What comes first, the CRM or the loyalty program?
For a company in the restaurant business, or any company for that matter, putting systems and processes in place to manage customer data, relationships and experiences should take priority over the introduction of a loyalty program. The principal value of a loyalty program, after all, is not so much that it encourages greater patronage frequency (which is one of its key goals) but that the program is an enabler and conduit for customer profile information which can be leveraged to enhance value through improved targeted marketing communication, as well as services, operations, and other performance areas. Having functional systems to manage and channel customer data will make any loyalty program more effective. Without the systems, any loyalty program would have to be managed through manual means or with single-application software.
As a quick example of the importance of profile data and how a system can make it pay real dividends, there's a new smart card-based, combination customer identification system, loyalty program, and on-site advertising medium for fine restaurants called Personal Recognition, offered by Integrity For You (IFY) in Texas. Diners use an RFID (radio frequency identification card) to identify themselves at a kiosk upon entering a restaurant, and they're rewarded with personalized service and special offers. They will also view brief advertisements for sponsors (such as beverage companies, theaters, etc.), so there's little to no investment cost for the restaurants. The program is now in test phase.
Dig Deeper on Customer loyalty and retention
Related Q&A from Michael Lowenstein
Find out if luxury retail stores should offer loyalty programs for their customers in this tip. Learn how some luxury retail brands build loyal ... Continue Reading
Get an experts take on raising the hurdle rates of a customer loyalty program and learn more about value-added benefits from Michael Lowenstein. Continue Reading
Learn a few ways to measure customer loyalty and find out about customer spend or "share of wallet," which expert Michael Lowenstein believes to be ... Continue Reading