How to reward loyalty without going broke

Rewarding loyalty is important, but don’t go broke doing it. Image: Wavebreak Media Ltd

While many businesses are still finding their way in the pandemic, it’s a good time to consolidate what you have—loyal customers. But how do you keep them happy when those margins are still razor thin? By Sue Nelson

Your regular customers not only keep your business sustainable because of the guarantee of their continued custom—they are your brand ambassadors. They will generate interest in your business through word of mouth, which in turn creates that indefinable buzz about your restaurant that really drives growth. This is especially important when you’re trying to rebuild following leaner times.

A dessert or a discount on a customer’s birthday or anniversary is a personalised way of thanking them for their loyalty and making them feel special, and these date-based rewards are easy to record thanks to social media and membership databases. 

Social media also allows you to tailor early bird or special group discounts linked to posts you publish. This makes your online community feel like insiders. 

Thoughtful rewards go further than a stamped loyalty card—and often result in a greater spend from the customer. “It’s about knowing your market so that you can build appropriate rewards-based programs that retain customers,” says Andrew Spring, a consultant who has helped many restaurants over his 20-year career. 

Make sure you can afford it

Make sure you know what your numbers are, and how they fit into your plan while your margin stays intact. It’s okay to keep a customer loyalty going during tougher times—you just have to budget for it. 

Loyal customers don’t need to be advertised to, so it makes sense to cut that advertising spend if you’re more interested in consolidating and retaining your current customer base. 

“Think about your advertising and promotional budget, which should include an expense for brand loyalty and customer retention,” says Spring.

“If it doesn’t, is there some room to cut what you spend on getting new customers through the door in favour of retaining the loyal customers? These numbers need to be balanced.” 

You can also shave a fair bit off your marketing budget by going online. You save on design and printing costs by mastering electronic communications and social media and reach more of your valued community in this way. 

No such thing as a free lunch

Obviously, a scattergun approach to giveaways and freebies for regulars is not going to keep your business afloat for long. Restaurant advisor and author of More Bums On Seats, Howard Tinker says strategies to encourage custom at quieter times are vital, and that you shouldn’t be blasting out each and every offer you can think of. 

“A lot of people were burnt quite badly by the daily email deal offers that were all the rage a few years ago,” Tinker says. “Some deals simply remove too much revenue from the equation, making it impossible for the restaurant to make any money no matter how many people come through the door.

“Whatever you do, it all has to begin with a strong database. If you don’t tell people about the offer, they’re obviously not going to show up. You need that database first of all. Then the delivery of the offer simply becomes a part of the overall strategy.”

Tinker quotes endless examples of restaurants that have turned quiet times into profit. Pilu at Freshwater, for example, turned lunchtimes into booming business when they developed and marketed to a database of 14,000 their ‘Tour of Italy’ lunches. Nowadays their ‘Literary’ events throughout the year attract authors and readers alike to what would be a traditionally quiet time of the week.

Make them feel they’re getting a good deal

Customers like a good deal, but they also like to feel they’re part of a special club. The managers of The Meat and Wine Company restaurant in Darling Harbour developed a different style of loyalty programme. Rewarding customers who are becoming serial diners at the restaurant, the VIP programme is an incentive for people to come back. Benefits include a 10% discount off all bills, preferential seating, invitations to wine tastings and a personalised steak knife for use at each visit to the restaurant. 

The programme has become so popular that there is now a waiting list on the knives, of which only 100 were issued with another 10 to be issued each year. 

Don’t take customers’ loyalty for granted

Make sure your standard offering is as good as your long-term customers remember from their first visit. They’re the ones who will notice the gap between how a dish used to be made, or how big the servings were, and how things are now. 

“The best way to keep customers coming back is to ensure that what you’re offering is always of a high standard,” Spring says. “People won’t come back for a free coffee if the coffee isn’t worth coming back for.”