Loyalty Marketing

Customer Loyalty Program for Restaurants in a five Star Hotel:

Customer marketing long since began when marketing practices started.  Loyalty marketing is not a new concept.  Best customers generate most profits an example was in the 50s when ‘mom & pop stores look after its best customers.  A good customer spends more than thirty percent and keeps coming back but worst customers are less loyal.

Chris X. Moloney and Fred Reichheld noted that loyalty marketing has a new marketing discipline called “Customer Advocacy Marketing” (CAM).  This programme in marketing is strongly linked with loyalty and customer referral (Wikepedia).

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I.  Customer Loyalty – its benefits

The rapid advancement of technology, relations between the 21st century customer and supplier needs to be nurtured because of growing competition and new demands or high customers’ expectations.  Restaurant businesses grow faster than the rate of demand.  A business is building up then suddenly a new comer comes along.  For this reason, it made sense to nurture or retain regular good customers than to attract new ones.

a. Long Term Profitability

Marketing is supposed to contribute long term profitability into a business but competition is intense.  Now it is important to regard its effort in a changing marketplace.

First of all we must check how a loyalty program fits an establishment, how can it continue to progress, and how to encourage future investment for its continuous development or its expansion?

Customer Loyalty Program is only one aspect of the comprehensive marketing techniques but it is the central pillar of the plan.  In the article written by Randolph Hobler he noted that only 5% of the top 130 restaurants in the US have loyalty programs (Hobler).  Sixty percent of consumers go to restaurants with rewards program.  However, despite of the knowledge that a good loyalty program pays back from the very beginning; (example is the Tesco’s Club Card who makes money from day to day). Still, only twenty five percent of the National Restaurant Association in the U.S. used loyalty program.

To attain this program data must be collected and from these data a study or an intelligent interpretation should be provided to have much clearer picture on the customer base.  Most of the program will have this question “When is the payback begun to happen?”  For some it happens right away but in some it will depend on the circumstances.

b. Customer Retention

High performing companies retains customers and magnets other clients.  Businesses that retains its clients makes more money at lower cost than the one who constantly pays for advertisements just to invite new customers.  A loyal customer depends mainly on the good and sound practice of the business and its marketing schemes at all times.  Clients are normally easy to lose than to win.

Retaining customers have simple principles:  know your clients and reward them.

It is important to perform the following tasks:

a. Study the peak-hour and plan to retain the number of customers at slow times.

b. Make new menu items and take-out products

c. Provide functions activities such as parties with specialty drinks

d. Up-sell products like value meals

e. Provide incentives and encourage secure registering and loading of cards

f. Changing business operations for a greater profit must also be considered by creating an economic balance between getting the attention of customers and in giving them rewards.

II. How to build customer loyalty – its factors

Critical factors to built customer loyalty

Market Size or Estimation

This is a tool which gives very good guidelines to calculate market sizes reasonably of the member base who would receive loyalty programs or rewards.

Trends and Forecast

Trends means consumer behavior and spending patterns based on customer marketing initiatives and forecasts of future marketing campaigns.

Best practices and Innovations

Problems with loyalty programs and practices will be examined like issues and pitfalls, corporate values and visions including inconsistent messages to consumers, comparing loyalty rewards from competitors and finding out what does not work.

Best Customer Marketing Access Pricing and Customer Lifetime Value

As it implies, directing good customers since they bring the most profit.  Since pricing strategy is the key features in every business, best customers should have access to discounted pricing throughout its lifetime.  Customers may collect points on their purchase on a frequent or everyday basis measuring loyalty’s effect on the customer’s lifetime value.

Essential data or business models can be used to analyze CLV calculations.   “The most important factor in consumer loyalty program is the price”(Weiss). Although it is important not all people buy because of the price but sometimes because of  loyalty to the brand.

Customer loyalty and analysis – New tools

We do not develop loyalty tools from scratch but examine newer tools used by the loyalty rewards program.  Some of them are:  The loyalty token – it is the bit of the program that members carry in order to have contact with the program.  An advantage of this is to link the transaction with the database however those data can be transmitted to and fro.  Why?  It is important to search the true value and function of a reward, its properties, getting the most of it, and the reward redemption process.

Human Aspect of the Loyalty program

The aspect of human loyalty is very important.  This is the cycle of customer – employee – shareholder/owner relationships.  These are actions and emotions that must satisfy every human condition.  This is also one way of keeping clients happy with a new policy since most of the time the front liners are the one who deals with customers closely and yet are the ones who are underpaid.

Customer loyalty program for hotels, resorts and casinos

One reason why restaurants in hotels are not expanding on its reward program is due to the fact that almost 50% of visitors do not belong to any loyalty program.  The business is still an untapped market.   For instance the use of wireless consoles to summon waiters, loyalty programs with personalize services such as greeting the customer by the name and  seats the client at their favorite table with his usual drink etc.. Technologies are also employed to hasten meal preparations.

The future of loyalty as what experts thinks:

The best way of looking into the future is to examine what happened in the past and from that make a projection.  Though it is hard to make expectations because sometimes things happen when you least expect it.

The trend for globalization will have two distinctive effects. One, there will be no division in the international border.  We will have a global macro-regional system as opposed to centralized system we have today.   Second, worldwide trend on customer loyalty will be more difficult to develop because of the ever changing consumer values. (Trend).

The future is here today. It would be to the disadvantage of new marketers of today if they would not embrace the new technologies.

We are expected to see in the future more sophisticated innovations and consumers will expect more points to buy items which ordinarily are out of reach.  Marketers who will not embrace this change will be at the least advantage state.

Since the opening of Scala’s Bistro in 1995 a culinary of French and Italian countryside, the restaurants focused on list of primarily California and Italian selections of wine along with few French varietals.  Scala offers 10-15 choices by the glass and 150 selections by the bottle.  The restaurants serve culinary delights of both Italy and France; fresh local vegetables combine to a rustic innovative menu.  It has offered 18% of gratuity to parties of more than six.  One can be found at 432 Powell Street, San Francisco, CA. or search the web to find out comments of its satisfied customers.

References:

Hobler, Randolph. “Late to the Table.” 2006.

Trend, Herman. “The Future of Customer Loyalty “, 2007.

Weiss, Allen. “Is Price *Really* the Most Important Factor in Consumer Loyalty?” 2007.

Wikepedia. “Loyalty Marketing.” 2007.

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