Adoption rates for restaurant loyalty programs lower than other industries

March 31, 2014

Despite an increased focus on loyalty apps and loyalty programs by many big-name restaurant brands in recent months, plenty of opportunities remain in the loyalty space. According to a new study from Deloitte, just 25 percent of consumers consider loyalty programs important when choosing a restaurant.

The study, titled "Second helpings: Building consumer loyalty in the fast service and casual dining restaurant sector," also found that loyalty program adoption rate is lower for the restaurant industry compared to other sectors. Fifty percent of survey respondents said they belong to at least one restaurant program, versus airlines (78 percent) and hotels (70 percent).

Also, according to a news release, among consumers who belong to at least one loyalty program, nearly three-quarters (74 percent) indicate that they do not participate in their favorite restaurant's program, either because they say one is not offered or they are simply not sure whether one is available. But among the other 26 percent who indicate that their favorite restaurant offers a loyalty program, a large majority (87 percent) actually belongs to it, implying a high conversion rate among a restaurant's best customers.

"Although restaurant loyalty program participation is lagging, the study indicates that consumers do not have an inherent aversion to such programs," Scott Rosenberger, principal, Deloitte Consulting LLP, said in the release. "These programs can drive value if promoted effectively, as a restaurant's most frequent patrons are more inclined to join that restaurant's program and use it more than any others. Additionally, we found that those core customers who do belong to their most-visited restaurant's program are more satisfied customers and stronger brand advocates than those who do not."

To strengthen the connection between members and the brand, restaurants should clearly market their loyalty programs and encourage participation, he added.

Getting personal

Loyalty programs that complement interactions with staff and those that include digital engagement are ways restaurants can offer more personalized connections, Deloitte's study says.

Currently, just one-third (33 percent) of respondents felt that they had developed a personal relationship with their favorite restaurants' brand and people. Attributes such as responsiveness and friendliness of staff rank high (5th and 8th out of 23 attributes) in terms of importance to the restaurant experience, and relatively high in terms of repeat patronage (11th and 10th).

While these characteristics rank high, consumers still hesitate to share their experiences about them. Seventy-one percent of survey respondents liked the menu options at their favorite restaurants, but only 42 percent would be willing to serve as brand ambassadors, and 61 percent said that they never or rarely wanted restaurants to contact them for personal feedback.

However, there are a number of untapped opportunities for restaurants to engage their patrons in a manner they prefer, the release said: About six in 10 (61 percent) consumers indicate they prefer to be contacted via email, while less than half this amount (28 percent) say restaurants actually do so. One half (50 percent) prefer traditional mail, 29 percentage points higher than the number who say they receive it.

Restaurants can also add engagement value through mobile channels. Among consumers who have downloaded a mobile application (19 percent), the primary reasons for doing so include viewing restaurant menu and prices (55 percent), and checking for hours of operation (46 percent).

"Loyalty programs, mobile platforms and customer outreach, among other approaches, afford restaurants the unintrusive means to understand and connect with customers in ways that matter to them individually," Rosenberger said. "Blending traditional and digital channels, restaurants can gain insights into customer preferences through each transaction and interaction. Armed with that knowledge, they can make more personalized gestures, such as a free favorite beverage or dessert as a birthday or anniversary present, that help garner goodwill and drive brand affinity."

Topics: Loyalty Programs, Marketing / Branding / Promotion, Online / Mobile / Social, Trends / Statistics

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