Contrary to popular belief, your delicious menu items are not enough to keep your customers loyal. All it takes is a new brand with better items and a little advertising (word-of-mouth or otherwise) to lure a customer away.
A good loyalty program can help mitigate this kind of brand migration, but it has to do two things consistently to work to a brand's benefit.
First of all, a loyalty program must be easy to use. The best restaurant loyalty programs are those that are chain-wide - meaning you can earn and redeem loyalty points at any location. Each franchisee has agreed to be part of the program, understanding the importance of loyalty and how it is good for the brand and, therefore, good for the location(s) they operate.
Chain-operated programs tend to be top-notch as there is a lot riding on them. If the system is down brand-wide, you get a lot of very unhappy customers brand-wide. Their loyalty becomes weakened and it's possible that they may start considering other brands.
Secondly, a loyalty program has to be fairly generous. We're not suggesting you give away food at any extreme rate, but you do have to make it easy for loyal guests to feel like they've been adequately rewarded for the time and money they've spent with you.
Buying nine menu items to receive a tenth free is totally reasonable. It's also reasonable to differentiate your dayparts as well. Buy nine breakfast items, get a tenth free, etc. It encourages guests to be loyal to a brand - and to the time(s) of day they visit.
Some more notes on loyalty programs:
Some brands leave it up to individual operators to determine their loyalty program. Fortunately, there are some good and simple ways to run a loyalty program at a single location:
Punch cards. They may seem archaic, but punch cards are reliable. They're easy to carry, and it's easy to see how loyal somebody has been. Rewards can be clearly printed on the card as a good reminder every time the patron looks at it.
Apps. There are some very good restaurant loyalty apps out there for single location operators. Perka is a great app with some great features, however it requires the operator to have two things in order to work: A tablet or similar device to run their side of the app, and WiFi to connect to the network so it can communicate with the patron.
All it takes is an iffy WiFi connection or for someone to forget to charge the tablet and an app can go offline. Loyalty apps are very powerful, but they need to be supported by educating staff on how to use them and having the reliable infrastructure in-place to support them.
Loyalty programs work. Whether it's a system wide one or a single-location punch card, they keep guests engaged with your brand and buying their way toward rewards. Got a favorite loyalty program? Lets us know about it in the comments.