Customers are the lifeblood of the restaurant business, and the ability to keep traffic flowing is essential, especially in challenging economic times. Restaurant operators employ different ways of managing relations with guests, and many have found loyalty programs can be an advantageous tool—not just to offer customers special deals and discounts, but to act as a direct marketing source to a brand’s most dedicated customers.
Starbucks, for example, launched its Gold Card initiative late last year to extend its existing Starbucks Card rewards program. For a one-time fee of $25, members receive a 10-percent discount on all transactions, among other benefits.
Given the troubled economy, brands that keep an open dialogue with their customers will have a leg up on their competitors, says Brad Stevens, the vice president of customer relationship management for Starbucks.
“I think customers are thinking very carefully about how they spend their money and what brands they are going to align with,” Stevens says. “Those brands that maintain a good relationship with their customers will continue to thrive.” Stevens’ e-mail inbox overflows daily with ideas and constructive criticism from dedicated Starbucks customers.
“One of the things customers have been telling us is that value is not just about dollar savings,” he says. “It is about the whole experience that you get from the company.”
The Palm, an upscale-steakhouse chain based in Washington, D.C., would seem to be the kind of fine-dining operator to suffer from the financial crisis. But Kathy Turley, senior manager of loyalty marketing for The Palm, says sales from the chain’s 837 Club have either grown or were flat for every month during 2008.
“I think that the club has really helped us maintain our competitive edge,” Turley says.
Members of the 837 Club, which is named for The Palm’s first location at 837 Second Avenue in New York City, pay a one-time enrollment fee. But that money is refunded in the form of a gift card or certificate. The program has been in existence for 10 years, and the Palm added monthly e-mail offers, good only for 837 Club members as part of the anniversary celebration last year.
Turley says The Palm’s family-run, unstuffy atmosphere helps the members feel engaged in the restaurant when they visit.
“Our members, I think, feel like they are part of the family,” she says. “So as a result there is a sense of ownership, a sense of pride.”
With the loyalty shown by the 837 Club members apparent in their steady sales, Turley knows how important the program is for The Palm’s bottom line as the economy weakens. But she stresses that the chain is dedicated to customers even when times are good.
“I think it is extremely important regardless of what the economic situation is,” Turley says. “You know the old adage [that when] somebody has a great experience they will tell a few of their friends, [but when] somebody has a poor experience they will tell 10 of their friends.”
