The Dos and Don'ts of Building a Restaurant Loyalty Program

The Dos and Don’ts of Building a Restaurant Loyalty Program

The Dos and Don'ts of Building a Restaurant Loyalty Program

Creating a loyalty program can be an effective way for restaurants to reward regulars, gain more repeat guests, and deliver great hospitality. For tips on making it work, we turned to Chad Mackay, President and COO of El Gaucho Hospitality, a group that operates four El Gaucho restaurants, AQUA by El Gaucho, and The Inn at El Gaucho. Read on for his Dos and Don’ts. 

As the leader of our family company, one of the most important and pleasurable responsibilities I have is letting our guests know how much they are valued and appreciated. To this end, a few years ago we decided to build a loyalty program, drawn from our company’s motto, “We revel in celebrating lives.” It is from that motto that we created our Reveler’s Club.

We are an aspirational brand — our restaurants are fine-dining establishments, and our guests are typically broken down into the following categories: business diners who entertain clients; special-occasion celebrations such as anniversaries and birthdays; and travelers. With that in mind, our loyalty program needed to be based on spend rather than frequency of visits.

Our Reveler’s Club offers a point-based earnings platform, along with special promotional spending dollars. When guests dine with us at one of our five El Gaucho Hospitality locations, and use their loyalty card, they receive one point for each dollar spent. Once 100 points are earned, the points are automatically converted into a $10 reward, which expires one year after conversion. Additionally, we administer promotional dollars for our guests’ birthdays and anniversaries. Depending on the level of loyalty (we have three tiers), guests receive anywhere between $50 to $150 on these special occasions to use within the month of their special occasion.

Here are some Dos and Don’ts we have learned along the way about how to build an effective loyalty program:

DO take the time to find a trustworthy rewards tracking system that works with existing systems. Fortunately, we already had the technology in place to manage our gift cards: Paytronix, our partner company, was able to take on the task of managing our loyalty program as well. Having a system that is trustworthy and works efficiently makes the process of implementing the loyalty club much smoother. Further, Paytronix was already synced with Micros, which helped to make the transition to the new system.

The Dos and Don'ts of Building a Restaurant Loyalty Program

DON’T make rewards unattainable. Our Reveler’s Club was built on the fundamentals of the rewards program we already had in place, which distributed $50 birthday and anniversary cards via email to any guest who had signed up for promotions. When these basic promotions expanded into our loyalty club, we decided to add in points for dining, which then convert into reward dollars. After careful consideration of our company’s revenue, and observations of other restaurants’ reward programs, a generous 10% ROI was agreed upon for our Reveler’s Club. We set expiration dates on both our birthday and anniversary rewards (one month), as well as earned rewards from dining (one year from conversion). A sense of urgency is created with expiring reward dollars, encouraging our loyalty members to spend their earnings before they are gone.

We have set parameters for using these rewards: birthday/anniversary rewards must be redeemed on at least two entrees while dining with us. This prevents the reward dollars being lost on Happy Hour prices. Setting a few boundaries and limitations helps monitor a loyalty program so that it is beneficial to both the company and the guest.

DO promote the loyalty program to all guests. When it comes to our loyalty program, we made it clear to our employees that this is something we want to encourage and promote. After some simple vetting, each server is encouraged to invite guests to the Reveler’s Program.

Our marketing and communication strategy includes a monthly eblast which includes a “statement” of the guests’ rewards. Additionally, monthly reminder emails are sent to guests who are celebrating birthdays and anniversaries that month. Another key component is staff training, so servers can explain the program to our guests tableside and sign them up while dining with us so they can begin earning points immediately.

DON’T making joining and participating complicated. The easier the better.  We offer both an online and an in-person option for joining. This way, guests can sign up and receive a card the moment they hear about it upon entering our restaurant.

Go cardless: With technology today, going cardless is a fantastic option for guests.  We recently launched a mobile app allowing guests to download the app from their phone to sign up — no physical card required! A fantastic feature we included is a “check-in” feature, so guests simply check in at the restaurant from the app and their check is synced to their account.  Again, no card required.

DO communicate, communicate, communicate. Earning rewards is useless if customers aren’t aware that they have rewards to redeem! We have set numerous “triggered” emails into our system, so that our guests are alerted when their reward dollars are about to expire; when they are celebrating a birthday or anniversary and $50 has been added to their account; as well as a thank you after they dined with us, which indicates how many points they earned. We have also integrated a personalized point balance that is included in our monthly eblasts to our entire email database. Each email includes their name, loyalty number, and point balance.

DON’T be afraid to let the program grow, adapt, and change. The loyalty program should be a living, breathing entity, just like the business. Being comfortable with changing the structure, benefits and terms is imperative to keeping it thriving and, in the end, profitable. We are continuously looking for ways to change and improve our Reveler’s Club program to fit the needs and wants of our guests, and build loyalty.

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