Study reveals sales jumps from incentivized programs

Jan. 27, 2011

In 2010, restaurant goers signficantly increased the amounts of food and drink they purchased when incentivized through gift cards, comp cards, and loyalty programs, according to a 2-year analysis of consumer promotions conducted at 50 New England restaurants.

The analysis, based on data collected by CaptureCode of Waltham, Mass., showed a 21 percent uptick in the amount of product upsell as a result of consumer promotions run in 2009 and 2010. Moreover, the CaptureCode analysis shows an astonishing 85 percent surge in loyalty program points issued in the year-over-year comparison.

Tony Padam, president of CaptureCode, attributes the findings to two inter-related factors: an improving U.S. economy and increasing consumer confidence. However, Padam cites a third factor – the increasing effectiveness of consumer promotions that are based on better buyer analytics being harnessed and applied by merchants.

According to CaptureCode, nearly $86,000 worth of gift cards were sold at the establishments studied in 2010, in comparison to approximately $60,000 worth sold in 2009. Notably, restaurants experienced an appreciable increase in additional product sold as a result of gift card promotions: $84,449 worth of gift cards sold generated an additional $22,969 in actual in-store sales – representing more than a 20 percent realization of product upsell.

Similar increases in additional sales were seen in restaurants’ issuance of comp cards. More than $53,000 in comp cards were sold by the restaurants studied – sales that led to actual gains of $68,077 in products sold; these figures indicate that restaurants realized more than a 20 percent increase in sales when the “approved” (sold) amount of gift cards is compared to the “requested” (face value) of comp cards sold.

Other noteworthy statistics from the CaptureCode study include:

  • Restaurateurs realized only a 6 percent level of upsell from gift card promotions in 2009.
  • More than 1 million loyalty points were issued to customers in 2010 in comparison to 161,000 points issued in 2009 – an increase of 85 percent in the year-over-year comparison.
  • The length of time consumers held onto gift cards before redeeming them decreased from 45 days in 2009 to 40 days in 2010.   

“The data from our analysis show a dramatic improvement in restaurants’ promotional efforts in the last two years,” Padam said. “A key factor is that restaurant owners are generating greater insights on their customers and, in turn, creating much more focused and impactful customer loyalty and coupon programs.”

Topics: Business Strategy and Profitability , Food & Beverage , Trends / Statistics

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