Why customer loyalty is essential for hospitality businesses
Customer retention is any marketing that helps a business prevent customers from jumping ship to competitors while encouraging repeat purchases. And when it comes to customer retention strategies, a customer loyalty program is a fantastic (and popular) way to build long-lasting, high-return customer relationships.
While it can be tempting to focus on customer acquisition (everyone loves getting new customers), retention strategies are much more profitable for established retailers.
Have you heard the theory that 80% of your profits will come from 20% of your customers (also known as the Pareto Principle or 80:20 Rule)?
This rule is commonly applied to the development of marketing and sales strategies, and for a good reason. When you consider that your most loyal customers are the majority of this highly profitable 20%, showing them a little extra love to maximize returns makes sense.
But how does this apply to a customer loyalty program?
Look at it like this: without a loyalty program in place, what are you doing to promote your business to existing customers or stand out to potential customers? And how do you foster brand loyalty in the highly competitive hospitality industry?
This resource provides the answers to getting started with customer loyalty. Let’s dive in.
How a customer loyalty program will help your hospitality business
Loyalty programs present a vast customer retention opportunity within the hospitality industry – maximizing this opportunity involves understanding your customer database and how they would like to be rewarded.
Did you know that customers’ average spending increases as much as 67 times when they are members of a loyalty program?
Would your customers prefer % discounts, $ discounts, or maybe even experiential rewards like a complimentary beverage? By catering to a range of your customers’ preferences, you are more likely to encourage customer engagement and long-term loyalty as they reap the rewards of a customer-centric loyalty program. To do this, you need a comprehensive, customizable loyalty program provider that allows you to augment your customer’s experience and automate the rewards process.
And Marsello does just that. Learn more about rewarding your customers with Marsello.
The HoneyCake, a Perth-based bakery, has created a simple but effective loyalty program that suits their brand, delights their customers, and helps them to establish long-term customer relationships.
The HoneyCake’s customers earn 1 point for every $1 they spend and extra points for actions like social media shares and product reviews – and when they’ve earned enough points, customers can redeem rewards like gift boxes and free cooler bags.
Did you notice their extra touch of personalization? They know that some of their most loyal customers require gluten-free options, so The HoneyCake baked this into their customer rewards program by offering gluten-free rewards to delight all of their customers.
The team at The HoneyCake knows that customer loyalty is essential to their continued success. Creating a simple but inclusive loyalty program captures a broader range of customers and encourages continued engagement.
When creating your hospitality loyalty program, you should aim to do the same. Delight your customers by creating an inclusive rewards program, but keep it simple. One way you can achieve this with Marsello is by including VIP tiers to encourage continued loyalty throughout your customers’ entire lifecycles.
What loyalty programs are best for hospitality businesses
It can be challenging to know what type of loyalty program will suit your business when you’re getting started. Did you know that it costs as much as seven times more to acquire a new customer than it does to retain an existing customer? When you consider this, it makes sense to focus your energies on keeping your most loyal customers coming back time and time again. So, what type of loyalty program will best suit your business needs?
Points-based rewards programs (a Marsello favorite)
Cash-back rewards programs
Punch card or ‘coffee club’ loyalty programs
VIP-tiered loyalty programs (another favorite of ours)
BOGO value-based loyalty programs
The loyalty card template has been a go-to staple of coffee shops for years, and there’s a reason for it – customers love a simple, easy-to-understand loyalty system. But there’s no ‘one size fits all’ regarding customer loyalty programs, which is particularly true for hospitality businesses. When it comes time to decide how to reward your customers, a lot of the decision-making will come from understanding your customers and their shopping habits and then testing what works well for your business.
Retailer tip: More often than not, a combination of programs is a perfect solution. By offering points that customers redeem for rewards, tiers that encourage increased purchase frequency, cash-back, and discounts, you appeal to the loyalty preferences of all your customers.
Book a demo today and learn about Marsello’s loyalty product offering.
How to set up a customer loyalty program for your hospitality business [with examples]
A recent study by Deloitte showed that hospitality patrons appreciate just a few simple but essential characteristics in loyalty programs:
And the key takeaway from the study?
“A restaurant that doesn’t offer a [loyalty] program – and promote its existence – misses out on that heightened engagement with their best customers.”
So customer loyalty is a must-have to help any business stand out, but how can you achieve success no matter what type of hospitality business you run? What should you be looking for in a loyalty program provider, and what should you include in your loyalty marketing strategy? One source suggests that,
“Your system should be able to track metrics in real-time, provide journey-mapping solutions, and manage cross-channel messaging from the same platform.”
Let’s dive in with seven essential tips that will help you find the tools you need to grow customer loyalty with your hospitality business.
1. Create a simple and engaging loyalty system to encourage customer engagement
There’s a lot to be said for a loyalty program that’s easy to understand. Take Hello Harry’s approach to encourage loyalty program engagement, for example. They display their loyalty promotion banner loud and proud on the primary landing page of their website, enabling customers to join with a stand-out CTA and clear branding.
Customers are encouraged to join with the promise of a free birthday burger and “exclusive member offers, and discounts.” There’s no question that just the promise of a free burger is enough to excite most consumers, and it works perfectly for Hello Harry’s customers too.
Whether you offer a variety of earn and reward options or keep it simple like Hello Harry, the best way to get started with your loyalty program is to understand your most loyal and active customers and appeal to their shopping patterns. If you run a busy restaurant and find that your best customers tend to pre-order their food to get access to priority order fulfillment, you could create a condition that customers in your highest loyalty tier will have their order prioritized on the basis that they are a ‘priority customer.’
Thankfully, Marsello makes it easy for you to enable loyalty program earn and reward options that suit your business.
With 11 earn options, you can provide customers with various engaging ways to collect loyalty points that they can redeem for rewards. And the reward options are endless with a variety of reward types for you to choose from and adapt to your business. Learn more about Marsello’s loyalty rewards options.
2. Activate a VIP rewards program to build life-long customer loyalty
VIP or tiered rewards programs can sometimes feel like you’re offering too much; however, patrons who engage with high-value, high-return loyalty programs are 78% more likely to spend big. And one study found that as much as 50% of patrons would change their shopping habits to progress to higher tiers of their favorite loyalty programs.
Offering loyalty tiers doesn’t mean you have to offer up more either. Instead, consider VIP loyalty like gamification where customers can ‘level up’ to get better earn options or juicer rewards but only if they spend enough to get there.
A popular offering for VIP tiers is simply offering the highest tier double points whenever they spend money. Or by providing experiential rewards, like Hello Harry’s free burger offer.
VIP rewards aren’t always essential to every loyalty program. Still, they’ll go a long way in developing long-term customer engagement as customers continue to reap the rewards long into their relationship with your business.
Retailer tip: Enable expiry dates for the points your customers earn and remind them when their points are due to expire while encouraging them to shop again. Your customers will feel compelled to retain their points status and to keep coming back.
Learn more about creating a tiered loyalty program here.
3. Utilize data to create the best hospitality loyalty program for your business
From customer information and detailed segmentation to campaign success and conversion rates, data reporting is essential to your customer loyalty marketing and business strategy.
As the team at Lightspeed puts it,
“One of your most powerful tools for filling seats is strong digital marketing – and when you are able to see the successes and losses of campaigns or tailor them to individual preferences, that makes them even stronger.”
When it comes to developing a customer loyalty program, there are a few metrics you should consider:
Repeat purchase rate – the % of customers who make a repeat purchase.
Average purchase frequency – how many times a customer returns to make a purchase throughout their lifecycle (on average)
Average purchase value – an average of how much customers spend with you each time they visit.
Average purchase cycle – the average number of days between one purchase and the next.
CLTV (customer lifetime value) – an average of how much your customers spend with your business throughout their lifecycle.
With these metrics, you can understand essential information – such as the likelihood of customers achieving all the tiers of your loyalty program throughout their lifecycle, how often to send notifications, how many points to award for specific actions, and how to set up rewards.
You’ll never truly understand the success of your loyalty efforts unless you’re tracking the results directly from your POS and eCommerce analytics. And the same goes for creating your loyalty program. Compare sales data, understand trends and popular products, then build an eCommerce and POS loyalty program that makes your customers feel appreciated every step of the way.
Customer data isn’t just valuable for your loyalty program development either.
As we’ve explained, personalization is essential for business success, and detailed customer data will help you automate this process. For example, when you consider product recommendations, your customers’ purchase history and segmentation data will help you to categorize your customers and then automatically recommend products they simply can’t refuse.
If you use customer data well, you’re much more likely to gather details from more and more customers – one study found that:
“Within the food and restaurant sector, 73% of diners said they want product recommendations based upon past purchases. Even more compelling, more than half (50%) of consumers are willing to share their information with brands to get a more personalized experience.”
Look at it like this – if you know that your best customers always say yes to the up-sell when you offer them a half-price dessert, then you can use this closed-loop data attribution at your POS to recommend a dessert to your best customers whenever they shop in-store. That’s a bonus profit that you might not have made otherwise. Meanwhile, your other customers reap the benefits of your loyalty initiatives.
Retailer tip: From pre-ordering and online booking channels to customer sign-ins and email capture forms on your website, there are many inventive ways that you can capture customer information and request to add them to your marketing lists. From there, it’s easy to promote your loyalty program and encourage signups.
Learn more about the insights you get with Marsello-powered marketing here.
4. Activate multiple communication channels to reach customers wherever they are
Make the most of your loyalty marketing by ensuring you’re communicating to customers through multiple channels and with multiple messages.
Studies show that email is still overwhelmingly the most popular engagement channel for customers despite new technologies and communications channels. But you don’t have to stop there. If you send a one-off email promotion, why not promote the same campaign on social media and then follow your email up with an SMS to those who are yet to make a purchase? You can maximize your reach and delight customers in the format they most enjoy by getting creative.
Australian winery Rymil Coonawarra does a fantastic job enabling email notifications linked to their loyalty program and sending out campaigns that encourage customer loyalty.
Rymill’s loyalty program members are automatically notified when they’ve earned loyalty points, unlocked a reward, successfully referred a friend, and more. But the winery brand doesn’t stop at automated loyalty campaigns. Their one-off campaigns include merge tags to incorporate personalization and make sure that their loyalty program customers feel special with exclusive offers and detailed updates.
5. Personalize your marketing to win over customers
By establishing personalization in your customer communications, you create a sense of familiarity and tell your customers the impression that you appreciate them. When your customers feel appreciated, they’ll keep coming back time and time again – they’ll tell their friends too. And it’s no secret that word of mouth and peer recommendation systems go a long way in the hospitality industry.
Some ways you could develop a personalized marketing experience for your patrons is to consider using the following tools and tactics:
Maximize your marketing impact with customer segmentation that makes it easy to target customers based on their purchasing habits.
Automate campaigns that offer customers loyalty points, freebies, or discounts triggered from specific milestones.
Use merge tags in subject lines and campaign content to automatically populate your emails and SMS with your customer’s name and improve engagement rates.
Use personalized product recommendations that populate based on customers’ shopping data, helping you to suggest products that they’ll love no matter where they shop.
Gluten-free wholefood bakery whizkids, Nodo (pronounced “no-dough”), put this strategy into action by activating their captivatingly branded loyalty program and then making sure to target their members with undeniable offers.
With a 20% off email offer, merge tags in the subject line, and body copy that helps Nodo’s customers feel extra special, Nodo has a winning combination to get their loyalty program engagement rates up. They’ve even gone the extra mile by incorporating a GIF that helps their email stand out no matter where customers open it – emails like this showcase just how good branding and design can help you compete in saturated markets.
This email was sent specifically to Nodo’s VIP customers who bought a loaf of specialty bread in November, which shows just how personalized you can get with the help of tools like customer segmentation.
6. Create automated campaigns to nurture your customer relationships
Email marketing is still the most effective tool for successfully encouraging customer engagement and conversion results. One study, which focused on the impact of email marketing on generating customer loyalty, found that email “outperforms other platforms by 92%”.
The fact that email marketing is so successful is no secret, but it’s not enough to create the odd campaign now and again and hope that you’re reaching your customers. This is where automated email campaigns can help you strengthen customer relationships and build brand loyalty.
If you haven’t already started your automated marketing journey, it’s time to catch up!
One source found that:
“Fifty percent of hospitality operators in the US and 51% in Canada plan to utilize some form of automation technology within the next 2-3 years.”
Thankfully, Marsello has you sorted with a growing number of pre-built automated campaigns designed to help you grow customer loyalty and build long-lasting relationships with your patrons.
Marsello automated loyalty notifications are easy to set up; simply add your brand colors and logo, check the email copy, and enable the campaigns that best suit your loyalty marketing strategy. Choose from the following pre-built loyalty notifications:
Earned Points Email
Reward Unlocked Email
Reward Discount Email
Referral Discount Email
Points Expiry – Reactivation Email
Points Expiry – Last Chance Email
Enter Tier Email
And Marsello’s automated campaign options aren’t just limited to your loyalty program notifications. We’ve also pre-built a number of campaigns that will help you to nurture your customer relationships at every stage of their lifecycle. Or you can build your own automated campaigns.
Learn more about Marsello’s Marketing Automations feature here.
7. Request Google reviews from your existing loyal customers to showcase brand advocacy
Did you know search engine reviews can significantly impact your business and your ability to attract new customers? Google is the number 1 destination for customers to seek online business reviews, and a positive business ranking can create massive opportunities for boosting brand awareness. In fact, a good number of positive Google reviews can mean all the difference between successful advertising campaigns that see serious conversions and those that don’t.
Do you ask your customers for Google business reviews? If you don’t, or it’s not a centerpiece of your marketing strategy, consider this your gentle push to change that.
Here are our top 4 tips for encouraging customers to leave your business a positive review:
Ask your most loyal customers to leave a review directly after they purchase. With Marsello’s Google Review feature, it’s easy to set up automated campaigns that trigger to prompt your best, loyal, and new customers to leave reviews of their shopping experience.
Respond to your Google Business reviews. It may sound like a no-brainer, but many companies miss this opportunity to engage with their patrons. Respond to positive reviews with thanks, and engage with negative reviews constructively and positively.
Thank customers for positive reviews. Convert customers who leave good reviews into lifelong brand advocates by thanking them for their reviews with loyalty points. Remember, incentivizing reviews is absolutely not allowed and could have negative repercussions, so you cannot advertise this as a loyalty initiative. Instead, consider it an act of goodwill that will delight your customers and encourage them to shop with you time and time again.
Provide excellent customer service. With the help of a curated loyalty program, personalization, and emphasis on the customers’ experience, you’re sure to create a memorable brand experience for your customers – which will naturally lend itself to positive customer reviews.
It’s no secret that business reviews have a huge impact on hospitality businesses. Start creating a strategy now that will help you to generate more and more business reviews with minimal effort. While you’re at it, learn more about Marsello’s Google Reviews feature.
Learnings and key takeaways
No matter what loyalty program format or provider you choose, one thing remains true: your existing customers are the most loyal, most retainable, and offer the most return on investment. Make the most of that and start delighting your customer database with a comprehensive loyalty program.
And remember, your loyalty marketing strategy is inextricably linked to your customers, and without their engagement and advocacy, you could fail to see success. Keep our seven essential focus points in mind to get the most out of customer loyalty:
Simple rewards and earn options
Complete understanding of customer data
Personalized rewards and experiences.
Reviews and customer advocacy.
You’ll get what you give when it comes to generating customer loyalty. Creating exciting rewards and actively communicating with your customers will result in customer engagement and long-term loyalty both at the POS and online.
To make the most of your hospitality POS loyalty program and tie it to an online loyalty platform, book a demo and get started with Marsello-power customer loyalty marketing.