Jumping on the loyalty scheme bandwagon
Getting more customers through the doors more regularly who spend more money each time they do. If you can’t become a verb – a la Facebook and Google – become a brand people love and trust enough to return to over and over again. That’s the holy grail of marketing. Sounds so simple it must be complicated, no? Perhaps. But does it have to be?
Loyalty schemes have an incredibly important role in the hospitality industry. There are plenty of award-winning, revolutionary loyalty schemes out there – just think of the Nando’s card (and the infamous black card counterpart) and the My Starbucks Rewards app. They prove that when done right for the right audience, they can deliver excellent customer experience and drive revenue.
I doubt marketers go long without feeling pressured to consider and develop a ground-breaking, industry-leading loyalty solution for their brand, whether it’s a small independent coffee chain or a nationwide, branded restaurant group. And with numerous, increasingly sophisticated solutions on the market it can be a costly and intimidating field to navigate.
Before calling an emergency budget-request board meeting, could the solution lie closer to home? I’m talking about the on-site teams. Not so long ago identifying your most loyal customers lay in the hands of general managers and front-of-house staff. Relationships were built face to face, not by triggered emails, by chats at the bar and compliments to the chef, not push notifications. We’re in the business of hospitality; are sophisticated loyalty schemes driving us to lose sight of that?
With one in four UK customers eating out more due to restaurant offers (source: Worldpay, 2018), there is certainly opportunity for some operators. But I’ve been surprised by recent moves from some groups whose guests are city dwelling, affluent young professionals – investing huge proportions of their budgets in apps and membership cards. Consider the major reasons for guest visits, whether it’s a business meeting, special occasion or fuelling the Instagram feed at an “oh-my-god-you-have-to-go-there” venue, vouchers aren’t always functional, fancy or filter-friendly.
Maximum opportunity for loyalty scheme success lies in the regular purchase, high competition, close proximity segment (ie daily coffee, post-work pint). The one-to-three times a year “splurge dining” occasions will be much harder to convert – and the incentive needed to drive sign-up and redemption much larger – so are unlikely to be as conducive to regular loyalty use. More than two-thirds (68%) of all UK consumers – and a whopping 75% of Generation Y – prefer to try new places when they eat out (Worldpay, 2018). With such a nomadic customer group, incentive schemes have to be meaningful to a customer and distinctive to a brand to alter behaviour.
The average person in the UK is a member of 14.3 loyalty schemes (Deloitte, 2017). To break into the increasingly crowded loyalty-scheme market, a scheme must be easy to use and warrant its place front-of-mind for the guest. Deciding the platform on which the loyalty scheme will reside is one of the biggest decisions. Cards risk being lost or forgotten; anyway, who’s going to carry actual cards around when the world is moving to mobile? Phones don’t have unlimited memory – we’ll need to delete those loyalty apps we haven’t used in three months to download the next (insert favourite Netflix show here). So perhaps web is the answer. But hold on, who can actually remember whether or not they signed up to that loyalty scheme last year – never mind the password – or if they reconfirmed their newsletter subscription since GDPR regulations kicked in? There goes half the audience you were expecting for your exciting new summer offer e-shot. Shame.
With investment in some top-of-the-range loyalty platforms requiring six-figure sums – and costly continued subscription and retainer rates – being able to track, prove and deliver significant ROI can be a challenge. Could those budgets be reallocated “Pret-style” to teams at a fraction of the cost, empowering them to surprise and delight? Surely that could be more hashtag generating, special feeling creating and repeat visit driving, not to mention allowing the true hospitality stars of the business a little more creative freedom and ownership of guest relationships?
My most memorable, word of mouth-spreading experiences are from the team behind the bar at the pub where I grew up. Ten years later, they still recognise my face and send out a chocolate brownie on the house. Or the friendly manager of the new salad bar around the corner from the office who mistakenly asked me how myMonday was going last month and always asks for an update on “housemate-gate” when I pop in.
I’m a Starbucks gold card member – thanks to a genius flash sign-up offer in 2015 – congratulations Starbucks marketing team, I’ve retained my status ever since. I’ve also dabbled with Adventure Bar group’s online profile loyalty platform. I even have a few half-full old-fashioned stamp cards taking up valuable real estate in my purse. But as a fickle, exploratory, social media-using millennial Londoner, the appeal of being first to try the new Tel Aviv-inspired cafe in Hampstead Heath or a pop-up peanut butter fondue bar in Shoreditch I’ve seen in TimeOut will always beat getting one step further on my 20-stamp journey to a “free” 125ml glass of house wine at my favourite chain establishment. And you won’t change me, no matter how much your hand-held, eye-recognition, horoscope-based loyalty-creating device thinks it can.