Restaurant Loyalty: Delving Into Your Hearts, Not Just Your Pockets

Customer loyalty programs are slowly weaving themselves into the identity of most food establishments. Found to boost repeat business and increase order size, these old school punch systems are simple yet effective. A 2022 annual Deloitte study found that 47% of loyalty customers use their memberships several times a month, with 32% using them several times a week. However, as customers increase their participation with these programs, loyalty isn’t necessarily increased. Most customers that belong to one loyalty program, belong to three or more, indicating an enthusiasm for the programs, but a lack of commitment to specific brands. This implies that there is a lack of true emotional attachment between customer and company outside of the benefits offered in the program.

As Aristotle’s saying goes “a friend to all is a friend to none.”

These programs have surged over the past several years in coffee shops and fast-food chains, enhancing transactionally oriented loyalty. However, 2023 looks to be a year where higher end restaurants seize experientially oriented loyalty programs, resulting in long term customer loyalty.

Brand loyalty can generally be categorized in two segments. Behavioral brand loyalty looks primarily at patterns of past purchases including repeat buying, brand share, and purchase frequency. This outlook does not take underlying consumer motivations into consideration and does not necessarily indicate the degree of loyalty towards the brand. Behavioral brand loyalty involves either spuriously loyal customers that may not feel true attachment to a brand, or customers that are unable to end a relationship with a brand without incurring substantial costs, experiencing the ‘lock-in’ effect. Attitudinal brand loyalty emphasizes a customer’s commitment to the brand and willingness to recommend it to others. This form of loyalty acknowledges positive beliefs and feelings around a brand, thus measuring whether there is intention to purchase. However, attitudinal loyalty barely captures the dynamic and evolutionary aspects of loyalty within an interactive landscape. This form lacks the ability to deepen consumer connections while shifting alongside changing brands over time.

These two segments of brand loyalty can be observed within transactionally oriented brand loyalty programs. Fairly stagnant and impersonal, transactionally oriented customer loyalty programs include accumulating points for cheaper future purchases. However, as we observe the progression towards experientially oriented loyalty programs in higher end restaurants, a more alluring form of customer loyalty will be introduced and retained. Experiential loyalty programs involve rewards that are personalized settings or features that cater to loyal customers. Experiential loyalty encapsulates both active and passive customer participation, as well as the connection that unites customers within their loyalty. Consumption choices become more heavily linked to a customer’s sense of identity, and brand communities are created. Restaurants specifically, will find increased customer loyalty by moving away from generic rewards and pursuing greater authenticity in the emotional gratification that they provide for customers.

Fast food chains have been the primary entities that have utilized and succeeded with brand loyalty programs. Starbucks, Chipotle, and TGI Fridays have all implemented relatively simple reward programs that use point tallying to honor loyal customers. Driving about 50% of its business, the Starbucks reward program has increased loyalty through several facets. The app increases order frequency, personalization, and prepayment. The surge in ‘convenience’ facilitated by the app has laid a foundation for infrequent customers to become devoted to building up points. While Starbucks and other fast-food chains have kept points-based reward programs simple, customers are increasingly willing to participate in the program as they know exactly what to expect.

These transactional-based features are immediate, highlighting the programs’ value and a customer’s increasing desire to purchase, however, they are also relatively short-term as their retention cannot be guaranteed. As higher quality restaurants begin to move into this space, emotional loyalty must be sought.

These straightforward systems have been implemented and quickly become integral to the businesses they facilitate. In the past, customer loyalty programs have focused on transactional benefits, boosting metrics like frequency, share of wallet, and check size. However, recent studies have found that restaurants should shift to “surprising and delighting guests.” This can involve the introduction of:

1. New features

2. Celebrity endorsed menus

3. Expedited VIP services

4. Personalized offers

The prioritization of rewarding customers with early or exclusive access to restaurant offerings enhances feelings of personalization. This in turn connects a customer’s identity to the restaurant, increasing both intrinsic affiliation, and feelings of community. Engaging with experientially oriented aspects of brand loyalty will align customers with the restaurant’s identity, and result in emotionally oriented loyalty.

The blueprint has now been created for short term, transactionally oriented, brand loyalty. If restaurants hope to move into this space, they need to cultivate value based, long term, devotion among their customers.

Restaurant Loyalty: Delving Into Your Hearts, Not Just Your Pockets

References

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