Tiered Loyalty Systems: Do They Bring in More Business?
What exactly is a tiered loyalty system, how does it differ from regular loyalty systems and can it bring your restaurant more business?
Loyalty is Earned, Not Given
When it comes to getting your customers to visit your business more than once, you’ve got focus on loyalty. Why is repeat business (loyalty) so important for your restaurant? Well, just a “5% increase in customer retention can raise profit by 25–95%.” That’s a crazy range, for sure, but who wouldn’t take even a 25% increase in profits from just a 5% increase in customer retention. Luckily, there are a few simple ways to cultivate loyalty and motivate your customers to come back to your restaurant time and time again!
Loyalty Programs. What Are They?
You’ve likely heard of loyalty programs before, or may have seen them in use without even realizing it. You know those Starbucks cards patrons often use, or those special phone apps that people scan to get points every time they buy food? Yeah, those are all examples of loyalty. Of course, it can also be as simple as registering a customer’s phone number and logging them into the system each time they make a purchase.
Loyalty programs are one of the most effective ways for customers to form a strong bond with your business. They offer up free points, rewards and perks the more a customer spends. This simple premise can actually build brand loyalty and increase a customer's base spend amount significantly.
With that in mind, there are several types of loyalty programs that you can incorporate into your restaurant. Let’s go over a few common ones:
5 Common Types of Restaurant Loyalty Programs
1. Points Programs - customers earn points that can accumulate for rewards after each visit
2. Cash Back Loyalty – Spend a specified amount at a restaurant and get ‘cash’ back that can be spent on other food items
3. Digital Punch Card Programs – scan in each time you purchase a specified item and get one free after a certain number of purchases
4. Premium Loyalty – Customers pay a fixed amount upfront for instant access to benefits
5. Tiered Loyalty Programs – Letting customers work towards higher loyalty tiers for greater rewards and prestige
The Ins and Outs of Tiered Loyalty Systems
A tiered loyalty system is all about enticing customers to spend at your restaurant by encouraging them to cross milestones that make them eligible to reach higher tiers of membership. This type of incentive works for one main reason – exclusivity.
If your customers are in a bronze tier, sure, they get basic rewards, but when they see someone in a silver or gold tier getting more perks than they do, it encourages that customer to spend more to reach those higher levels of exclusivity. This, in turn is how you end up boosting repeat business and visits.
You can use things like progress bars and little milestone markers in an app, or online to let customers track their progress and always know how close they are to attaining the next level of loyalty. Integrate your tiered loyalty system directly into your POS so that it’s easily and quickly an integral part of your business. You are essentially building an emotional connection to your brand as customers associate their own identity with your brand as they spend more, get more rewards and feel great about it in the process.
Best of all, those customers who reach your top tier are likely to be so ingrained in the fabric and culture of your business that they almost turn into brand ambassadors.
5 Ways Your Restaurant Benefits from Tiered Loyalty
1. Know Your Customers
By separating your customers into tiers, you can focus more on those high-ticket customers that you know are going to spend more. This is a great way to allocate resources toward a targeted group that are guaranteed to provide your business with repeat spending and might even turn into brand ambassadors over time.
2. Curated Experiences Builds Loyalty
With a tiered system, you’re able to tailor-make experiences that will resonate with customers on each level of your loyalty program. Instead of offering the same generic experience to every customer, you can make attaining new tiers feel special and incentivise customers to spend more as they seek better experiences and rewards. This, in turn, builds loyalty and boosts spending.
3. More Status Means More Spending
Who doesn’t want to be the best of the best? Offer exceptional service to your customers, make them feel valued and encourage them to feel extra-special at your restaurant by reaching higher tiers. As they spend more and increase their status in your business, they’ll feel great about the progress they’ve made and want to share this with their friends and family. Feeling like a VIP is super rewarding for any customer!
4. Allocate Your Loyalty Budget Where It Matters
You know who your best customers are, so you also know that you should reserve the largest portion of your loyalty budget for them. Be it exclusive meals, access to secret menu items, deeper levels of customization, free gifts, and much more, no matter what awesome experiences you plan to spend your budget on, you can target the top-tier rewards for your top-tier customers.
5. Lower Rates of Cancellation
Your customers have worked hard to grow within your loyalty system, which means they’re less-likely to opt out or cancel. Having loads of loyalty members is a great marketing tool to showcase how many people are actively engaging with your restaurant brand, while also letting the world know that people love what you’re serving.
Yes. Tiered Loyalty Systems Encourage More business
Now that you have a deeper understanding of what a tiered loyalty system, you can implement one that perfectly fits your business. By incentivising customers to spend more thanks to positive experiences, great rewards and the urge to earn more prestige, you’ll boost repeat business and might even build new brand ambassadors along the way!