Did you know that food and beverage loyalty programs are probably the oldest loyalty programs in the world? As per several noted historians, the foundation of the contemporary loyalty programs can be traced back to Ancient Egypt where people earned and exchanged wooden tokens for bread and beer!
In the past, serving food (and beverage) was considered a holy act. It was more than just providing taste, nutrients, and calories to customers and patrons. It was all about love and service to humanity. The very act of cooking and serving commanded immense respect and loyalty.
But time changed, people changed, and so did loyalty programs. The wooden tokens were replaced by digital points. People became more transaction. And as ironic as it may sound, good food alone isn’t sufficient to guarantee loyalty today.
That’s why it’s not uncommon to see a lot of restaurants that serve good food don’t get loyalty from many of their customers. As per data, only 55 percent of customers are loyal to the restaurant sector. Could it be due to the lack of effective loyalty programs in the food and beverage sector?
In the present era, just as it’s important to bake a scrumptious pizza (or brew a perfect cup of luxurious Dalgona craft coffee), it’s also critical to design effective strategies to ensure customer loyalty.
To paraphrase Wolfgang Puck, a renowned Austrian-American chef, and restaurateur, it’s not just enough to be a great chef. It’s even more important to be a great businessman. That’s why we have created this food and beverage loyalty program a full guide to help you create and run successful food and beverage loyalty programs. Read on and thank us later.
What are Food and Beverage Loyalty Programs?
As the name suggests, food and beverage loyalty programs are customer retention programs that are designed by restaurants, cafes, diners, and other establishments such as food delivery companies in the food and beverage industry.
Likewise, grocery loyalty programs are reward programs that are offered by consumer packaged goods (CPGs) manufacturers, supermarket chains, brewers and soft drinks makers, and others.
These programs are crafted to reward frequent patrons and buyers using different incentives such as discounted food coupons, complimentary delivery, free treats, exclusive benefits to members, and branded gift items such as a classy coffee mug.
Challenges Faced by Food and Beverage Manufacturers and Grocery Companies in Customer Retention?
Every sector faces some challenges or the other when it comes to retaining customers. The food and beverage industry, as well as the grocery and CPG sector, faces the following challenges:
1. Low customer retention rates
The restaurant industry has one of the lowest customer retention rates. A 2018 study found that the restaurant sector has a customer retention rate of 55 percent, while it’s 84 percent in the media and professional services industry.
2. Limited prospects to differentiate customer experience
This applies to grocery companies where the opportunities for different customer experiences are extremely limited. In price-sensitive markets, products with affordable price tags sell more.
3. Infrequent purchases
A study conducted by loyalty and guest engagement platform Thanx Inc. found that 70 percent of restaurant customers never make a return visit to the same restaurant after their first visit. Many customers are more likely to churn after just one bad experience.
4. Rising competition and disruption
Over the last few years, the competition in the food and beverage industry (as well as the grocery industry) not only substantially increased but a lot of disruption happened as well. The evolving digital technologies and the entry of new players have altered the competitive landscape in the industry.
5. Difficult to have a unified customer profile
Another big challenge for the food and beverage industry and grocery store chain is that it’s difficult to have a unified customer profile as many customers alternate between online and offline purchases and there is no means to connect them.
Which Types of Food and Beverage Companies Should Use Loyalty Programs and Why?
The innovation of loyalty programs revolutionized many industries including the food and beverage sector. Many players in the industry can benefit a lot by leveraging sophisticated loyalty platforms and running loyalty programs. Here are some of them:
1. Restaurants and cafes
Restaurants, cafes, and diners should use food and beverage loyalty programs to encourage frequent visits and enhance customer retention. Being local in nature, these establishments can leverage sophisticated loyalty programs and attract and retain customers in the neighbourhood localities first and create word-of-mouth publicity over time.
2. Fast food chains
Food and beverage loyalty programs are extremely beneficial for national and global fast food chains because of their large customer base and high transaction volume. Leveraging loyalty platforms and customized programs, these establishments can easily collect customer data, run targeted marketing campaigns, offer personalized deals, and simplify the ordering process through mobile apps.
3. Bars and pubs
These establishments can leverage loyalty platforms to design and run high-quality loyalty programs for their patrons. By offering rewards for frequent visits or special discounts on drinks, these establishments can reward patrons to visit for social gatherings and create a sense of exclusivity. Also, bars and pubs can use loyalty programs to create loyal communities.
4. Bakeries and dessert shops
Bakeries and dessert shops can leverage loyalty platforms and food and beverage loyalty programs to promote new products, seasonal offerings, or limited-edition items to loyal customers.
5. Food delivery services
Can a food tech company do without digital loyalty programs? Certainly not! Be it Uber Eats or Zomato, all leading food delivery services use F&B digital loyalty programs and digital loyalty platforms to engage and retain customers.
6. Packaged F&B manufacturers
Packaged F&B manufacturers are among the major users of food and beverage loyalty programs. These companies leverage sophisticated digital loyalty programs not just to sell their packaged foods and beverages in huge volume but to create a sense of familiarity among their customers.
Suggested Read: Loyalty Programs are Driving Growth in Food and Beverage?
What are the Key Features of Loyalty Program Software in the F&B Industry?
The main features of loyalty program software in the food and beverage industry can vary depending on the needs of the business as well as the specific software provider. However, here are some common features found in loyalty program software for the F&B sector:
1. Point-based system
Sophisticated loyalty software usually comes with a points-based system where customers earn points for purchases. Make sure the software can monitor and manage the accumulation, redemption, and transfer of points. Software businesses can enable businesses to define the point structure and assign rewards such as discounts, free items, or exclusive perks.
2. Mobile app integration
Many types of loyalty program software provide mobile app integration, thereby enabling customers to access their loyalty accounts, redeem rewards using their smartphones, and check rewards status.
3. POS integration
The hallmark of sophisticated loyalty program software is how well it integrates with a business’s existing point-of-sale (POS) infrastructure. This helps in the automatic collection of customer data, accurate tracking of customer transactions and points accumulation, and real-time updates on loyalty program information.
4. Integration with third-party services
Sophisticated loyalty program software should offer integrations with third-party services such as online ordering platforms, delivery apps, customer feedback systems, or reservation systems. These integrations enhance the overall customer experience and enable seamless data flow between different systems.
5. Omnichannel support
The right loyalty program software should be able to support various channels, including in-store, online, and mobile. This ensures a consistent customer loyalty experience across various touchpoints, which enables customers to use their preferred channels to earn and redeem rewards.
6. Reporting and analytics
What’s the point of designing and running loyalty programs if you can’t monitor how they perform? To enable you to track the real-time performance of loyalty programs, sophisticated loyalty program software come with advanced reporting and analytics tools. They provide detailed data visualizations, reports, and insights into program performance, customer behavior, buying patterns, members’ activities, and the effectiveness of customer loyalty initiatives.
7. Promotions and campaigns
Loyalty software enables businesses to design and execute targeted promotions and campaigns to incentivize customer engagement and increase sales. This includes features like personalized offers, birthday rewards, tier-based promotions, limited-time discounts, and referral programs.
Top 3 Examples of Food and Beverage Loyalty Programs
In the F&B sector, some great examples of brands provide exceptional loyalty programs. Here we list three brands that provide gems of a loyalty program:
1. My Starbucks Rewards
Launched in 2009, this was the first loyalty program to be made available via a mobile app. Initially launched as a visit-based reward program consisting of three levels—Welcome Level, Green Level, and Gold Level. In 2012, the global coffee chain major modified the reward program and introduced another “My Starbucks Rewards” four years later.
This loyalty program in the food and beverage sector is suitable for busy and health-conscious customers. Using the reward programs, customers can skip the queues and place their orders directly over the mobile app.
2. Amazon Prime’s Discount on Whole Foods Market
Amazon Prime, a subscription-based loyalty program from the US-based e-commerce company Amazon, also offers heavy discounts on Whole Foods Market.
In 2017, Amazon acquired Whole Foods Market, which was a large multinational supermarket chain with 500 stores in the UK and North America. Since then, all Prime members who shop from Whole Foods Market can get many benefits such as one- or two-day shipping, early access to deals, and of course, attractive grocery discounts.
- Amazon Prime’s free 30-day trial allows everyone to taste the benefits without any commitment
- They can take advantage of 2-hour delivery in selected cities
3. Chipotle Extras
Chipotle Extras is an app-based loyalty program of Chipotle Mexican Grill Inc., also known as Chipotle. Under the reward programs, the American fast casual restaurant chain offers points for each dollar spent. It uses gamification to enable customers to earn extra points and collect achievement badges.
The program now has more than 24 million members so far and it has helped the brand immensely in shifting towards online sales, which proved to be a savior during the pandemic.
When it comes to ensuring customer loyalty in the food and beverage industry, a loyalty program can make all the difference. When designed and executed properly an F&B loyalty program is just like a lifeline in such a cutthroat competitive age.
At LoyaltyXpert, we have the expertise to create extremely effective food and beverage loyalty programs for all types of companies and establishments. Whether you own a restaurant or a food delivery app, If you are planning to use a high-quality loyalty program in your F&B and grocery business, then contact us to get a free demo.