Is your restaurant’s loyalty program ready for the holidays?

With the 2022 holiday season upon us, restaurants are focused on how best to increase foot traffic and maximize sales. Companies like Starbucks and Dunkin’ saw 25% and 9% respectively increased foot traffic within the first seven days of launching their fall menus. While some aspects of restaurant operations will remain similar, this holiday season will be different from years past. The pandemic has led to massive staff turnover and seen the adoption and implementation of new technologies across the industry, with 36% of restaurants Upgrade their technology in 2021. For many, this season will be the first time that new personnel and technology will come together in full swing.

While restaurants must focus on operational excellence and execution, they must also prioritize the opportunity to attract and retain customers as the New Year approaches. Here are three questions restaurant marketers should be asking to guide customer loyalty programs in the months ahead:

What external challenges impact customer data?

Consumer sentiment regarding data privacy has changed in recent years due to data breaches and increased awareness of data being collected. This change has left consumers less inclined to give their data to any company and now expect something in return if they do. At the same time, new technologies and software have made it increasingly difficult for restaurants to collect customer data. Increased use of smart cards and third-party delivery apps, which are expected have approximately 53.9 million users by 2023, offer restaurants little or no customer data

These new data collection hurdles and heightened consumer expectations have forced restaurants to refocus their customer loyalty programs as a trusted first-party data source. Brands can address both of these challenges by encouraging customers to opt for additional amenities and better offers and services. It’s the perfect time because Data shows that 61% of consumers have joined a loyalty program to receive discounts during the 2021 holiday season and loyalty programs continue to grow gain popularity with Gen Z and Millennials target audiences.

Are restaurants collecting the right customer data for effective loyalty programs?

When customers sign up for a loyalty program, they agree to share their data with a restaurant. It is then up to the brand to ensure that it collects the right data. For many restaurants, the holidays correspond to an increase in the number of customers – on average, the holiday season accounts for 20% of annual restaurant revenues. This gives them the opportunity to collect a large amount of customer data.

Restaurant owners should think of customer data as a three-piece puzzle. To leverage customer data for hyper-personalized marketing, restaurants need:

  1. The ability to identify their unique customers, via email address, phone number, customer number or credit card number
  2. The ability to know what they have purchased, in order to provide a relevant offer or commitment based on purchase intent
  3. A way to reach that customer to present that relevant offer or engagement

If any of these pieces are missing, the entire campaign will be cut to the knees and prevent restaurants from effectively engaging with their customers.

Are restaurants considering KPIs that will matter beyond the fourth quarter?

This is the time of year to take advantage of increased spending (the pumpkin spice industry, for example, was worth a huge $511 million in 2019) to optimize the activity until 2023 and beyond. During the holiday season, restaurant marketers are “thinking big” when it comes to tactics and strategies, but many overlook the opportunity to “think big” about their KPIs and business impact long-term potential. Marketers need to think about how best to optimize their loyalty programs.

Restaurant KPIs should pay the utmost attention to discount engagement and effectiveness. Whereas in the past, brand loyalty could be correlated with an increase in spending or visits, this is no longer the case. Marketers need to look outside of the usual practices for those who truly engage with a brand – whether on social media or in opportunities to provide feedback. When teams start paying attention, they are able to see where loyalty really lies and if those customers are being targeted appropriately. Discount efficiency, on the other hand, focuses on maximizing every dollar of discount provided. Loyal customers are likely to visit a restaurant whether or not they have a discount, so this wouldn’t be the best place to focus on. Where the real opportunity lies is in targeting a customer who may have visited once to entice them to return. By doing so, restaurants can ensure that the discounts offered correspond to greater long-term profits.

Kellie Zimmerman has extensive knowledge of the software industry, having spent over 15 years building and leading teams in the technology space. She spent most of her career at Concur and Avalara, and held high-level positions, such as vice president of sales, as well as general manager, responsible for a $160 million business unit. She held key leadership roles in the acquisition (2014 purchase of Concur by SAP for $8.4 billion) as well as the initial IPO (Avalara IPO in 2018) . Kellie holds a BA from Washington State University, majoring in Management Information Systems. Kellie lives in Bellevue with her husband, Dave, and two daughters, Livia and Emmalie.

Ryan H. Bowman