The basic human need for food will never go away. People have to eat no matter how tough life gets. Yet, the restaurant industry was one of the hardest hit when the COVID-19 pandemic began. When consumers need to tighten their purse strings, frivolous spending on eating out is one of the first things to go. So, how have chains like Panera, Starbucks, Taco Bell, Wendy’s, Chipotle, and others managed to survive and thrive? Well, it’s simple: They’ve banked on the loyalty of their customers to carry them through.
Why Loyalty Programs Work
Customers become loyal to a brand when they feel that the brand intentionally offers products and services they enjoy and feel excited to purchase. These “feel-good” benefits keep customers coming back to readily spend their money. For chains like Panera and Taco Bell, the best way to offer those benefits is through a loyalty program.
Panera’s coffee subscription program launched shortly before the pandemic, which quickly halted most breakfast food purchases. But COVID-19 didn’t stop people from signing up for Panera’s program in droves. As of July 2020, that subscription program was 40 million strong, thanks to its loyalty program. Panera’s CEO has stated that these loyalty members purchase from the brand 6–10 times more than nonmembers and generate reliable recurring revenue.
Taco Bell rolled out their latest rewards program in July 2020. It generated so much buzz that their website and app crashed when the program first launched. This sort of pent-up demand shows that even in the midst of a crisis, loyalty finds a way. Their program offers users secret menu items and other perks that nonmembers can’t get without providing basic sign-up information in the app. Even though they had to give a little on their end, customers still scrambled to be a part of the program. If you generate loyalty that provides extra value, customers are willing to come back and keep spending.
More Than Fast Cash
Creating loyalty programs offers a lot more perks than just generating revenue. Customers who sign up for a loyalty program give information that becomes useful data. This data helps businesses learn about their customers, giving insights into what they like, what they don’t, and what their buying patterns are. By revealing the most loyal of these loyal followers, it can even uncover their most valuable demographic. This information is exactly what companies need to adjust their branding and stay popular and cost-efficient.
Customers don’t just love loyalty programs for points and perks. The pandemic has revealed that they have higher expectations. Loyalty has, first and foremost, become about experience and personalization. Taco Bell continues to master this by not only offering food perks but also messaging their members about new products, safety, and business insights. People love to be informed, and with more customers ordering digitally, each brand’s ability to reach out effectively and make that happen is only growing.
YOU Can Reap The Rewards
At this point, you may be thinking, “If my business isn’t a big-name brand with hundreds of locations, will a loyalty program still benefit me?” The answer is yes! No matter your company’s size, you will still benefit from offering customers deals and insider information. The reason goes back to business fundamentals.
As a business owner, you know how much harder and more expensive it is to acquire a new customer than it is to keep a current one. A loyalty program — or any type of loyalty perk or offer — will help you keep the customers you already have.
According to Forbes, in good times, 25% of customers are responsible for 50% of sales. So, focusing on that segment of your customer base is actually cheaper for the top and bottom line of your business. (For more strategies to help you do this, check out our Ultimate Guide To Customer Retention.)
Catering to these customers also means your business is truly letting the customer influence their own journey (with your help, of course). And that’s better for everyone involved: It creates more revenue for the business and more satisfaction for the customer. Similarly, storytelling can also increase your brand loyalty.
If you want to outlive the tough times we’re in — and thrive — you have to focus on your customers with the most loyalty potential. Remember, loyalty can equal revenue. Providing those customers with something to keep them coming back may seem costly, but in the end, that loyalty will pay for itself, and then some.