What’s Happening to Customer Loyalty

An Interview with Paul Rubin, Chief of Strategy, PAR Technology

What do consumers expect from loyalty programs now that was not a requirement years ago?

Loyalty programs in the restaurant industry began as highly transactional programs. Participation typically followed a model in which something of value was given away in exchange for the customer signing up for the loyalty program and then earning “free stuff” in exchange for loyalty or repeat visits. The customer would generally receive copious amounts of email advertising once signed up, but the messaging of those emails would be general in nature; such as new product introductions and the like.

Thanks to cloud technology, restaurant owners now have real-time access to loyalty program information worldwide. This access is critical for restaurant chains and enterprise management to allow customized configuration across all channels: in-store, online and on mobile devices, so that everything is streamlined for guests. Consumers now demand convenience like never before, so downloadable loyalty apps with personalized customer profiles that store behavior and order history are now critical as well.

How must loyalty programs bridge the gap between restaurants/hotels and third parties?

Strong loyalty programs will create a balance between the needs of the business and the desires of the guests. Programs that do not offer value to the customer will become obsolete, as customers will not find engagement in these types of loyalty programs. Similarly, programs that have no benefit to the business will not last either. Sources of big data statistically show that customers are willing to give their loyalty in exchange for value.

Big Data

Value does not always equate to “free.” It can also mean providing unique opportunities or providing extra convenience. Point systems tend to be the most opportune way to do this. Rewarding customers with points based on how many times they visit, the amount they spend, filling out easy surveys, or even how many new people they refer to your rewards program can all generate points to add to their customer profile. Provide your loyal guests with an easy way to access their points; either through your website, or better yet, your mobile app.

What will loyalty programs of the future look like?

Loyalty programs of the future will be built holistically around data. Data, combined with the deep learning techniques of today’s AI technology stacks foreshadows that programs of the future will adapt more quickly and be more relevant to their participants. Techniques like A/B testing enable rapid learning so that programs can be optimized for participation while at the same time offering increasing value to the business.

Why is a “one size fits all” loyalty program no longer of interest to consumers?

The more data we have on a customer — where they live, demographics, birthday, purchase history, etc. — the more the program can optimize for that customer’s preferences. While there will always be a thematic component to the marketing campaigns driven through loyalty programs, the rest of the content can be tailored for each customer to keep the program interesting and of value. This, of course, keeps the restaurant’s brand interesting and relevant for each customer.

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What should be key components of a true omni-channel loyalty program?

Building a loyalty program in an omni-channel world can be a challenge. As the omni-channel methodology encourages consumers to shop consistently across one brand, as opposed to shopping amongst various fragmented channels, businesses can struggle with how to adapt to this model. The major, key components of an omni-channel loyalty program would be to digitize the entire experience for the consumer and adopt agile software solutions that utilize big data to create a personalized shopping experience for guests.

With an omni-channel approach, businesses must tailor to each individual consumer in order to improve retention and gain long-lasting customer loyalty. Gaining valuable insight such as what drives consumer’s purchase behavior can be vital data that drives business and marketing strategies. The more seamless of an experience a business can create for its customers, the more advantages they will have over competition.

Where is the hospitality industry missing opportunity in loyalty program structures? What industries do this well?

I personally feel that the airline industry can improve in their loyalty programs and can create more value for consumers. Some airlines offer “premiere” or early boarding for preferred customers, which is genius. It costs next to nothing for the airline to offer this benefit to its loyal customers and yet it is an enormous value to the customers who have “earned” this benefit. The restaurant industry should focus less on “free food” and more on rewards that will make the experience more convenient and/or more enjoyable for their customers.

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