Consumers have spoken: They love earning rewards. Nearly half of restaurant loyalty program members say they’re less likely to try new restaurants because they prefer to return to places where they can take advantage of their loyalty program benefits.
Loyalty programs are important growth drivers for quick serve and chain restaurants in the current economic climate. Restaurant chains have faced mounting price pressure from inflation over the last few years, forcing higher menu prices. By offering competitive loyalty programs, your restaurant brand can continue to offer the high level of value that customers have come to expect, even when margins are tight.
But loyalty programs don’t just provide value to your customers: They’re a wealth of insights that you can use to inform your brand messaging, marketing investments, and overall business strategy. With a data-driven approach, you can leverage loyalty program data to continually optimize your rewards program while enhancing your end-to-end omnichannel marketing impact.
What is a data-driven restaurant loyalty program?
A restaurant loyalty program encourages customers to return more often and increase their spending by offering them exclusive discounts and other perks, such as right-timed coupons or deals with partner brands. With a data-driven loyalty program, restaurants leverage the first-party data customers share with them to personalize rewards and offers, encouraging higher engagement. For instance, it’s common to trigger special rewards for customers on their birthdays or create custom offers based on their favorite menu items. These types of perks serve to “surprise and delight” customers, making them feel valued.
Sophisticated restaurant marketers also use data shared through loyalty programs to inform marketing efforts on other channels, such as email campaigns or targeted digital ads, to ensure customers have a streamlined experience across all touchpoints. Loyalty program data can also be used to identify new audience segments, allowing you to expand your reach with tailored marketing strategies that drive additional loyalty program signups.
Benefits of building a restaurant loyalty program
Loyalty programs increase customer lifetime value while also enhancing brand loyalty and visibility.
You can strategically use your loyalty program data to support your consumer data strategy by uncovering new insights about your customers, which leads to:
Improved customer retention
Customer loyalty programs are highly effective at keeping diners coming back. Rewarding repeat visits gives customers an incentive to choose your restaurant over others, helping you retain loyal patrons.
Increased average order values
Special offers or the ability to earn loyalty points that are tied to higher spending thresholds encourage customers to increase their order sizes. Three-quarters of consumers say they spend more when they’re a member of a brand’s loyalty program.
Better customer insights and behavior analysis
Data-driven loyalty programs provide valuable insights into customer preferences and behaviors. By analyzing order patterns, favorite menu items, and visit frequencies, you can better understand what customers want and tailor experiences to fit those preferences.
More advanced data-driven decision-making
The data gathered through loyalty programs is useful for informing business and marketing strategy decisions. For example, patterns in ordering behavior among loyalty members may influence menu updates, brand collaborations, or partnerships with delivery apps.
Increased customer lifetime value
Loyalty perks help your restaurant deliver greater value to customers, making them more likely to become frequent diners. A well-designed loyalty program can increase the overall lifetime value of a customer by encouraging greater foot traffic, larger orders, and long-term brand loyalty.
Data-driven best practices for restaurant loyalty programs
Setting up a loyalty program is relatively straightforward. You might roll out a basic points system, offer discounts, or even incentivize customers with freebies. But optimizing your program for long-term ROI is where the challenge begins. Many restaurant chains struggle to fully harness the data generated by these programs. Other chains find it challenging to attract new members to the program after the initial wave of brand loyalists sign up.
To build a truly effective, data-driven loyalty program, you’ll need to overcome several common challenges, such as fragmented customer data, inconsistent customer engagement, and difficulty measuring the program’s real impact.
Here are a few ways to overcome these challenges with data:
1. Gain a unified view of customer journeys
Most restaurant chains use a third-party platform to manage their loyalty programs. These solutions simplify the process of enrolling members, tracking points, and distributing rewards. Unfortunately, they also keep your loyalty program data siloed inside the platform. Without a way to cross-reference loyalty program data with data from your other marketing channels, you won’t have a complete, accurate view of all the ways individuals are engaging with your brand.
Data collaboration between marketing platforms and channels can break down silos to ensure you’re able to harness your data’s full potential. By resolving customer identities across various channels and data sources, you can better understand how customers interact with your brand as they move between online and in-store experiences. This information can be used to enhance your loyalty program and other channel-specific strategies so you can optimize the customer experience across all touchpoints.
2. Make personalized offers
Customers will quickly tune out your offers — or opt out completely — if they aren’t relevant. For example, a single person living alone would be unlikely to redeem an offer for a family meal deal. Instead of offering the same promotions to everyone, you need to get specific and strategic.
Consider tailoring welcome messages and initial offers to new loyalty program members based on their demographics, interests, and the channels they were acquired through. This personalized onboarding experience can increase engagement and encourage early adoption of your loyalty program.
As you learn more about your customers’ behaviors and preferences, you can refine these offers to keep them engaged over time. For instance, using purchase history and past interactions, you can segment customers into audience groups. You might send a targeted deal for a new breakfast sandwich to a segment of customers who frequently order breakfast, and use a different incentive to engage customers who have only dined in at dinner and are unlikely to be swayed by a breakfast deal.
3. Re-engage lapsed customers
Even customers who love your food can disappear for a while. To re-engage these loyalty program members, create targeted win-back campaigns on their preferred channels, such as SMS, email, or mobile app, with personalized offers based on their past order habits.
For example, if a customer frequently ordered your spicy chicken sandwich but hasn’t visited in over 60 days, a targeted offer for a free sandwich with their next order can remind them of what they’ve been missing. By combining this approach with predictive analytics, you can fine-tune your outreach and focus on customers most likely to re-engage.
4. Grow your membership
To grow your loyalty program, you need to effectively reach new customers with offers they see value in. By leveraging data partnerships and advanced analytics, you can identify and reach loyalty “lookalikes” — customers who share similar traits to your most loyal members.
Using targeted advertising campaigns across social media, CTV, and other digital channels, you can attract high-value prospects and encourage them to enroll in your program. For instance, displaying ads to customers who have previously engaged with fast food brands or shown interest in quick-service restaurants can significantly increase sign-ups. You can do the same for customers who have visited your restaurant in the past without joining your loyalty program.
5. Measure your success over time
To ensure your loyalty program delivers long-term value, you need a marketing measurement strategy that consistently evaluates its business impact. Without clear metrics, it’s difficult to understand what’s working, where there are opportunities for improvement, and how your loyalty program influences your overall omnichannel marketing results.
By connecting loyalty data with campaign performance metrics, you can assess the impact of specific promotions on customer behavior as well as the impact of your media investments. For example, you can track how many new members joined after a particular campaign and monitor subsequent engagement levels. This helps you optimize your marketing strategies over time, ensuring your loyalty program continues to generate ROI and build deeper customer relationships.
Types of data that loyalty programs unlock
A restaurant loyalty program captures valuable customer data that goes far beyond name and email address. Here’s a look at the types of data your loyalty program can unlock and how you can use it to fuel growth.
Identity data
This category of data includes personally identifiable information (PII) that customers share when signing up for a loyalty program, such as name, email address, phone number, birthday, and address. To protect sensitive information, each customer should be assigned a unique, pseudonymized identifier within your loyalty program so you can track their activity and ensure accurate data association.
Transactional data
Loyalty programs capture data on what customers buy, how often they buy it, and how much they spend. This reveals valuable insights into individual preferences and spending habits. You can reinforce these preferences through your loyalty program by offering a selection of rewards that customers can choose from — such as discounts, free items, exclusive experiences — to increase redemption rates and satisfaction.
Order data
It can be hard to resolve order data across different channels (e.g., app, website, and in-person) back to a specific individual. Enrolling customers in loyalty programs provides an opportunity to analyze details like order date and time, frequency, items purchased, and even dietary restrictions and allergies at the individual level. By understanding patterns in customers’ ordering habits, you can deliver more targeted and well-timed offers through your loyalty program.
Engagement data
You can capture data on how customers interact with your loyalty program, like the number of points earned, rewards redeemed, and participation in challenges or promotions. Similarly, if you use a loyalty app, you can monitor usage patterns, including frequency of app opens, features used, time spent on different sections, and in-app purchases. Tracking these engagements measures program effectiveness and identifies areas for improvement.
Cross-channel interactions are another form of engagement data that provide valuable insights. Tracking metrics like email open rates, click-through rates, responses to surveys, and social media engagement helps you optimize communication strategies and personalize messaging everywhere your customers spend time.
Demographic and psychographic data
Loyalty program enrollments can provide insight into your customers’ demographic information, especially their location, and potentially their age, gender, and income level. Analyzing demographic data alongside behavioral, transactional, and engagement data allows you to gain a clearer view of your customers’ lifestyles, interests, values, and attitudes — collectively called psychographic data. These insights are valuable for enhancing your loyalty program, as well as informing overall brand messaging.
Examples of successful data-driven restaurant loyalty programs
The most successful and sophisticated restaurant loyalty programs run on fully integrated cloud data structures that stitch together data from every channel and data silo. This advanced data architecture combined with a deep analytics bench allows brands to move away from third-party platforms and build their own bespoke loyalty programs that are finely tuned to their unique customer base and marketing objectives.
Here are a few examples of how the world’s biggest restaurant brands are connecting their customer data:
McDonald’s
With the help of LiveRamp, McDonald’s gained a comprehensive view of customers’ interactions with the brand, whether they happened in the app, at the drive-thru, or in-person. The iconic burger chain now boasts one of the most innovative restaurant loyalty programs among its competitive set, delighting customers around the world with hyper-personalized experiences.
Global Mexican Franchise
A major Mexican chain restaurant wanted to engage new audiences, including driving new signups for its loyalty program. The brand partnered with LiveRamp to connect data across channels and publishers, improve its cross-screen measurement, and uncover deeper performance insights.
Maximize the impact of your loyalty program with LiveRamp
Consumers today are increasingly cost-conscious and have more dining options than ever before. A data-driven restaurant loyalty program is a strategic asset that can drive brand growth and increase revenue in a challenging market. With LiveRamp’s data connectivity and collaboration platform, you can elevate your loyalty program by leveraging customer data in powerful new ways. From gaining a unified customer view to delivering personalized, omnichannel experiences, LiveRamp empowers your brand to optimize engagement and boost loyalty.
Learn how our Enterprise Identity solution can make your loyalty program data work harder for your business. Connect with an expert today.
