By Charlotte Cowan
While it’s frustrating that the wake of the COVID pandemic continues to affect the Kiwi hospitality industry, there are strategies you can put in place to attract and maintain customers.
In a market where consumers are spoil for choice as to where they spend their money, one way to build your consistent customer base is through loyalty programmes.
Loyalty programmes, also known as rewards programmes or loyalty systems, are structured incentives designed to encourage repeat patronage and enhance customer engagement.
While they are commonly associated with the retail and FMCG sector (think supermarket cards), their importance in the on-premise should not be underestimated.
Do consumers actually use them?
According to CGA by NIQ’s On Premise Pulse+ Report, a fifth (22%) of New Zealand consumers are currently enrolled in on-premise venue-specific loyalty programmes and three-quarters of enrolled consumers (78%) use their loyalty benefits frequently during visits to bars and pubs.
According to the data collected, loyalty programmes are more popular in pubs amongst 35–54-year-olds and 55+ consumers than they are amongst younger drinkers but, by comparison, 18-34 years olds are more likely to use loyalty schemes in late-night bars and cocktail bars.
This high-volume engagement highlights the potential competitive advantage of loyalty programmes to nurture consumer loyalty and drive repeat business, in a time when consumer discretionary spend is down, says CGA by NIQ.
Mike Jennings, Director of Front Row Hospitality – which owns and manages five on-premise venues across Auckland – says loyalty systems are a must-have for on-premise owners.
“We are firm believers in adding a loyalty system to on-premise businesses,” he told The Shout NZ. “It’s a good way to stay competitive in today’s markets – especially with things a bit tight out there at the moment.
Jennings says most Kiwis who find a loyalty system attractive are just looking for some recognition from any business that they choose to frequent more regularly.
“We find that rewarding regular people in our businesses is a good way to have an extra connection, learn a bit more about our customers and to give them a cherry on top for choosing our businesses over others,” he says.
Why are loyalty schemes important?
Encouraging repeat business
Loyalty programmes incentivise customers to return to your venue by offering rewards, discounts, or special perks for frequent visits or purchases.
By rewarding loyal customers for their continued support, you can cultivate a sense of appreciation and recognition, encouraging customers to choose your venue over your competitors.
Research in the Journal of Marketing found that consumers who started with low usage levels changed their behaviour just as much, or more than, moderate and heavy consumers when engaged with a loyalty programme.
Understanding your customers
By collecting data on customer preferences, behaviour and purchasing patterns, you can tailor your loyalty scheme to meet the individual needs and preferences of your customers.
Personalised rewards and offers demonstrate that the bar values and understands its customers, fostering a sense of connection and loyalty.
“Building a data base of customer details to occasionally get in touch with special offers or event information is a bonus for us,” says Jennings.
Driving sales
Loyalty programmes have the potential to increase sales and revenue by encouraging customers to spend more during each visit.
Whether through points-based systems, tiered rewards, or exclusive discounts, loyalty programmes motivate customers to make additional purchases or upgrade their orders to unlock rewards or benefits.
What should you offer?
When introducing a loyalty programme, it’s important that your marketing strategies prioritise unique and exclusive loyalty rewards not available to non-members or at your competitor’s venues.
Food and drink combination offers
Whether it’s a burger and beer combo or a pizza and wine pairing, a food and drink bundle is a prime opportunity for you to upsell and increase your average transaction value. Plus, offering exclusive combo deals to loyal customers during off-peak hours or slow periods can help drive traffic and maximise sales.
Cheap drinks on specific days or times
As with the food and drink combo above, offering two-for-one, cocktail hour or happy hour with cheap drink options can help fill seats and generate revue during traditionally slow periods (such as weekday afternoons or during off-peak seasons).
Points systems
One of the most popular loyalty schemes is the points-based system where customers receive points for each dollar they spend, which can then be redeemed for discounts, free drinks, or exclusive perks.
Often a card-based system, this scheme motivates customers to track their points balance, monitor their progress towards rewards, and take advantage of opportunities to earn bonus points or unlock exclusive benefits – therefore also motivating them to continue to frequent your venue.
Everyday discounts
Mike Jennings says Front Row Hospitality uses an in-house loyalty system which provides an everyday discount in their venues, keeping things simple, consistent and easier to manage.
“[You] earn 10% on everything you spend in any of our venues, it doesn’t matter if it’s at normal price, during happy hour or on a daily deal,” he says. “The more you spend, the more meaningful the rewards become.”
Jennings says this system also gets rid of the “annoying plastic cards that fill up wallets, get left at home or get lost”.
“Our system allows customers to just mention their name at the point of sale and we connect the customers profile to the transaction,” he says.
“Points are added immediately and can be viewed online at any time. It’s a great way to learn our regular customers’ names!”
Surprise rewards
According to a study published in the Journal of the Academy of Marketing Science, incorporating elements of surprise into loyalty programmes can significantly enhance customer responses.
Offering surprise rewards based on personalised recommendations, customised offers, or rewards based on specific interests or past interactions, can create a sense of exclusivity and make customers feel valued.
Research shows that the anticipation of what might come next keeps customers intrigued and engaged, fostering a stronger connection between them and your business.
Social media engagement
Venues can encourage customers to engage with them on social media platforms by offering rewards for likes, shares, or mentions. For example, customers who follow the bar on social media or tag the bar in a post may receive a discount or free drink during their next visit.
Other options include:
Referral programmes: Customers who refer their friends or family members will get a free drink.
Birthday rewards: Offering special rewards or promotions for customers on their birthdays – such as a complimentary drink or voucher towards a meal.
Exclusive invites: Loyalty members receive invites first to any events being hosted at the venue.
By focusing on building and maintaining strong relationships with your customers, on-premise businesses can enjoy benefits including increased spending, resilience during slow periods, a sense of community, and brand advocacy.
Investing in customer loyalty is not just a strategy for growth, it’s a necessity for long-term viability in the competitive on-premise sector.
Take a look at: how rewards systems can use technology.
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