Loyalty is Key to Keeping Customers Happy in the Face of Rising Prices

Editor's Note: Keeping your customers happy can mean a lot of things, but to us it means meeting them where they spend 5+ hours per day on: their mobile devices. Mobilizing your loyalty program can open the door to hyper-personalized messaging to create brand intimacy and drive repeat purchases.

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Price hikes may be inevitable, but discounts don't have to be.

As the restaurant industry continues to fight disruptions in supply chains, combat the scarcity of goods and overcome the rapid increase in the cost of goods due to inflation, many restaurants have been forced to raise prices.

Consumers have been vocal as of late about the woes of inflation and soaring prices from gas to groceries. However, unlike these traditional consumer product goods, restaurants have a unique opportunity to keep customers happy despite price increases —thanks to loyalty programs.

For too long restaurants have depended on discounts, coupons, dollar-offs and freebies for customer acquisition and retention, but discounts and coupons are expensive to the bottom line and to the brand, posing an increased risk for brand erosion. Additionally, if a restaurant has to inevitably raise prices, discounting items negates the necessary profit gains. A modern and customizable loyalty program can help alleviate some of these concerns.

Loyalty programs allow restaurants to build direct relationships with their customers. And through data capture enabled by loyalty platforms, restaurants can better understand who their most valuable customers are as well as their behaviors and preferences. For example, Starbucks, with one of the most sophisticated programs in the industry, shared program success in their latest earnings call. The coffee chain's loyalty members accounted for 54% of the revenue in US company-operated stores, the highest level of engagement on record, up 2% from last year.

And this makes sense. Our data shows that targeted campaigns delivered six times more revenue than generic campaigns. With robust customer data captured through loyalty programs, it is possible to deliver messages and offers that truly resonate with each customer to drive customer lifetime value and predictable revenue.

With sophisticated loyalty programs, restaurants may offer non-discount rewards that entice with exclusivity and access. Instead of giving a coupon, effectively nullifying a price increase, restaurant marketers can attract customers, reward VIPs, incentivize direct orders, respond to guest satisfaction feedback and ultimately drive customer lifetime value — all without offering a single dollar off.

Special perks like merchandise or swag, dedicated parking, exclusive seating or a skip-the-line pass all thank loyal customers without steep discounts. Drive first-party ordering by offering a secret menu only available on owned channels. Grow check averages and frequency by creating a challenge within a brand's loyalty program, like earning an exclusive invitation to a chef tasting event by spending a specified amount in a given month.

Despite inevitable price increases as a result of inflation and the shortage of supplies, restaurants can delight customers with exclusivity and access to valuable experiences without sacrificing profit gains to discounting. With a sophisticated loyalty program, restaurants place their brand in a position to engage loyal customers and build stronger relationships.

This article was written by Zach Goldstein from Fast Casual. News Features and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.