A loyalty or customer rewards program allows restaurateurs to track customer purchases by offering them discounts or free gifts.
The tracking could include number of visits, amount of purchases over a period of time or a combination of these or other measurable concepts. There are many different ways to offer a loyalty program with the simplest being a punch card. You can also use proofs of purchase, peel-off cards, scratch-off cards, receipts, gift cards, loyalty cards, etc.
Loyalty programs can be as simple as a “buy 10 pizza buffets get one free” that some local Pizza Hut franchises use to increase lunch business. They add to this by offering a double punch on Mondays bringing in additional lunch business on a typically slow day. Loyalty programs can be as sophisticated as you acting as a partner with hotels, airlines and movie theaters. Here’s PMQ’s explanation of different types of loyalty programs and how to use them in your business.
Reward loyalty. Focus your marketing energies and dollars on building loyalty with your existing customers. Statistics find that it may cost you as much as ten times more in obtaining a new customer than to retain an existing one. Continually couponing and deep discounting create loyalty, but the customer is inadvertently tied to the discount rather than to the service or product. For the best results, your incentives should entice customers to spend more and spend often.
Craig Douglas, owner of Pizza Joe’s in Willoughby, Ohio, plans on starting a loyalty program with the beginning of NFL football. It will be a Cleveland Browns fan program because the shop located in a suburb of Cleveland. For the 17 weeks of football season, anyone who orders pizza on Sunday will receive a card with his or her order. “If someone orders 10 of the 17 weeks, we will give them a sheet pizza for their Super Bowl party,” Craig says. Craig’s wife, who has a degree in graphic design, designed the cards to save them money.
Craig already has a great customer rewards program in place. “We call it ‘Free Food Fridays,’” Craig says. “We randomly pick one of our customers and call them on Friday afternoon to tell them they’ve been selected to receive $15 in free food. We tell them to contact two friends or neighbors for the same deal. We’ve gotten many new and regular customers. It rewards our customers and gets them talking about our pizza with their neighbors.”
PMQ Think-Tanker Phil Evans, owner of Pizza Serena in Kent, Ohio, uses this inexpensive loyalty device a little differently. Customers get their card punched for every $10 they spend. They never punch cards on delivery orders. This helps to minimize “punch card fraud.” There are only five punches on the card. When completed the card is good for a free 10-inch pizza or any sub on the menu. Customers can turn in two cards for a free large pizza, and three cards for a free “Full Sheet Pizza.”
“Because I punch the cards in increments, $12 is one punch, just like $15 is only one punch. The average completed card has ‘generated’ close to $75 or $80 in sales. For that I give away a free 10-inch pizza. I staple all the completed cards above my counter. This shows customers that people really do get free stuff. I will never stop using this marketing tool!”
Incremental punch cards provide customers with instant gratification. Wondering how to develop an incremental card? Here’s an example of what your offers should look like:
- First visit—Get the card.
- Second visit—10 percent discount.
- Third visit—15 percent discount.
Designate a stopping point and reward them with 50 percent off or a free pizza.
A variation of the punch card is a stamp program. The customer affixes stamps to the card with each qualified purchase. This can be time-consuming and messy. A better option is a peel-off offer card that can introduce customers to other menu items. Pass the loyalty cards out at grand openings, in catering boxes and to good customers. Give them offers like get a free drink or a free appetizer a large pizza purchase. They try new items they might not have ordered before.
A free-for-you spin-off of the punch card is collecting proofs of purchase. Scott Anthony, owner of Fox’s Pizza Den in Punxsutawney, Pennsylvania, uses proofs to give customers free merchandise. Customers get the following when they redeem proofs:
- One Proof – Fox’s Pen
- Two Proofs—Fox’s Softer Saucer
- Three Proofs—Fox’s Memo Board
- Four Proofs—Fox’s Travel Mug
- Five Proofs—Fox’s T-Shirt
- 20 Proofs—Big Daddy Pizza
Big Dave used scratch off cards in his pizzeria. He says they were very effective, especially for delivery. His only tip: make sure drivers have the prizes like soda in their cars for instant winners.
Dale Roberts, owner of Blackjack Pizza in Boulder, Colorado plays off the scratch-off cards by having his drivers carry personal business cards with their names on one side on the other side is a “special” or $1.50 off any order. “This lets them connect with the customers, and makes the customers feel extra special, too.”
SWIPE LOYALTY CARDS
Another type of loyalty card can be used in much the same way as a gift card, often times through your POS system or credit card terminal. These come in several shapes and sizes ranging from a bar-coded key tag to the traditional wallet-sized plastic card. Here’s a quick explanation of each type of swipe card loyalty program. The swipe card operates on a points system. Each purchase a customer makes gives them a number of points which will accrue and may be redeemed for merchandise, cash, rebates or free food.
Cardholders automatically receive a reward when they reach a certain number of points. They can get rewards like free pizza, a discount, or free merchandise such as key chains or hats.
You can also add cash rebates to the card. This means that cash value is stored on the card instantly when the customer obtains a certain number of points. When the customer is ready to use their reward, the loyalty card acts as a gift card. The customer pays with the cash accumulated on their loyalty card.
Printed vouchers are another type of instant reward. These are given to customers once they’ve reached a specified number of points. Their reward prints on the receipt. The printed voucher is a great way to cross-market with other businesses. The voucher program might work where the pizza guy wants to start a program with a complimentary but non-competing business in the community. Maybe there’s a movie theatre across the street, or a bookstore, and it can automatically print out a voucher that says, “Congratulations you get two tickets to a movie at (local) Theater.” You can put exclusions on the voucher like “Not valid for Friday nights.”
The graduated customer reward program allows customers to save points until they want to cash them in. Reward points are only subtracted when the customer wants to use them. A popular variation of this program is the rebate program. We live in an instant gratification society; customers don’t want to wait. If someone walks into your store and spends $20, the system will take say 10 percent of that and put it back on their card as cash. The customer gets two dollars back on the card as cash. It can continue accruing. They can opt to use it right away let it accrue to something more significant.
OTHER LOYALTY PROGRAMS
Achievement Awards for Kids—Partner with teachers and schools. If the kid gets an A, the teacher will give them a certificate that says, “Hey, you’ve done exceptional work.” The teacher signs it, and the kid gets a free meal. Who’s going to take the kid to the restaurant but the parents? They’re going to eat as well. It’s a great reward for the kids and special recognition creates loyalty. You may also want to partner with churches and soccer or baseball leagues. Give achievement awards to kids who learn Bible verses. Film soccer or baseball games and invite the team back to your shop to see it. Put up pictures of kids who excelled in school or activities.
Birthday Club—Send a postcard with a loyalty card attached to your customers on their birthday. Put more than one offer on it. The customer will hang onto it for a month or two after their birthday. Check out PMQ’s previous coverage of this type of program at http://pmq.com/mag/2002fall/ games.shtml.
Beer Club—Old Chicago Pizza, has had a beer club loyalty program in place for over 20 years. They developed the World Beer Tour in the mid-80s. The tour features 110 beers from around the world. Customers are given incentives to try each beer. The tour is free and customers are not required to finish it. Customers are given prizes as they reach certain milestones on the tour.
Old Chicago uses the program as a way to contact customers electronically. The tour is a tool for franchisees, not just to gain new customers, but also to send them marketing materials. They are able to tell them about promotions. “These programs are a big draw for potential franchisees,” Buck Warfield, director of the tour, says, noting that there are currently more than 480,000 active World Beer Tour participants in the United States. “The World Beer Tour gives them instant access to a customer base that they would not otherwise have. It is a highly effective marketing tool that franchisees have found to be extremely helpful in developing a presence in their local communities.”
This program also allows the company to have a high volume of beer sales. Sixty percent of Old Chicago’s beverage sales are beer. This marks an average of 38 to 45 percent of total store sales.
TRACKING CUSTOMER SALES USING LOYALTY PROGRAMS
When you look at your options for tracking customer purchases through a loyalty program, you have a few available. You can use an outside company that tracks the purchases on your swipe cards. You can use your POS system loyalty program module to track purchases or you can track using your database.
The most important thing to do when beginning your loyalty program is to get your customers to fill out an application. Things you should obtain are birthday, zip code, email address and even anniversary dates because your marketing is tied to this demographic information.
You can do your own swipe cards with your POS. The cards are pre-coded with a number, which your POS will use as their account number. But, that it is often easier for pizza places that deliver to use their customer’s phone numbers as an account number because the caller ID is often linked to the POS. A big plus of using your POS to track customer loyalty is that you can track numerous promotions.
If you do have a POS system, but don’t have the capability to track customer loyalty programs or you don’t have a POS, an outside tracking company may be your best bet. Seventy-five percent of the time the company’s software is compatible with either the POS system or the credit card processing equipment. The company can track the purchases, points, birthdays, etc. and reveal who your best customers are.
Keep in mind that whatever type of incentive program that you develop, you do not have to have the cheapest pizza in town to gain and keep customers. Instead, focus on what makes you stand apart from your competition: your staff, speed, value, cost and service. As a result, your customers will feel more loyal to your excellent service than to your discount offers. Your goal as a pizzeria owner is to maintain the customer’s confidence in your product. You don’t want to tie them to the offer. Loyalty programs are just a way to say “thank you” for choosing your product not your discount.