What Is Customer Loyalty: Rewards vs Discounts

We recently asked you an important question: How well do you know your customers (1)? We believe knowing your customers means knowing what they want, and knowing what they want means you can keep them coming back. We’re now going a step further to find our what is customer loyalty?

Regardless of the industry, every good business knows how important it is to hang on to those customers. When keeping an existing customer is around 10 percent of the cost of acquiring a new one, you know it makes economic sense (3).

However, temptation is everywhere.

In this ultra-competitive world that we live in, loyalty can be hard to find. In reality, it can be impossible to get and hold on to. New offers, the next big thing, those little extras can all turn a customer’s head.

Suddenly, the competition got fierce. And customers got wise. They started asking some important questions – what do I get for being loyal? Are the discounts being offered really for me or trying to get me to buy something else? Am I saving any money or getting any value?

Customers have started playing the field and restaurants, cafes, fast food joints, and bars have been left struggling to hang on to their regulars.

The deal with discounts

Discounts have found themselves the top draw for restaurants. 2 for 1 deals became common back in the time of the 2008 recession, and are now proving difficult for these places to shake off.

You see the problem with offering a general discount is that customers come to expect them, and often won’t visit again unless they have it (2).

Not the most loyal of customers then, are they?

When 2000 UK restaurant goers were surveyed in 2012, just one in four would visit an establishment with a discount programme. However, something else emerged. If a pub or restaurant offered a loyalty card, then 48 percent would be more likely to visit it (4).

Now that is something to think about.


Up steps the loyalty card

For those buying their daily coffee, this has taken the form of both cards offering the 6th coffee free, and plastic cards collecting points on the money spent.

Whilst most smaller venues rely on the paper cards, they are missing out on valuable information by not linking into a digital version. The stamping of the card does not tell the venue anything about the person – not even what type of drink they have been buying.

It could take them a week to build up to the reward, or months, and by the end of it, what do you really know about them. Are they really as loyal as you think?

Loyalty cards can shine a light on a customer’s behaviour, and ultimately enable venues to add value to their future experiences. Creating truly memorable encounters between venues and customers in-turn breeds further loyalty.

Rewarding loyalty = ongoing loyalty

But to reward it, you need to know about them. And that is all down to data.

Insights from data

The beauty of loyalty cards really does lie in the data. Using a little inside knowledge of what your customers do, buy, the time they visit, what they regularly order, could then shape how you reward their loyalty. This data can be gleaned when a customer uses their smartphone to place an order or pay via an app.

Delivering a ‘loyalty programme’ in this digital age should be focused on enhancing the customer experience. When personalised engagement happens, whether in person or via the smartphone, long-term loyalty prevails. This could take the form of a surprise free order, a customised thank you email or being reminded of their name as their order pops up on the tablet.

Customer-focused, personalised deals can be the best reward. Ultimately, it is about how you deliver the reward and the on-going engagement opportunities this creates that will create loyalty with your brand. Doing it differently using your customer’s information is now in reach for the vast majority of quick service venues.

This answers, what is customer loyalty….

Ordoo offers a great way to monitor and reward your most loyal customers…find out more here

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