LIST OF RESTAURANT LOYALTY REWARDS PROGRAMS AS OF MARCH 13, 2013
Have we missed anything? Please let us know.
LIST OF RESTAURANT LOYALTY REWARDS PROGRAMS AS OF MARCH 13, 2013
Have we missed anything? Please let us know.
A PERFECT STORM
A perfect storm of negative economic factors has caused a downturn in restaurant sales beginning mid-January 2013. For restaurant companies with existing loyalty programs, this is the time to act deliberately and strategically to leverage the potential of the program to help weather the downturn.
Restaurant loyalty rewards programs are strategic, not merely tactical. They create a tie-breaker in the mind of the consumer and generate incremental visits that consumer research shows may amount to a 35% (see the LoyaltyPulse Study). As a byproduct of a loyalty program, restaurant companies accumulate transaction-level customer data that is of vital importance in understanding and influencing guest behavior. It’s always important for companies to use this information wisely, but it’s especially important in a sales downturn as restaurant companies seek to:
DELIBERATE, MEANINGFUL AND MEASUREABLE ACTION
One of the best ways to address current guests is through an existing customer loyalty program. Following is a roadmap for action:
Targeted promotions conducted through a loyalty program are superior for several reasons. [Note, this assumes the more traditional model of loyalty programs in which there is something such as points accumulated over time that convert to value, rather than programs that are based on periodic surprises.]
STEP 1 – QUICK ANALYSIS
Companies with loyalty programs have the ability to examine guest-behavior in detail and understand customers far better than those without loyalty programs. Unfortunately, many marketers fall into the classic trap of relying upon simple statistics that disguise the genuine diversity of your guest base.
Using averages to describe the behavior of a larger group of people (such as members of a loyalty program) can be a handy way to provide a sound bite metric (“our members come in about five times per year”). However, averages are of no use in trying to understand unique groups and how best to encourage incremental visits from those groups. Furthermore, averages lie. Averages lead one to believe that most people come to your restaurant about the average number of times, when in fact very few come in the average number of times. If the average is five visits per year, there are many who come in one, two or three times and quite a few who come in ten or more times.
The best way to understand the behavior of your loyalty program members is through segmentation analysis. The best measure of what a guest will do in the future is what they have done in the past. That is a fact. If you haven’t conducted a segmentation analysis of your membership base on a regular basis, now is the time to do so; quickly and expeditiously.
Gather past guest visit transaction data from your loyalty program database. At least six months but preferably one year. No matter what loyalty technology platform you’re running on, there will be a way to get your hands on historical details of individual guest visit transactions. At a minimum for a quick analysis you’ll need the following items for each guest visit:
There are many other data elements you might use in a more comprehensive segmentation analysis, but these are adequate for a quick analysis under the pressure of sagging sales. Summarize visits and spending by member over the past year. Group into segments based upon common-sense visit counts. If you’ve heard of ‘deciles’ – set that concept aside. Grouping members into ten equally-size segments (equal either by counts or spending) is a method used in ancient direct marketing efforts, but visit segmentation in a restaurant setting must make common sense and have fewer segments.
Shoot for 4-6 segments and think about a simple way to organize. The example used here applies to a casual-dining restaurant and has a higher frequency and lower spend per visit than a fine dining restaurant (those differences represent a subject for a much longer examination than may be accomplished here). The principles of segmentation apply regardless of the type of restaurant and its associated visit frequency and average check, but the numbers can be quite different. This is just one example for the purposes of this exercise. The decisions you make may vary, but this provides an example of the methodology which combines some analytics with common sense and the ever-present principle of “let’s not over-think this.”
Consider this approach to grouping the segments:
Using some fictitious data, the segmentation grid might look like this. Note we’ve included a simple letter code to identify each segment so that it’s easier to refer to later in this roadmap.
This single-page summary of member behavior can, by itself, be eye-opening if you haven’t conducted such analysis on your program in the past. The more important characteristic of such a segmentation model is its ability to help you break down the challenge into smaller pieces. There are no silver bullets in marketing, although many still seek the single big idea that will catapult them to success or pull them out of a crisis. Real success comes from a comprehensive array of strategies and tactics that are measured and continually improved. Measurement ensures a method to your madness and helps you avoid the old saying, “I don’t know where we’re going, but we’re making good time.”
STEP 2 – CREATE OFFERS AND DEFINE TARGETED RECIPIENTS
So what do we do with these groups? We construct promotional offers that are in the context of the loyalty program. The natural approach for restaurant operators during times of sagging sales is to create menu-item based promotions combined with discounts to drive traffic. Such promotions are important for attracting new guests (loyalty programs rarely attract new guests, but instead engage those new guests after they have experienced the restaurant for the first time).
Here’s what we might want to do with these groups:
The double point bonus for the lower frequency segments helps to get those guests more engaged and potentially build a strong pattern for the future. The 50% bonus for the more frequent guests who are already engaged with the program encourages those members to consolidate as many of their casual-dining visits with your restaurant versus the other competitors that are in their consideration set. In tough economic times that create sagging restaurant sales, consumers seek maximum value. These promotions create maximum value.
These promotions are not broadcast to your entire customer base. They are delivered via e-mail directly to each selected member. The offer is not made public; it’s presented as “an exclusive, limited-time offer for you”. The mechanical process of awarding the bonuses is something configured within your loyalty program technology platform. Assuming you are operating within a platform that has the expected functionality in today’s loyalty landscape, this shouldn’t be a terribly complicated configuration process.
STEP 3 – WITHHOLD A CONTROL GROUP
How can we determine how well this works? Use the time-tested process employed with scientific experiments and many marketing programs: a control group. A control group is a randomly-selected group, extracted from a larger group. Those who are selected to receive the offer are considered the “test group” while those who are withheld at random and do not receive the offer are considered the “control group.” While analyzing the performance of the program, the test group is compared to the control group. The only difference between the two is that one group received the offer while the other group did not. Therefore, any difference between the behaviors of the two groups may be conclusively attributed to the promotion itself.
Here’s an example of a matrix that includes the counts in the test groups and the control groups. We have used 25% as the control group percentage. Decisions about control group size are often made with a combination of statistics to determine margin of error for comparisons, combined with a dose of pragmatism.
STEP 4 – IMPLEMENT AND MEASURE
Once you have the mechanical process of handling the bonus points configured in your loyalty program technology platform and you have the language and creative content developed for your targeted e-mails, you’re ready to finalize the selection of your test and control groups and get this deployed. Once the promotions have been deployed, measure regularly rather than waiting until the promotions have completed. A daily review is not uncommon.
Now is the time to elaborate on the process of comparing the results of the test and control groups. If the two are the same size, it’s relatively easy. Just compare total visits and total spending from one to another and you’re done. However, it’s often the case that the two are not the same size, so we should explain the nuance of making such comparisons.
Because in this case the control group is smaller than the test group, the spending and visits for the control group must be normalized. The normalization process takes the rate of spending and visits in the control group and extrapolates those rates as if the control was the same size as the test group.
STEP 5 – PROMOTION COMPLETION: ASSESS, QUANTIFY AND LEARN
Once the promotional period has completed, conduct a final review seven days after the conclusion. In this final review, break down the test and control evaluation among the five different segments (A, B, C, D and E). Analyze the seven days after the end of the promotion because it is not uncommon to experience a “halo effect,” describing the phenomenon in which the test outperforms the control group for a short period after the conclusion of the promotion. Promotions such as these will almost always generate incremental sales; it’s just a question of how much incremental sales. A typical range to expect is 5% to 15%. One additional element of cost to include in your final analysis is the cost of the extra points. If, for instance, your program has what appears to be a “face value” rewards percentage of 10% (you earn one point per dollar and 100 points converts to a $10 reward; 200 points converts to $20, etc.) and your food cost is 30%, then for planning purposes you can assume that a point has a $.03 (that’s three cents) cost value. NOTE: the face value of a point is $.10 (ten cents) because in this example 100 points = $10, so one point = $.10 (ten cents). But the actual cost is the food cost percentage. Using 30% in this example, 30% of $.10 (ten cents) is $.03 (three cents).
You’ll learn a great deal from this test. The most important thing you’ll learn is how to go through the process from analysis through planning and execution and measurement. This can be done quickly these days. It shouldn’t take months to get something going; more like a couple of weeks. Once you’re proficient at this it will be second nature and you should test promotions periodically in a quest to outperform the last great promotion you ran. The key is to not execute these promotions on a predictable schedule.
ABOUT CHECK-LEVEL DETAIL
If you have check-level detail data (each individual item on the check) that is accessible through your loyalty platform, you may be tempted to develop a highly individualized approach to this. Proceed with caution. If you are more advanced in your analytic and marketing efforts, you may find success with this. However, when you’re in the early stages of developing your proficiency with the analytics, planning, execution and measurement it’s best to keep it relatively simple. Once you have benchmarked the incremental spending you experience with the relatively simple approach and decide to put your toe in the water and try something more complicated using check detail, you’ll have a point of comparison. Does the more complicated approach generate a better return? If so, does the incremental return adequately compensate for the additional resource (time, money) consumption associated with the more complicated approach?
SETTING THE RECORD STRAIGHT ON THE TERM ‘LOYALTY’
Some may read this and say “that’s not real loyalty – that’s just transactional loyalty.” There’s quite a bit of this discussion that goes on with many of the people who operate in the conceptual loyalty space. I’ve seen plenty written and I’ve heard plenty of speeches that state idealistic beliefs about the relationship between a brand and its customers. Some describe a level of loyalty that a husband has towards his wife or that a German shepherd has towards its person. Granted, there are some who absolutely love a company they do business with. Those are the rare customers that are ambassadors of a brand and spread the word but they do not by themselves make up a population that can come close to supporting that business. For the lion’s share of customers, a brand satisfies a need for them in a manner that develops into a positive feeling about the brand, but that brand, in most cases, gets a share of that customer’s spending rather than all of that customer’s spending. That is very much the case in the restaurant business. And that’s the reality of the application of loyalty marketing in the restaurant business. That’s a fact.
The Warrior Card loyalty/rewards program offered by P.F. Chang’s China Bistro falls into the category of “surprise and delight” as described by the company itself. First, a little background on the brand itself, from the company’s website:
At P.F. Chang’s we are committed to providing you with an exceptional dining experience every time you walk through our doors. Each dish on our menu is prepared to order using the freshest and highest quality ingredients.
At P.F. Chang’s you are surrounded by a unique environment combining influences of Chinese and American cultures. A panoramic, hand-painted mural depicting 12th century China, is visible from the main dining room and commands attention as the restaurant’s centerpiece, while several terra-cotta warriors stand guard.
Our majestic 11 ft. tall horses grace the entrance to many of our restaurants. The horse symbolizes the original Forbidden City in China, which was built for China’s first emperor Qin Shi Huangdi.
These elements showcase the cuisine and create a stylish, comfortable, upbeat dining experience for our guests.
And some facts about the program, which is integrated with a mobile app to make it easy to order online and ensure credit for your Warrior Card program participation:
The spirit of Warrior® Rewards is to thank you for choosing P.F. Chang’s and provide you, the guest, with rewards that will surprise and delight.
How does Warrior® Rewards work?
The Warrior Rewards® program allows you to receive Rewards for dining with us. These Rewards may not be identified to you in advance.
There are a few ways you can participate in Warrior® Rewards.
- Get a plastic Warrior® Rewards card at any participating P.F. Chang’s location in the Continental United States. In order to receive Rewards, you must register your card online here. When you visit us simply present your plastic card to your server and they will swipe it and you’ll receive credit for that visit.
- Get a plastic Warrior® Rewards card as mentioned above, but instead of giving the actual card to your server to swipe, you can tell them the card number.
- Sign up for Warrior® Rewards on our website or from our Mobile App. If you participate this way you will use the phone number registered to your account as your account ID and provide that to your server when you dine with us. You will also be issued a virtual card number, which you can see when you login to your account. If you want to jot that number down and present that to your server you are welcome to do so. All options, when presented to your server, will allow you to get credit for your visit.
Pizza Ranch, with more than 170 locations across the Midwestern United States offers its ‘Ranch Rewards’ program.
Ranch Rewards® gives you points for every dollar you spend on qualifying food and beverages at participating Pizza Ranch® locations. Here’s the skinny on how it works:
WHAT’S HAPPENING RIGHT NOW AT PIZZA RANCH
Nation’s largest dining deals site launches new rewards program powered by the #1 gamification platform to increase social loyalty REDWOOD CITY, Calif. and ARLINGTON HEIGHTS, Ill., Feb. 13, 2013 /PRNewswire/ — Badgeville, the #1 gamification platform, and Restaurant.com, the nation’s largest dining…
In case you’re not familiar with Restaurant.com, here’s a summary of what they do, from their website:
We Help Communities Thrive and Prosper
Restaurant.com enables local restaurants and small businesses to give diners the best deal on every meal. We help diners find and use local restaurants, driving new customers and bringing back old ones, providing great value to the diner, and strengthening local economies. Restaurant.com Gift Certificates match diners with great savings at new restaurants. Your favorite restaurant is in your neighborhood – maybe you just don’t know it yet. Restaurant.com is here to help.
So this new rewards program of theirs may have some interesting appeal. We know from our LoyaltyPulse research study that 73% of consumers would like one rewards program that is honored at multiple restaurant brands. The local aspect may have some legs with certain consumers as well, as the ‘buy local’ trend gets greater traction. The key to this program is whether or not the value proposition is strong enough and certain enough. We also know from our research that 4 out of 5 consumers prefer a clearly-defined rewards program proposition over periodic surprises. Here’s a sentence lifted directly from the Restaurant.com Rewards Program’s terms and conditions:
The primary Rewards are virtual recognitions such as badges and status levels.
Here’s an excerpt from the press release about the new program:
ARLINGTON HEIGHTS, IL (February 7, 2013) – Restaurant.com, the nation’s largest dining deals site, announced the launch of a new rewards program which enables participants to earn points, badges, and advance on the Restaurant.com Rewards Leaderboard. Diners earn rewards by shopping, sharing on social channels and participating in promotions. The game-like rewards experience highlights and enhances the thousands of dining opportunities Restaurant.com has to offer.
“Restaurant.com Rewards offers a variety of fun interactive perks for shoppers,” said Christopher Krohn, President and CMO, Restaurant.com. “We are excited to provide our customers yet another way to discover amazing dining discounts and be rewarded for their engagement and loyalty.”
Restaurant.com customers can begin playing immediately by logging into their account. When they complete a reward-worthy action, participants receive a message of congratulations as well as a clue about what to do next to achieve additional points and badges. Customers start at the “Newbie” level and continue to “level-up” as they earn points and complete fun shopping “missions.”
Restaurant.com will also host a range of playful promotions and sweepstakes through its rewards program. As customers progress their way up toward higher levels, they unlock additional badges and may earn special surprises such as free Restaurant.com gift certificates and other rewards. From now through February 15, 2013, Restaurant.com Rewards participants can earn the “Nifty Fifty” badge with the chance to win a year’s supply of $50.00 eCertificates (12 free $50 eCertificates). Restaurant.com will reveal other limited edition special badges to participants throughout the year.
Stay tuned. For more information, check out the Rewards Section at the Restaurant.com website.
The former McCormick & Schmick’s Preferred Guest program converted to the Landry’s Select Club at the end of 2012. Landry’s Select Club is the single, multi-brand restaurant loyalty rewards program that allows members to earn and redeem at more than 400 locations in 31 states throughout the United States. We know from our LoyaltyPulse national study of consumer attitudes and behavior relating to restaurant rewards programs that 73% of consumers want a rewards program honored at multiple restaurant brands. Good news for McCormick & Schmick’s and Landry’s Select Club. Member’s be be more happy with the expanded versatility of their program.
Here’s a little bit about McCormick & Schmicks:
Bill McCormick and Doug Schmick teamed up in the 1970s before going on to establish more than 80 restaurants throughout the country. Over time, McCormick & Schmick’s became the nation’s premier family of seafood restaurants. The combination of an open imagination and a respect for tradition is what makes McCormick & Schmick’s the classic and successful business that it is today.
Each McCormick & Schmick’s restaurant is uniquely designed to create an inviting, original and relaxed atmosphere, where guests can enjoy the highest quality dining experience. Our restaurants are situated in a broad array of locations – from downtown urban cores to suburban retail-driven centers.
Each McCormick & Schmick’s Seafood Restaurant’s menu is printed twice daily, featuring the signature “Fresh List” highlighting an impressive number of fresh seafood varieties, in addition to aged steaks, poultry, entrée salads and pasta. McCormick & Schmick’s commitment to local freshness is apparent in the seasonally inspired dishes and regionally inspired preparations offered.
WHAT’S HAPPENING RIGHT NOW AT MCCORMICK & SCHMICK’S
Packed full of facts about restaurant loyalty and rewards programs, the Tasty Little Restaurant Loyalty Fact Book is based upon a national study of U.S. consumers regarding attitudes and behavior with respect to restaurant rewards programs. The study is called LoyaltyPulse.
We know from our LoyaltyPulse research study that 73% of consumers want one restaurant rewards program that is honored by multiple restaurant brands. The folks at Louisville Originals know that from experience with their multiple-restaurant coalition program. Here’s an excerpt from a recent article in the Louisville Courier-Journal:
Originally begun as a marketing consortium of local independent restaurants that sold gift certificates online every three months, the Louisville Originals program is now best known for its rewards program that enters its fifth year giving 22,554 cardholders credits at member eateries.
“I think we were very hopeful” that the local marketing program would take off, board secretary Kerry DeMuth said, “but you have no way of knowing in these types of things.”
While Louisville Originals has gift certificate programs as well, “I think the rewards (card) programs would be, by far and away, the most popular with customers,” said Siobhan Reidy, an Originals co-founder who owns the Irish Rover restaurants with her husband Michael Reidy.
For every dollar spent at one of the restaurants, card holders get one point. At 150 points, card holders gt a $10 gift certificate — maintained on the card — to use at any of the restaurants. Double points are offered the first Tuesday of the month. There is a 500 point cap for any one visit and no more than $100 in credits can be redeemed by any one person in a visit.
Starbucks has been very successful with My Starbucks Rewards. The integration of loyalty, prepaid and mobile is a powerful combination. Here is an excerpt from an article at FastCasual.com, quoting Starbucks CEO Howard Schultz:
Overall, the Starbucks gift card accounts for 25 percent of U.S. tender, Schultz said. He noted that the Starbucks gift card was likely the most popular gift item of the 2012 holiday season. More than $1 billion was loaded onto Starbucks gift cards in the quarter (a 25 percent increase over the same period last year), and one in 10 adults in the U.S. received one as a gift.
What’s more, 20 percent of card transactions at Starbucks locations were conducted using the mobile app, Shultz said. Over 7 million customers now use one of our mobile payment apps, translating into 2.1 million mobile payment transactions each week, with hundreds of thousands of additional Starbucks mobile app downloads each week.
It wasn’t just about payments either. The integration of the Starbucks loyalty card with the payment app meant that the company added 1.4 million members in Q1 of 2013. That’s an increase of 86 percent over last year’s 778,000 new members for the same quarter, Schultz said.
Clearly, loyalty plays a strategic role at Starbucks. They ‘get it’ – loyalty is a strategic game changer.
Here’s a little more about My Starbucks Rewards, from the website:
MY STARBUCKS REWARDS FEATURES/BENEFITS
“Earn 1 Star every time you pay with your registered Starbucks Card or Starbucks mobile app at a participating Starbucks or our online store. As you collect Stars, you move up to bigger benefits. Get started by registering a Starbucks Card.
Use your card once, earn your first reward. Sweet!
Five Stars puts you at Green. Besides your free birthday drink or food reward, you also earn:
Collect 30 Stars within 12 months and you’re Gold. Once you reach Gold, keep those benefits for another 12 months by earning another 30 Stars. With Gold, you get all the Welcome and Green benefits plus:
For more information, visit the Starbucks Rewards Website.
WHAT’S HAPPENING RIGHT NOW AT STARBUCKS