Customer loyalty finally arrives at restaurants

Customer loyalty solutions have been used to great effect within the retail sector for many years and even its most vocal opponents have ultimately succumbed to recognising that points and prizes means regular shoppers.

Brucie would have recognised what points mean.

Asda in particular has long rubbished loyalty programmes, instead preferring to focus on its Every Day Low Prices strategy. But it has started to change its thinking, having recognised this as being a deeply flawed strategy.

It had effectively excluded itself from collecting knowledge and insights into its customers’ shopping habits (the key reason retailers should have loyalty programmes). But it has seen the light over the past year and has started to use vouchers.

What has been surprising is that the restaurant sector remains in the darkness. It has almost universally ignored any form of loyalty programme (beyond coffee shops having cards that are stamped when customers buy a drink).

It’s not exactly the most advanced loyalty programme.

What has made this scenario even more difficult to understand is that restaurants have failed to implement such solutions at a time when they have been dishing out millions of pointless money-off vouchers. Restaurants haven’t had a clue who has been using these vouchers and what their purchasing preferences have been.

This is a shocking state of affairs and it beggars belief that it has gone on for so long. At least the likes of Pizza Express has been investigating loyalty programmes and the capture of customer data.

Pizza Express: better than most, but not that good.

But when Retailinsider.com spoke to the company’s management last year, this reasonably savvy company seemed almost embarassed by the lack of sophistication in the way it collects customer data. Don’t ask me how useless the worst offenders are at giving vouchers out to all and sundry and not closing the redemption loop.

However, things may be starting to change if news from the US is anything to go by as the pioneer in loyalty programmes UK-based Dunnhumby (that handles the successful Tesco Clubcard scheme) has just signed a three-year deal to supply insight and customer behaviour information to leading casual dining restaurant group Ruby Tuesday, which operates almost 700 outlets.

Hello Ruby Tuesday – to loyalty programmes.

If this means the restaurant industry is now going to take loyalty solutions much more seriously then it can only be good news for both the sector and the dining public. Consumers will be rewarded for their loyalty to specific restaurants and will no longer be indiscriminately targeted with irrelevant, money-off vouchers. And restaurants will stop giving away margin to promiscuous deal-chasing consumers.

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2 Responses to Customer loyalty finally arrives at restaurants

  1. Nick January 11, 2011 at 11:40 am #

    Nando’s have been doing this for years but that aside I agree that the restaurant industry have, in the main, lagged behind other parts of retail in loyalty management save for a few interesting examples of burger chains offering similar schemes including the noteworthy 4Food in New York. http://www.canvas8.com/public/2010/09/14/4food.html

  2. Glynn Davis January 11, 2011 at 4:43 pm #

    Thanks Nick. I think the key problem has been failure to close the redemption loop (as they say). Unless you are collecting data while you dish out freebies and offers then the upside to the retailer/restaurant is pretty limited. Only then can you ID loyal customers and give them what they really want. And as for dis-loyal customers – give them nothing, and certainly not money-off type deals.