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Loyalty programs often overlook most loyal customers, study finds

Like a lovelorn teenager, restaurant loyalty programs often have it all wrong. It’s not about wooing the hot new customer with free tokens of affection—or free coffee, as the case may be—it’s about loving the one you’re with.

A new study by Deloitte finds that although 50 percent of consumers belong to at least one restaurant loyalty program, overwhelmingly, it’s not the program of their favorite restaurant. About three-fourths (74 percent) of consumers do not participate in the program of their most-visited restaurant. Why not? Either that restaurant does not offer a program, respondents say, or they don’t know if one is offered.

It’s a lost opportunity. Of the 26 percent of consumers who say their favorite restaurant does indeed offer a loyalty program, a full 87 percent of them participate; and the research shows that those core customers in the loyalty program are more satisfied and are more likely to recommend the restaurant to friends or family.

“The data says a loyalty program has little effect on increasing or decreasing your core customer base; it doesn’t necessarily build traffic,” says David Michelson, principal at Deloitte and a presenter at the 2014 Restaurant Leadership Conference. “A loyalty program makes your core customers more loyal.”

Michelson says it’s important that restaurants understand their core customers. In restaurant programs, the study finds, the kinds of rewards that matter most to consumers are those that offer recognition and personalization, such as a free favorite dessert on their birthday. Participants in restaurant loyalty programs also value privacy and desire to control the level of engagement they have with the restaurant. For example, 61 percent say they prefer to be contacted by email while half say they’d rather get traditional mail—both methods that let the customer decide when to and when not to reach out.

More information from the study will be presented at a breakout session of the Restaurant Leadership Conference on Wednesday, April 2 at 7:30 a.m.

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