Customer Loyalty. The Holy Grail of the hospitality industry or, in fact, of any consumer-centric industry in the world. Without it we cannot survive. To turn a customer into a regular and keep them coming back – is what we strive for the most.
“Tell me something I don’t know!” – will be the reaction of every coffee shop, restaurant, bakery, deli or bar owner in the world. Yet if we look closer, we all seem to hope customer loyalty will be a side effect, something that will happen if we serve good products with good service and in a nice venue. And I too, was completely guilty of such thinking, when I too used to run venues myself.
Well… the reality is brutal and sadly that is simply not enough. Not anymore. Good news is – it’s never been easier to make your customers stick with you. All it needs is a bit of support and the right tools.
Rewards ≠ Offers
“Then there were the tie-ins with voucher schemes, such as Groupon, which attracted fickle bargain hunters, and didn’t inspire loyalty or regular customers.”
This is a comment from Lucy who worked at Jamie’s for 5 years. Do you remember Jamie’s? The one of many restaurant brands that shut down and it was not because of Covid or rising energy costs. It was way before that! Although, the were many reasons for restaurants like Jamie’s to shut down, one of the main problems we often face as venue operators is the feeling that attracting new customers is the best way to fill up the tables and increase revenue.
Whether it is through discounts, placements on voucher apps, paying 30% commission to online delivery platforms, spending money on social media ads (to an often hardly defined audience) – we seem to put so much effort to get new customers onboard but forget that our business comes purely down to our regulars. The data shows it, research proves it and if we really think about our coffee shop, bakery or restaurant for a minute – I’m pretty sure we all know this, too.
Source: https://www.smallbizgenius.net/by-the-numbers/customer-loyalty-statistics/#gref
There is no question that instead of fighting for a new customer and incentivising them with offers, we should reward customer loyalty above anything else.
However, we must fully understand the difference between offers and rewards:
- An offer can be a good tool to upsell a particular product, time of the day, day of the week – but only for a limited period of time!
- Every offer should be tied to your CRM/database and ideally a loyalty system or membership – allowing you to measure the results, capture data so you can retarget those customers and, by using a loyalty system, invite them back to turn a one-off visitor into a regular guest.
- If offers are always there and easy to claim by anyone who happen to come across them with no effort and they have no tie to a loyalty system or membership, they will often attract voucher seekers and devalue the brand in the eyes of your regulars.
- Rewards, on the other hand, send a powerful message to your customers. They say “you are my VIPs, I appreciate you supporting my business and I will always make sure you are looked after for it”. It creates a win-win situation, a relationship built on loyalty rather than desperate efforts to get someone new through the door.
- Rewards champion spending money. Offers champion voucher seekers. By setting up a loyalty system you make a decision to give back to people who spend their precious time and money with you. Whereas by turning to constant offers, by putting deals on delivery platforms who then charge you 30% commission on top, by constantly looking for new customers, you make your business bleed and reduce your profits.
- The best businesses go the extra mile for their regulars instead. They make those people get better treatment than anyone else. This is why leading (quality-wise) airlines like British Airways spend so heavily on their loyalty scheme (BA Miles) whereas cheap airlines have to play a constant price-war to attract new customers whilst providing a much lower quality of service and product.
So, if you think about your business. What do you stand for? What do you champion? What do you seek to attract? Are fighting for success using quality or cheap prices?
If you do stand for quality and put so much effort into your service, product, branding, customer experience – make your loyalty system support all that and cement your strong relationship with your clientele that makes your business tick!
If you stand for quality, rewards will be your best partner in business.
But just rewarding isn’t enough.
Now let’s assume you are rewarding loyalty already. Whether it’s through a paper card, random act of kindness or other simple solutions that are extremely easy to use for your customers and staff.
I am also sure you are being pitched by different tech solutions and apps every week and it is difficult to assess whether going digital is the right move given not everyone is excited about technology, some don’t feel comfortable with it. Then I’m sure even more questions arise:
- How do I implement it when I am so overloaded with work?
- How will my staff react and how shall I ensure it works if my team changes so frequently in the current staffing crisis?
- Can I afford a technology solution? And what is the actual upside?
- Why change something that works?
All these questions are completely natural and correct to ask. However:
- Does your current way of rewarding (e.g. paper cards) actually work? How do you asses this if you get no data, no tools to manage and are left with not much extra value as a business. Remember that just because you see people stamping away it doesn’t always mean it works for your business and that you are getting the most out of your loyalty card.
- If those customers you reward are so key for your business, do you know how many you rely on? Do you know how many stopped visiting you in the past 30 days? Do you know how many still return but instead of visiting twice a week visit only once a week spending only half of the money as they had been spending before?
- How many of those customers can you reach out too? To upsell new products, stay in touch, update about your menu, or simply retain after they haven’t visited for a while? If there are any customers that are worth speaking to, it is people who are and were loyal to you, people who visited you before and tried your product.
Your loyalty cards should be much more than a free coffee or lunch.
Answering the questions above will help you assess if you are getting the most of your current system. And as much as we sometimes don’t like change (natural human trait!), change is what pushes us forward and makes us improve.
Life is a stormy ocean, and you are the surfer
We live in a world of constant changes, rapid developments, living costs crisis, upcoming recession – many new challenges but also many new opportunities. However, we must act fast, be disciplined about where and how we spend our money and efforts but above all – be ready that if we don’t change, don’t keep on moving, don’t take every opportunity to improve, it will be hard to survive, let alone thrive in the current environment.
A stormy ocean doesn’t wait for the surfer to start moving – it throws them waves that they can either ride on or die on.
One of those waves is technology. Tech and digital solutions are nowadays so common in our everyday life (especially after nearly two years of lockdowns) that less and less people are afraid of them or not comfortable with them. We also live in a world where you can find solutions that can really tick all your boxes as a business but also for your customers.
However, with the amount of solutions on the market, you have to choose which one will work for you. As a surfer you should never choose every single wave that comes your way but be open, listen to the ocean and pick the ones that allow you to ride on and thrive – for a long time.
Having now served close to 1,500 venues and nearly half a million people with a digital loyalty solution I would like to help you find the best solution that fits your business. Below you can find a simple checklist and questions that should be answered when making your choice:
- How simple is it to use for your customers?
Remember that not everyone will always be excited about a tech/digital solution. Even with the general digitalization of our lives, the only technology that really works in a hospitality venue is technology that is simple and takes very little time to understand and use when in a rush. If it has a long signup process, requires a lot of effort to collect a stamp, claim rewards, limits your loyalty only to pre-orders, then you will lose on customers and achieve low adoption. Whereas the more of your customers adopt it, the bigger your return and value!
- Does it give you enough data and analytics for your business?
Data is king. If you are already giving away rewards and put effort into your regulars, ensure the loyalty system gives you right away a powerful CRM where raw data is turned into summaries and analytics that are easy to draw conclusions from. So that you can understand your customers better, improve and realise bad patters before it is too late
- Can you use that data to drive business and communicate with customers with a few clicks?
As hospitality operators we are often overloaded with tasks and left with not much time. Ensure your loyalty system comes with easy and quick to use marketing tools so you can reach customers directly through multiple channels like messages, e-mails, in app upselling promotions etc. Make sure those tools are straightforward to use that you only need 10-15mins a month to utilize them.
- Is it affordable and quick to launch?
We have to act fast, and we have to act now to make loyalty count for our venues. There is no time for long integrations, implementations, and months of waiting to go live. At the same time, it is key that your loyalty system doesn’t leave you with a huge debt and upfront costs that will be difficult to make back. Ensure your loyalty and CRM system can be launched within days, without much effort from you and that the payment model is based on an affordable monthly subscription that you can turn on and off any month.
- Does your loyalty solution offer and cover walk-ins, click&collect and delivery?
It is key for your business to maximise your revenue streams and use every opportunity to make extra money. Click&collect can be a powerful way to process more transactions, server more customers during rush hours and put less pressure on your staff. At the same time, you can easily upsell products and link transactional data with customer data for better marketing. Whereas delivery is an inevitable customer journey and revenue stream that currently cost you 30% commission and provides no data and no ways to make your customers loyal to you. Ensure your loyalty system covers all those customer journeys, allows your clients to order in multiple ways to increase revenue but at the same time offer affordable commission and access to data so you can actually make profits.
THE TIME IS NOW!
Whilst I hope this post will help you asses your current solutions and strategies, as well as find the best one for you, do not hesitate to see what others in your industry do. If you are a coffee shop check what other well respected and well known coffee shops brands use to drive more customer loyalty and get their feedback. If you are already looking at some solutions on the market, ask those platforms for case studies, testimonials and brands they work with to ensure they have a strong track record. And if I can be of any help, make sure to reach out on my e-mail or LinkedIn – you will find all my details below. Let’s make loyalty count!
Frederick Szydlowski is the founder of Embargo App. Embargo work with businesses across the UK including Bold Street Coffee, Tsujiri, Gentlemen Baristas and Honi Poke to create easy, efficient and eco-friendly loyalty programmes.
frederick@embargoapp.com
https://www.linkedin.com/in/fryderyk-frederick-szydlowski-2985a775/