How four restaurant operators drive repeat traffic with loyalty programs
Most, if not all, operators would agree that restaurants thrive on repeat business from core customers. But the most common way to address the need for that kind of traffic — the loyalty program — takes all kinds of forms unique to each restaurant or chain.
At a breakout session at2011, executives from Garden Fresh Restaurant Corp., Genghis Grill, La Madeline and Red Robin Gourmet Burgers shared insights into what led to their loyalty programs and what makes them work.
Target your customers
Genghis Grill, a 76-unit build-your-own stir fry chain, has 650,000 members in its Khan's Klub loyalty program. Chief marketing officer Ron Parikh showed attendees that it's worth it to slice and dice such a large group of customers when the chain gets its analytics every week from the technology vendor that manages the program, as it did with lapsed users in its "We Miss You" campaign.
After combing through its data, Genghis Grill saw that many Khan's Klub members had not visited the restaurant for more than 90 days. The chain sent an email to that segment of guests and offered a free stir fry bowl to entice them to come back in.
In one location, 889 "We Miss You" offers were sent, and the redemption rate was 7 percent, Parikh said. Four months later, those guests that redeemed their free bowl had returned to buy 1,257 bowls for $13,958. Eight months later, those targeted fans had purchased 2,193 bowls for $23,764.
"That's very powerful," Parikh said. "It's something that you can't buy a newspaper ad or do a Facebook promotion for. They're coming back and bringing more people with them."
Give employees incentives, too
Michael Mack, chief executive of Garden Fresh, which operates 122 units of the Souplantation and Sweet Tomatoes brands, said the company's Club Veg loyalty program represents 65 percent of all coupons redeemed at Garden Fresh's restaurants. It has become a popular program, surpassing 1 million members last year, based on a heavy emphasis on in-store sign-ups.
"You have to have very clear direction from the top, you've got to allow the people who are going to be touching this program a voice ... and third, there's got to be some link to their financial compensation," Mack said.
Of course, incentives also factor just as much with consumers, he added.
"The best deals are available through our loyalty program," Mack said. "We were very purposeful in going after that in this environment."
Tie it to a larger cause
For bakery-cafe chain La Madeleine, running a loyalty program means inspiring true loyalty by tying in to the 60-unit brand's cause marketing for breast cancer charity Susan G. Komen for the Cure. Amanda Breaux, senior manager of interactive marketing, said the integration made sense because La Madeleine already was aligned with Komen and systematically giving to the organization would develop greater loyalty than a traffic mover like a Groupon daily deal.
"This program was meant to foster loyalty, and loyalty at its core is strong support or allegience not just a discount of the week club," Breaux said.
La Madeleine customers, who skew predominantly female, buy a Card for the Cure for $35 and register the card online, where the chain captures their data. Users then are entitled to 10 percent off every purchase for a year, and 1 percent of every sale is donated to Susan G. Komen. They can renew every year for $25. In two years, La Madeleine has donated more than $52,000 to the charity.
Provide more chances for rewards
Red Robin Gourmet Burgers has had its Red Royalty program available to its whole system of 460 restaurants since January, and the casual-dining chain is on pace to reach 1 million members by October, said Dana Benfield, director of customer relationship management.
The ongoing offer with the loyalty card is a familiar buy-nine-entrees-get-one-free, she said, but the added incentives are what drive the program's popularity.
"With our e-club, we always give away a free burger on the customer's birthday, so that automatically became a part of the loyalty program," Benfield said. "The rewards that we added on incrementally were an incentive to register the card -- guests can build credit on their cards but they can't redeem anything until they register it and start that two-way communication with us. We added a registration reward that's valid only 14 days afterward, so that drives a highly incremental visit with our guests."
Another incentive is an initial "5 in 5" feature where guests receive $20 off a sixth visit if they come to Red Robin five times in the first five weeks after signing up for Red Royalty.
"It's just that one time right when they join to try to achieve that reward," Benfield said. "Again, because of the frequency of our guest, that drives heavily incremental visits for us early in the program and establishes the habit of visiting Red Robin."