For restaurants, and especially fast casual and quick-serve restaurants, there are three different types of loyalty programs that are the most popular and effective: Product Frequency Program, Automatic Rewards Program and Visit Frequency Program.
Product frequency program
A product frequency program is possibly the most popular loyalty program because it rewards customers for continually purchasing a specific product. his can also be referred to as a “punch program” because rewards are given after a customer earns a certain amount of punches, with a punch being given each time the specified product is purchased. All of those “Buy 10 Get 1 Free” promotions you see are product frequency programs.
This type of loyalty program works great for businesses that offer a simple menu with one item being the most popular. For example, a smoothie restaurant could easily implement a product frequency program because most of its customers come in for a smoothie, and therefore they can easily offer “buy 10 smoothies, get one free,” and it will be a reward that their customers actually want to receive and redeem.
Automatic rewards program
Automatic rewards programs are probably better know as a “points program” because customers earn a point for each dollar they spend and then are automatically given their reward once they reach a certain spending threshold. There are two different types of rewards that can be given once the threshold is met: a product reward or a dollar reward.
A product reward would be something like: Earn 100 points and receive a free dessert, whereas a dollar reward would be: Earn 100 points and get $10 off your next purchase.
Both rewards are attractive to consumers, so you just need to decide what makes the most sense for your business. If there is a product you offer that people love and would want to get for free, then offer that as the reward for earning points. If consumers often spend over $10 on a meal, then maybe you should give them the $10 off reward.
It really comes down to which is going to be easier for your business to compensate for after the coupons are redeemed. For example, do you make enough desserts to give free ones away every day? Can you afford to lose the $10 off a purchase? Once you figure out the logistics, you can easily choose which reward to offer.
Visit frequency program
The visit frequency program is almost like the product frequency and automatic rewards programs combined. ach time a customer comes to your restaurant and makes a purchase, they are given a punch/point. Then, after a certain amount of visits, they receive their reward, which can be a product reward, dollar reward, or a discount. For example, after 10 visits you can give a customer a free dessert, $10 off their next purchase, or 10 percent off their next purchase.
The main differentiator of the visit frequency program from the other two is that you get to decide the minimum dollar amount spent that qualifies as a visit. In other words, you can say that a customer must spend at least $10 in order to receive their “punch” for that visit. This helps encourage buying behavior that is more beneficial for your business. However, when deciding on this program, it’s important to set the minimum purchase amount at a reasonable level so that customers don’t get frustrated that they are never earning punches and thus feel like it’s not worth it to try and earn the reward.
Now that you have a better understanding of your options for loyalty programs, it’s time to pick one. No matter which of the three you decide on, make sure to monitor its relevancy and engagement so you can make changes if necessary. Each one has its benefits, but it is up to you to decide which is best for your business and will get you the most loyal customers.