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What is a F&B loyalty system and how does it help to improve my business?

Updated: Jun 4

There are industries that live and die by repeat purchases such as the F&B and FMCG retail industry. The price tags are relatively low and margins are slimmer than other industries, so high volume of sales is required! Sales volume can be generated by getting people to buy more per visit or by getting them to visit more often, both of which are where a loyalty program comes in.

A customer reward program is not a brand-new concept in this day and age. It was primarily designed to reward regular diners. In this article, we will take a look at the various benefits of having a loyalty system and why your restaurant needs to have one!


WHAT ARE THE BENEFITS?


1. Customer Retention


As mentioned in the beginning, the F&B industry is much more dependent on repeat purchases as compared to others. Retention of patrons is one method of securing repeat purchases and loyalty programs excel at exactly that! For example, a point system which is your most common foundation of a loyalty system for F&B restaurants awards every dollar spent with a certain amount of points which can then be traded for a reward.


It’s addictive – think of it like a game that keeps you coming back – and encourages more spending for redemption. Typically, customers are unable to claim these rewards in one visit and have to accumulate points over a prolonged period of time. This will keep them coming back and patronizing your restaurant, effectively retaining and turning them into loyal customers!


2. Customer Acquisition


Before you can retain your customers, you first need to attract some of them. Marketing gimmicks aside, you can also utilize loyalty systems to accomplish this task. Referral programs can be used to great effect in conjunction with the point system. For example, existing customers can be rewarded with some points or a one-time use voucher when successfully referring a friend or family to dine at the restaurant. This can also be applied to sharing of designated posts on social media to advertise your restaurant at little to no cost.


It is also worthy to point out that well executed loyalty systems do get advertised through word-of-mouth a fair bit. Starbucks is widely regarded to have one of the best loyalty systems in the F&B industry with a staggering 16 million users globally in 2019. In addition, Starbucks relied on its hugely successful referral program to grow its brand in the beginning into the largest coffee franchise in the world today. You can find out more details in the complete Starbucks case study here.


3. Customer Data Collection


Customer data is king in this digital age. It allows you to pull off a variety of creative advertising and promotion tactics for retention and acquisition purposes. You are able to send these marketing collaterals to them through these direct channels, boasting of much higher viewing, click-through as well as engagement rates.


Loyalty systems help you to collect this valuable data by getting customers to fill in a digital form with some of their contact details such as phone numbers or e-mail. Some restaurants offer instant gratification such as a discount off the payable bill upon membership registration, urging customers to sign up for the system on the spot.


Conclusion


Loyalty systems are a common sight nowadays, but there are still restaurants who have not adopted this yet as they are not aware of the benefits or worried about reduced profit margins from the rewards. However, you can rest assured that a loyalty system will pay back severalfold in the future by increasing repeat purchases and new customers!


Check out how to implement a F&B loyalty system properly here.


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