websites
Loyalty websites, also known as rewards portals, provide customers with an easy-to-navigate interface for managing their loyalty program accounts, redeeming rewards, and viewing transaction history. These websites should be responsive to display well on mobile phones, offering a channel that provides a full experience almost as rich as mobile apps.
‣ Smart Wallet Cards
Stored in mobile wallet applications provided by Apple iPhone or Google Android phones, smart wallet cards display basic information about the member, including point balance, tier, or stamp card progress, as well as information and links on the "back side" of the card. Smart wallet cards can also receive push notifications.
‣ Website Widgets
Website widgets can be placed on existing restaurant websites to offer a seamless way for customers to sign up for rewards and quickly check their status or redeem rewards. They typically require a minor adjustment to a website by placing a short JavaScript code. These widgets provide customers with easy access to their loyalty program account information, rewards, and incentives, and other program-related information.
In conclusion, adopting an omnichannel approach for your loyalty program can significantly enhance customer engagement and satisfaction. By enabling customers to interact with your brand through multiple touchpoints, such as in-store, online, wallet card, or mobile app, you can offer a seamless and personalized experience. This ensures that both highly engaged customers and less enthusiastic ones have the opportunity to participate in your program as your relationship evolves over time. Ultimately, this fosters loyalty and drives long-term business success.
METRICS TO MEASURE LOYALTY PROGRAM SUCCESS
Understanding the success of a loyalty program is crucial for businesses to make informed decisions and adjustments. However, quantifying the impact of a loyalty program is notoriously hard, especially in brick-and-mortar businesses, because unlike in e-commerce, there is no hard data on the baseline. Being able to measure the impact is already a significant achievement. There are several key metrics to track, focusing on both customer acquisition and retention.
CUSTOMER ACQUISITION METRICS
Customer acquisition measures how effectively a business attracts new customers through its loyalty program.
‣ Enrollment Rate
The enrollment rate is a key factor in measuring the initial success of a program. The goal of any loyalty program is to excite as many people as possible, making them sign up for the program. The simpler the enrollment process, the fewer people hesitate to join the club.
‣ Activation Rate
This metric assesses whether the loyalty program incentivizes customers enough to start using its benefits right after they have registered. A shorter time frame for the first use of the program suggests that the customer is highly motivated and engaged, while a longer time frame may indicate losing interest once signed up. This metric can also help businesses identify areas where they can improve their onboarding process or provide more information/incentives about the program to encourage customers to start using it more quickly.
‣ First Use Rate
Deemed by many as a critical metric, the first use rate focuses on converting customers from registration to first using the program, such as receiving their first points and first reward. This metric shows customers how easy and rewarding it is to participate and starts building a habit.
CUSTOMER RETENTION METRICS
‣ Repeat Conversion Rate
A high repeat conversion rate indicates that customers are satisfied with the rewards or incentives offered by the program and are likely to continue participating in it. A low repeat conversion rate signals that the incentives are not enough, or that there is some other problem causing members to churn.
‣ Average Spend Per Member
This metric measures the amount of money that each member of the loyalty program spends on average over a certain period of time. It is relevant to compare this over time, across segments, and versus non-members. It is used to evaluate the effectiveness of loyalty program campaigns, understand the revenue potential of the program, and possibly help set up incentives and rewards for the customer to spend more, such as tiered rewards systems for higher spenders.
‣ Lifetime Value of the Program
Lifetime Value (LTV) refers to the total monetary value that a customer is expected to generate for a business over their entire lifetime as a member of the loyalty program. It is used to measure the overall effectiveness of a loyalty program in terms of generating long-term revenue and profits. It also informs the ROI (return on investment) of marketing spend to attract new customers. LTV is often based on forward-looking assumptions that need to be tweaked as real-life data is collected.
‣ Percentage of Sales from Loyalty Members
This metric defines the proportion of total sales generated by the existing member base. It can be examined in two ways: either as the percentage of revenue contributed by loyalty program members or as the share of transactions with loyalty program activity attached. Both approaches are relevant and provide valuable insights into the effectiveness of the loyalty program and its impact on sales.
‣ Customer Retention Rate
The customer retention rate measures the percentage of customers who continue to be active members of the program over a given period of time. A high customer retention rate indicates that the loyalty program is effectively engaging and retaining customers, while a low retention rate suggests that there may be issues with the program that need to be addressed. By tracking this metric, businesses can identify areas for improvement and make the necessary changes to keep their customers engaged and loyal.
‣ Incremental Margin
Incremental margin evaluates the effectiveness of a loyalty program in driving profit growth by identifying the additional profit generated by members of the program. By analyzing this metric over time, a business can determine if the program is delivering a positive return on investment and whether any changes are needed to improve the program's performance.
Discover How Different Generations View Food and Beverage Loyalty Programs
Generations have unique perspectives, shaping their worldviews and loyalty expectations. To create successful loyalty programs, it’s crucial to understand these differences.
Dive into our ebook, “Building Customer Loyalty Across Generations,” and learn how to tailor loyalty strategies to various age groups.
What do I need to run a modern loyalty program?
There are three components to successful modern loyalty. Well-fitting concept, Technology stack to operate the concept, and ongoing execution of marketing and on-premise. To succeed, you should consult the concept with experts, employees, and customers, select a future-proof all-in-one tech solution, and focus on ongoing execution to deliver outstanding results.
Is my hospitality business the right size to support a modern loyalty program?
There are solutions for each size of business. Single-venue operations or small chains with up to about 5 outlets should consider a simple set-and-forget solution, unless they can commit resources to set up and operate a program. Mid-sized chains, large multibrand gastronomy groups, and operations with hundreds of venues should definitely invest in developing and operating a modern program.
Is Loyalty Program Software complicated to use?
Though it is rich in features, the loyalty program software is typically designed to be easy-to-use, with intuitive and streamlined user interfaces and in-depth user guides available.
Does Loyalty Program Software require a large internal team?
Using the loyalty program software minimizes the need for IT involvement. Once the required integrations into all existing systems are taken care of, marketers can fully concentrate on creating engaging content, while the software provider ensures that the tech works.
How do I find the right Loyalty Program Software?
When searching for the right loyalty program software, it is helpful to have at least a basic idea of what you're trying to achieve with your loyalty program, and how the software can help you achieve it. Some of the most important factors to discuss further with potential providers include:
• Features: Consider the specific features that are important to your business and make sure the software you are considering offers those features.
• Scalability: Make sure the software can grow with your business and can accommodate an increasing number of customers and transactions.
• Integration: Check if the software can integrate with other systems you already use like your e-commerce platform, POS system, and CRM.
• Customer support: Look for a software provider that offers excellent customer support, so you can get help when you need it.
• Cost: Compare the cost of different software options and make sure they fit within your budget.
• Feedback: Look for testimonials and reviews of the software from other businesses to get a sense of how well it works and whether it meets their needs.
• Security: Make sure the software provider has robust security measures in place to protect your customer data.
Which Loyalty Program Software is ideal for the Food and Beverage industry?
The ideal loyalty program software for the Food and Beverage industry is one that meets the following criteria:
• Proven industry experience: Choose a provider with a successful track record in the hospitality sector to ensure that they understand the unique needs of your business.
• Comprehensive features: Look for software that includes all the features typically required by hospitality loyalty programs, such as customizable reward structures, tiered memberships, and easy redemption options.
• All-in-one solution: Opt for a provider that offers a complete solution, covering both back-office operations and consumer-facing capabilities, to avoid the complexity of developing and managing separate systems.
How long does it take to implement Loyalty Program Software?
The length of time it takes to implement loyalty program software can vary depending on a number of factors, including the complexity of the software, the size of your business, and how well the software integrates with existing systems. Typically, a loyalty program can be launched within 1-6 months.
How much does Loyalty Program Software cost?
The total price of a loyalty program software typically consists of: A one-time setup fee to cover the initial costs, ranging from a few hundred to $20,000. A monthly/annual subscription fee for the access to loyalty program software, with costs ranging from around $100 to several thousand dollars per month.
