How To Build The Right Loyalty Program For Your Small Business?

Customer Loyalty is one of the most desirable traits for any kind of business, be it small scale or huge conglomerates. It is observed that most big companies focus on acquiring and diversifying their customer base since they are confident that their product popularity and aggressive advertising campaign can help sustain their customer base.

This formula is not very effective and sustainable in the case of small-scale businesses, especially small-scale restaurant businesses. Studies have shown that it is much more expensive to attract new customers than to keep an existing one. 

Hence, small businesses have to focus more on their quality and not run after the quantity of their customer base. An organically developed customer base loyal to the restaurant can be one of the main reasons for its success and sustenance.

Further, in the article, we will try to understand better the different loyalty programs for small businesses, what they are and how to successfully implement them, and also discuss specific loyalty programs which small restaurants can use to improve and sustain customer loyalty.

What is a Customer Loyalty Program?

A customer loyalty program is a tactic that is used by most businesses to reward repeat customers by providing them with certain incentives and perks. It is mainly done to encourage the customers to buy or visit regularly.

Small restaurant businesses are mostly run on a shoestring budget. It hinders their outreach potential since the advertising budget is very limited, and they eventually get overshadowed by large, more popular restaurant chains.

In this context, a well-thought-out customer loyalty program can make it profitable and successful and better compete with its financially superior counterparts. There are numerous customer loyalty programs, but choosing the right one with proper deliberation and research will benefit the restaurant business in the long run.

The restaurant needs first to understand the following things:

• The kind of customers the restaurant generally attracts
• The average demographic
• The type of food they order typically
• The amount of money they spend during each visit
• The amount of time they spend in the restaurant

It is extremely vital information as it can allow the restaurant to develop a correct loyalty program that will cater to the customers, reward returning customers, and eventually increase engagement.

Since it is a small business we are talking about, it should also be noted that a well-thought-out budget must be allocated to the customer loyalty program. In some cases, mismanagement and a lack of foresight can spiral the loyalty program into spending more money than it should earn for the restaurant. Here’s how to reward loyal customers.

How Can You Design Loyalty Program For Your Restaurant Business?

Customer Loyalty Points Program        

A reward point system for customers is one of the most basic and popular types of customer loyalty programs. In this program, customers who visit the restaurant can earn certain points accumulated on business loyalty cards. Customers can then redeem these points to avail of certain complimentary meals and discounts on future food bills. 

This loyalty point system can also be helpful for the restaurant, meaning it can offer certain non-popular food items on its menu. For example, if a particular dish is new on the menu and the customers are hesitant to try it, the loyalty point system can be used to push out this dish. It is a free dish for the customers, and for the restaurant, it can help them get feedback to improve their dish further.

A Streamlined Customer Service System For Better Loyalty

It is a free loyalty program for small businesses. Not all loyalty programs have to have some sort of monetary value to appeal to the customers. Studies have shown that restaurant customers are much more concerned about the restaurant's ambiance and service, which heavily influences their decision if they are to revisit the restaurant. 

In this regard, it is extremely important to understand the type of customers who frequent the restaurant and to adjust the ambiance and service to cater to their demographic. Stand-up comedy shows or live music performances significantly add to the restaurant's ambiance, which can attract new and old customers. Moreover, you can offer your customers special discounts on visiting on event days.

Digital Loyalty Program and Subscription Programs

Although dedicated mobile loyalty programs for small businesses may seem like a bit of an overkill but to better cater to the modern generation if you create a loyalty program app. The restaurant can push out notifications regarding deals and discounts when they have a customer loyalty program app. The app can also have delivery options; hence, customers can order food directly through the digital app, whether online or at your restaurant. The restaurant can also use several third-party rewards programs by partnering with other vendors and services.

The restaurant can also offer certain subscription plans via the app, with certain tiers, namely gold, silver, and bronze. The different tiers can offer certain perks to the regularly subscribing customers, like discounts, no-cost delivery, etc. It is an ingenious way to ensure that customers visit the restaurant regularly.

Reference-Based Customer Loyalty Programs

A reference-based program is popular amongst restaurant businesses.

For small-scale restaurants, it can be beneficial as small restaurants do not have much advertisement revenue available. The word-of-mouth recommendations can be beneficial.  If the restaurant can somehow incentivize this reference system, it can be a win-win for both the customer and the restaurant.

In this regard, the restaurants can offer certain discounts or free meals to customers who recommend the restaurant to other people.   

Local Community-Based Programs

As mentioned earlier, not all incentives need to be monetary to better connect with the community. It gives restaurant owners a cue to offer a local loyalty program. For example, if the restaurant wants to provide live music options, they can try to hire local musicians. It can allow the business to better connect with the local community and increase word-of-mouth footfall.

Another way to better connect with the local community is to procure local produce, meaning a restaurant can buy ingredients from local shops. It can be very useful for the restaurant as local ingredients can be cheaper while helping establish a customer connection. You can even offer such recipes free to your customers initially.

The Benefits Should Be Valuable

To retain customers and get the best out of the loyalty programs, the restaurant must ensure that the loyalty points offered have some value attached. The restaurant owners must understand that if the customer is making an effort to enroll in their loyalty program, it must be worth their time and effort. A lot of businesses offer superfluous loyalty benefits to their customers. It can be very harmful to the image of the business.

You can also use business loyalty cards for your regular customers. These cards can have the restaurant branding and help customers spend the loyalty points when they visit the restaurant in the future.

Conclusion

A well-thought-out loyalty program can benefit restaurants and small businesses by attracting new customers and incentivizing older customers to return.

But before setting up any such program, the business owners must know their target customers and what they want to achieve from the loyalty program. The business owners must understand what the customers want, their habits, spending potential, etc., and design the program accordingly to get maximum benefit mutually.

The business owners must also ensure that the loyalty program is well aligned with the product they are offering. They must be flexible and must optimize these programs according to the market circumstances to get the best results from these programs.