Why Choose a Reward-Based Loyalty Program Over Discounts?
When it comes to loyalty programs, restaurants have a crucial decision to make – should they opt for a reward-based program or stick with the more traditional approach, be it a flat discount or paying for orders with cashback? The case of Starbucks in 2016 serves as a stark reminder of the importance of making the right choice from the start. But let’s focus on this topic and explore five compelling reasons why a reward-based loyalty program might be a better option:
Higher Perceived Value
Offering a loyalty program with a reward catalog creates a higher perceived value for the customers than any kind of discount. Discounts – especially paying for the order with cashback may feel insignificant and are quickly forgotten, whereas receiving a physical gift – an item from the menu or even the restaurant’s merchandise! – can be a solid emotional motivator, making customers feel genuinely valued and appreciated.
Reward catalogs with colorful pictures more effectively engage customers in earning points than an abstract number with a percentage. The visual appeal of mouthwatering rewards creates an emotional connection between customers and the brand, driving them to participate actively in the program and strive for exciting gifts.
Diverse and Exciting Rewards
Unlike discounts or paying with cashback, a gift catalog allows for a more varied range of prizes, making the loyalty program feel fresh and exciting. You can offer desserts and appetizers, unique branded gifts and souvenirs, and even charitable donations to keep up with the modern trends, providing customers with an array of options that spark their interest.
Maintaining Brand Value
When it comes to maintaining brand value, discount-based loyalty programs can actually end up devaluing the brand. Customers become accustomed to discounts and may want to avoid paying the total price, which can lower the brand’s perceived value. On the other hand, offering exclusive menu items in a reward catalog can enhance the brand’s exclusivity and public image, ultimately preserving its value in customers’ eyes.
Flexibility and Cost Optimization
A reward catalog allows for “micro-optimizations” in the loyalty program, enabling businesses to adjust without causing negative customer reactions. By changing the list of available gifts regularly, brands can reduce costs while keeping customers engaged and anticipating new rewards. Compare that with reducing a discount or cashback percentage.
Also, when speaking about reward catalogs, in today’s digital age, loyalty programs can be personalized to meet individual customer preferences, taking restaurant marketing to new heights. To discover more about using customer purchase history to create effective promotions, read our article “Why it’s important to base promotions on customer purchase history.“
A reward-based loyalty program is a winning strategy for restaurants aiming to boost customer engagement, enhance brand value, and ensure overall satisfaction. With a thoughtfully curated gift catalog, restaurants can offer customers exciting and valuable rewards, creating a loyalty program that attracts new guests and fosters loyalty among existing ones. This approach sets the stage for long-term success and growth in the competitive restaurant industry.