How to Improve Customer Loyalty in Your Restaurant

Gaining new customers can cost up to five times as much as keeping current ones, so creating customer loyalty is crucial to your restaurant’s bottom line. But repeat customers are more than just their purchases— they are ambassadors for your brand, helping you grow your customer base through word of mouth.

Why customer loyalty is important

Customer loyalty stems from the relationship a guest has with your restaurant. Through a series of positive experiences that includes quality service, a great product and a loyalty program that includes perks and rewards, you can create repeat customers who will spend more money at your restaurant over time. While, on average, about 20 percent of your customers will be considered loyal, or repeat customers, they will account for about 80 percent of your total revenue. 

Keep reading to learn how to create a customer loyalty program and other tips on turning new customers into VIPs.

Creating a customer loyalty program for your restaurant 

Choose a digital restaurant loyalty program

The most successful customer loyalty programs for restaurants are simple both for customers to use and for staff to implement. These days, that means going with a digital customer loyalty program; it’s best to stay away from anything that requires your guests to bring in a physical item like a punch card, for a few reasons.

• If a guest leaves your restaurant’s loyalty card at home, they may decide to go somewhere else
• Damaged or lost cards have to be replaced, costing you money and frustrating guests who have essentially lost their earned points
• Paper cards don’t provide data, so you’ll have no data on insights like what your best customers order, how often they come in or what keeps them coming back

Most importantly: Keep it simple! No one is going to want to be a part of a restaurant loyalty program that has a laundry list of rules, regulations and stipulations. Set up your rewards program so that any guest visiting at any time can redeem their points in the same way as everyone else.

Train staff on your customer loyalty program

Be sure each server has been trained to ask guests if they are a loyalty program member when they deliver the bill, and how to respond when the guest’s answer is “no.” For example, having an incentive for new members to sign up right then and there, like 10% off that bill they’re about to pay, will help get a “yes.”

When it comes to redeeming rewards, make sure everyone on staff is fully aware of how to redeem and enter them into the restaurant POS. The last thing you want on a busy night is three servers crowded around a terminal trying to figure out a discount code or, even worse, an upset customer who can’t redeem their hard-earned rewards.

Give guests FOMO

How will anyone know what they’re missing out on by not being a member of your restaurant’s loyalty program if they don’t know about it? Tap into their FOMO (fear of missing out) by showing them exactly what they’re missing.

Promote those tasty rewards on your social media accounts, website and to your email list to entice customers to sign up for the program. Who wouldn’t want to hit the “enroll” button when they see the image of a delicious (and potentially free) meal? You can also host special loyalty members-only events at your restaurant and share the fun live on social media.

Promote your restaurant’s customer loyalty program everywhere

In addition to promoting the benefits of being a loyalty program member online, take measures to promote the program in other places as well to cover as much ground as possible.

• Create table tents so guests can read the membership benefits while sitting in your restaurant
• Implement a referral reward for current members who refer a new person to the customer loyalty program
• Cross-promote your program with another local business or influencer

3 ways to measure the success of your customer loyalty program

Measuring the impact of your loyalty program is an important way to understand your return on investment (ROI) and if you need to make changes in the program in order to increase loyalty. Here are the helpful analytics you should be looking at:

1. Customer retention rate

As your loyalty program picks up members, those members should be returning, essentially, fulfilling the “loyalty” part of the program. Compare numbers like the sales over time of non-members and members and the rate of return for each group to see if the data trends in the right direction.

2. Negative churn

Churn is the rate at which guests stop visiting your restaurant so, to create negative churn, set up markers to measure when guests become more invested in your restaurant. Tracking when loyalty members start returning more often, spending more in a single visit and participating in more events or higher-priced services and products are all ways to assess whether the program is working.

3. Net promoter score

This score is calculated by subtracting the percentage of guests that would not recommend your restaurant from the percentage of those who would. Using surveys is a clear-cut way to do the math here, but there are other less formal ways you can use the same principle to get helpful data. You could look at the percentage of positive vs. negative social media comments, for example. Even Yelp reviews could be a way to assess a “score.”

Understand that customer loyalty is more than a rewards program

While it’s important to have a restaurant loyalty rewards program in place, your customers also want to feel like their business is valuable and that they matter to you. That goes beyond points and discounts, which you can show in different ways.

• Get to know your regulars. Nothing makes guests feel more welcomed than when a server remembers their name or (even better) their favorite dish.
• Celebrate your guests. Even if a guest is not a member of your loyalty program, make the most of any data available to you by surprising them with a birthday or anniversary treat, sending them an offer for their most-ordered dish or reserving their favorite table for them.
• Engage on social media by sharing photos that guests have tagged you in and replying to every comment and message.
• Be transparent with your guests when things go wrong. Don’t sweep major issues under the rug as if they didn’t happen—acknowledge the issue and communicate your plan to avoid future mistakes.

Looking to turn more guests into regulars with the best restaurant loyalty program? With Lightspeed’s restaurant loyalty program, the guest’s credit card serves as the loyalty card so it’s less expensive on your end and less hassle for the guests, increasing the chances for them to sign up and stay with it.