How to Recognize Your Loyal Guests in a Remote World: Part 2

Part 2 of a two-part series on customer loyalty in the hospitality business

The landscape of hospitality has changed and as we covered in our first post, the traditional rewards systems that restaurants and hospitality businesses previously used to encourage repeat business no longer apply. In contemplating a new model for brand loyalty, we wanted to analyze one of the most successful rewards programs of all time. 

Case: Starbucks Loyalty

The Starbucks Loyalty Rewards Program, available on mobile devices in the form of the Starbucks app, is an all-in-one ecosystem that drives increased customer spend, frequency of purchase, and attachment to the Starbucks brand.

Since launching its mobile app in 2011, Starbucks has acquired over 20 million users and now attributes 40% of total revenues to its highly successful Rewards Program. By investing in loyalty, Starbucks has focused on increasing the purchase frequency of the ever-elusive occasional buyer, a segment that often puzzles business owners.

The Starbucks app creates customer value by offering mobile advance ordering, ease of payment, and a robust rewards program with purchase benefits earned and exercised quickly. Even more importantly, it further enables product customization, a theme that has been the cornerstone of the Starbucks brand.

Furthermore, Starbucks’ foray into the digital sphere with promotions such as Starbucks for Life, which allows users to collect rewards over the holiday period, have taken a page out of the casino playbook by gamifying the purchase experience. With every purchase during the holiday season, one gains the ability to “shake the snow globe” for further rewards, and by doing so, increases customer engagement and purchase frequency. 

Looking toward the immediate future, the value of the Starbucks Rewards Program lies in its collection of immense consumer data from over 20 million users of the app. Some of the immediate returns have been seen through offering users relevant offers at crucial times in the form of push notifications, typically aligned with promotions and incentives. However, the true value of this data is yet to be capitalized upon.

What Can We Learn From Starbucks?

1. Convenience is king Consumer trends in 2020 have shown that restaurant delivery and takeout ordering have increased by 15% as a result of the COVID-19 disruption, according to Deloitte, with a primary driver of this trend being convenience. Customers want a frictionless experience when it comes to mobile ordering (whether for delivery or pick-up) that prioritizes transparency (in knowing how long the order will take), and seek an integrated payment solution that foregoes traditional wallet-carrying.
2. Rewards & Data Starbucks has shown that rewards are a form of positive reinforcement, and they need to occur quickly and often to engage users. Furthermore, the collection of data allows for personalized recommendations at critical order times. Pairing these two concepts is a powerful device to drive customer purchase frequency and order size.
3. Tapping into human psychology Let’s face the facts here: transactions are not only boring, but actively discouraged by my monthly budget. Nothing is worse than that Mint notification shortly after a pizza order reminding me that I have exceeded my restaurant budget (let’s not even address foregoing fitness goals). Making the purchase experience fun through gamification delivers that order with a refreshing hit of dopamine. Starbucks has shown this effectiveness through their engaging promotions, but even the act of collecting “stars” and additional bonus “challenges” rather than traditional points makes the experience that much more enjoyable.

So how can a local restaurateur apply this?

Let’s assume that you’re not operating a franchise of the second-largest quick service restaurant in the world (first is McDonald’s)...

1. Make mobile ordering frictionless

Make no mistake, digital transformation was knocking on the door of the restaurant industry long before the COVID-19 pandemic; however, it cannot be understated how much customer expectations grew in 2020. Mobile ordering is becoming table-stakes for survival.

Implementing a mobile ordering program can be done in two ways, really: partner with an existing mobile ordering solution (add link to previous article about delivery partners) or build a mobile solution yourself. Given the high cost of building an app, opportunity for marketplace exposure, and a connected delivery solution, many organizations are choosing the former. 

But what if this is out of reach? We have seen some local restaurants leveraging social media for more cost-effective means, whether it is posting a menu on Instagram and taking orders via direct message, or offering a Google Form to complete an order for pick-up or delivery.

Don’t have a website? Find someone on fiverr.com who may be willing to build one cheaply. Better yet, with the requirements for digital skills becoming ever more pervasive, there are countless talented individuals seeking ways to build their career portfolios, and may be willing to do it for free.

2. Partner with a forward-looking payments provider 

Some of the biggest technology trends are changing the way that transactions are completed. Whether it is wearable technology like the Apple Watch, or voice command ordering through a virtual assistant like the Google Home, the fact remains that carrying a wallet full of cards (dare I even mention cash?) is a dying concept. This has become even more prevalent in an age where customers are demanding contact-less interactions as a result of the COVID-19 pandemic. Speaking with your payments provider about their responses to upcoming tech trends could allow you to develop a competitive advantage not just today, but in tomorrow’s market as well.

3. Customization & personalization are everything

Starbucks has built the quintessential customization machine. Although the math is up for debate, some believe there to be over 87,000 different beverages that can be created through the Starbucks menu. Madness.

While this may be an extreme solution to the ever growing trends of customization and personalization in consumer goods, the fact remains that your customers expect the ability to make modifications based on their own tastes. Empower them to be able to do so by developing flexible menu items or even a build-your-own item option (if the restaurant concept allows for it). Even just the inclusion of a comments box on a digital order form allows customers to communicate their desires, thus allowing you to make a deeper and long-lasting connection.

4. Seek ways to reward your most loyal customers

Starbucks offers 1 star for every $2 spent. Domino’s Pizza provides one free, two-topping medium pizza for every 6 orders. Even the local, independently-owned neighbourhood coffee shop has offered a punch card to incentivize daily coffee purchases. 

The fact of the matter is that not all restaurants have the margins to offer core menu items for free. This should not be the end of the loyalty conversation though. Whether it is a complimentary item or a personalized note thanking a loyal guest for their business, one cannot overstate the power of small touches. 

In a paper and pencil business, this may require the introduction of some tracking protocols. Otherwise, your point-of-sale system or delivery partner may be already tracking this information for you.

However you decide to reward your guests we would love to hear more about it.

Kevin Campbell is a business consultant, activator, and taco enthusiast, with over a decade of experience in the hospitality industry. He has spent his career as a fierce advocate for the customer experience, with a meticulous focus on every touchpoint of the customer journey. On an everlasting quest of self-discovery, Kevin is a recent graduate of the MBA program at the Smith School of Business at Queen’s University, with a specialization in digital transformation.

Adam Hijazi is a foodpreneur and hospitality business consultant. His insights come from years of extensive practical experience leading organizational culture change in the hospitality industry. As a business transformation leader with a track record of delivering results, Adam’s commitment to, and passion about, building inclusive teams, motivated to deliver excellence, shines through in all that he does.