Generate customer loyalty and get them coming back

Stephen Powell, director of customer relationship management at Acteol, an Access company that works with Azzurri Group, Franco Manca, Ping Pong, Itsu and Fuller's, says: "We are seeing a marked increase in demand for loyalty solutions, with the appetite for multi-channel solutions reflecting how businesses have evolved over the last couple of years. Historically, schemes would simply reward a guest coming into an outlet to eat, but must now also incorporate the takeaway, delivery and retail options." He suggests the increased pace of digitalisation is dramatically improving visibility of data compared to the more traditional paper stamp card, which provides detail of the number of visits but no other information on the customer behind the card or their spending patterns.

Have a strategy before implementing

Before embarking on such a project, Powell says the first questions to be asked of any hospitality company enquiring about a loyalty solution is why they are doing it and what they want to achieve?

"You must have a strategic reason rather than just implementing it because a competitor has a loyalty programme. This is a trade of information in which guests are willing to hand over their data so that the brand can track visits, nature and value of spend in exchange for getting something back, so the objectives must be clearly defined before moving onto the mechanics," he explains.

Victoria Searl, founder of DataHawks, agrees that loyalty projects have to be focused on commercial drivers and not simply fall into the camp of "vanity projects", which has sometimes been the case in the past.

You must have a strategic reason rather than just implementing because a competitor has a loyalty programme

"You need to approach loyalty from the point of view of the behaviour you want to drive and to keep the customers there [in your business]. It's about tipping one or two people over into more frequency –additional visits, additional spend and additional data. If the programme does not do this, then it would be a huge waste of money," she suggests.

For Achille Traore, founder of White Label Loyalty, working with Burger King across Europe was all about using the app-based loyalty solution to drive people to use the kiosks in its restaurants: "People think it's about the discount vouchers, but it's about using the data to change behaviours and to get people to try new things."

Build a relationship

One of the major challenges for much of the hospitality industry is the low volume of transactions and interactions with customers. For casual dining brands the frequency of visits is between 2.8 and four times per year on average, while for higher-end brands it would inevitably be less.

However, Searl says it is still vital that restaurants become "data businesses" because at the very least they need to recognise who are their most frequent customers and work on developing those relationships. In addition, they can then also look to find more people with the same characteristics.

To help build-out the picture of customers for its clients, DataHawks has been working with Starcount, which is able to bring other data points into play including the customer's activity on social media and the brands they follow on the various social platforms.

Rather like with Tesco and its Clubcard, Rowena Humby, chief executive of Starcount, says it is all about creating what Tesco called ‘customer lifestyles' from the combination of items in the shoppers' basket. "We're able to see the context of a purchase. We're working with a bowling alley and can see if a customer is on a works' night out, a family day trip, or a lads' night out," she explains.

From this additional data it is possible to see for instance whether a vegan burger has been bought by a customer because of health or animal welfare concerns and on that basis the restaurant can talk to them very differently though its communications. This knowledge helps hospitality companies know their customers better and, via the likes of DataHawks, these insights can be integrated into customer relationship managment (CRM) systems and loyalty programmes.

Digital age

For Kim Teo, co-founder and chief executive of Mr Yum, which works with the likes of Mildred's, Mallow and Le Bab, the mere fact that loyalty and CRM systems are on the agenda is progress indeed, as she says a year ago less than 10% of the companies she was working with had a marketing platform but this has now reached almost 40%.

For Mr Yum the driver has been the adoption of digital tools like order and pay, which companies have found enables them to build basic profiles of their customers from the data they are collecting. The obvious next step is to then develop a loyalty programme.

"It's the digitisation of hospitality. The first step is know your customers and what they order from you. Companies had not previously had a chance to collect data, it was just feedback on a paper form. But now with our product and the customer opt-in to receiving marketing there is an opportunity to create a loyalty programme," she says.

Guy Bosworth, head of operations at Ole & Steen, says the café chain operates a simple loyalty app that involves the collection of points that can be redeemed against the likes of an Ole & Steen coffee or pastry. The real beauty of the programme for Bosworth is the ability to use it to generate customer feedback. After a transaction the customer is asked to score their experience – to generate a net promoter score – and, most importantly, also add in any comments.

"This is the voice of the customer and we use it to improve our service. It's real-time feedback. There is a granularity to the feedback, which shows the area we might need to focus on – whether it is speed of service or the overall shopping experience," he says.

As Ole & Steen learns more about its customers, the plan is to move to tailoring the offers to the individual. Teo says such points-based schemes are an obvious start to the journey and suggests there is the opportunity to move onto a tiered mechanic, whereby the collection of points takes customers onto different levels of rewards that might involve exclusive, non-financial elements.

The collection of points has undoubtedly been complicated by the various channels across which customers can now purchase from hospitality companies. Al Henderson, chief sales officer at loyalty platform Eagle Eye, says the challenge is to have a loyalty solution that recognises the customer across the channels and can place their rewards in one location. Whether it is the scan of a QR code in an app, a plastic card presented to the server, or an online visit to a website, the loyalty solution should ideally recognise the individual.

Link your verticals

There is also the potential for even more complexity, according to David Wheatcroft, head of Hospitality at Elavon Europe, who says: "Increasingly there's potential for loyalty in one vertical to link to another, as companies work together. For instance, rewards from your hotel booking or flight could get you discounts with a preferred car rental firm or public transport provider, or even pay for your coffee at the airport or dessert to round off your meal."

For PizzaExpress and the Eagle Eye loyalty solution, there is a link into the tills in its restaurants as well as the tills of Asda and Waitrose for retail purchases of its pizzas and an integration into the delivery aggregators. Meanwhile, for Big Table Group, the goods bought in the supermarkets have a code on the packaging that generates a reward for loyalty members.

By being able to recognise the customer across all these channels clearly paints a much fuller picture of their behaviour and enables hospitality companies to better tailor their rewards to each individual. Eagle Eye is working on ‘marketing in the moment', where communications are triggered by events in a certain area. This could be weather-related, such as a rain shower prompting an offer for a discount in a bar in that area, thereby enabling them to take cover from the downpour.

Close to home

The move by foodservice businesses to become more multi-channel was the prompt by JP Then, founder of Crosstown Doughnuts, to create Slerp, which he describes as an e-commerce platform for hospitality that can handle all the digital sales for a restaurant. This has become especially important as online sales for home delivery play an increasingly big role for many restaurant chains.

He is an advocate of restaurants handling digital orders in-house rather than using the aggregators such as Uber Eats, Deliveroo and Just Eat and giving away around 30% in fees. Slerp therefore enables them to handle online orders, whether generated through a website or app, and to retain the customer data. An obvious step for Then was to add a loyalty programme.

This is proving to be an important part of the Slerp proposition because changing customer behaviour away from using the aggregators and instead transacting direct is best achieved through incentivising them and a loyalty programme is the obvious route. At Crosstown the loyalty aspect is about to move onto a tiered system of rewards, including different rewards given dependent on which channels are used by the customer. For Crosstown, almost 50% of its sales are now digital with the rest derived from its stores.

"If a restaurant's current online strategy is about using the marketplaces [aggregators] then margins will be dented. We're a more economical way to run the delivery side of a restaurant and reward the best customers who deal direct," says Then, who cautions that it can take time to build up a database for a loyalty programme, but it is worthwhile: "You will not have a database overnight and you need to be patient with it."

Traore at White Label Loyalty has also found it beneficial to reward customers not just on their level of spend but on other behaviours: "We're an events-based system whereby any customer action can be rewardable. Almost all loyalty programmes are based on rewards for transactions whereas we enable any customer action to be rewardable such as visits, frequency, and social media interactions. We're bringing a wider loyalty aspect to the market."

The API-first solution from White Label Loyalty can be embedded into existing websites and apps or the company can build an end-to-end solution for restaurant operators. This flexibility helps because Traore says the hospitality industry is rife with different solutions including tills, CRM and enterprise resource planning systems that are not unified: "It's very far behind other sectors. It's one of the biggest challenges facing it, which is why we've built an easy platform."

Hospitality would no doubt point to myriad other challenges, including an increasingly tough economic backdrop, but this might just be the environment into which a loyalty programme will come into its own.

Oakman Group links loyalty to investment

Upmarket pub and restaurant operator Oakman Group has cleverly linked a loyalty programme to its 800-plus investors who can take advantage of a raft of benefits across the company's various outlets.

The tiered loyalty programme, which has a batch of different discounts based on the level of investment committed to the company, was provided as an added incentive to potential shareholders, but Steven Kenee, chief investment officer at Oakman Group, says many people joined simply because they wanted access to the generous discounts on offer.

Although he suggests the company could have just given discounts – for money invested – and not bother with the shares element, he says: "We could have raised half the money and just given discounts, with no shares. But it's much more powerful with shares as it's more tangible than just a loyalty membership."

Kenee says there is no intention to change this arrangement, but adds that "we will look at it". So there is the prospect at some point of bringing in what would effectively be a paid-for loyalty scheme, the likes of which have become popular of late and encompass the subscription-type propositions.

Since the discounts are predominantly mid-week focused they are advantageous to the business as they drive trade at quieter times.