Loyalty in the hospitality industry is fragile. With 31% of UK restaurant, pub, and bar customers ready to switch to a competitor, the stakes couldn’t be higher. Customers expect more, with endless alternatives at their fingertips. In this highly competitive environment, loyalty is hard to earn and even easier to lose.
So, what’s the secret to keeping guests coming back?
Spoiler: it’s not just about discounts. The most effective loyalty programs go deeper, building genuine emotional connections and using data to craft personalised experiences. When done right, these strategies turn satisfied customers into loyal brand advocates, amplifying your brand and driving repeat business.
Why loyalty matters: The power of repeat customers
Repeat customers are the lifeblood of hospitality, offering value that extends far beyond each individual transaction. Here’s why they matter:
- Cost-efficiency: It costs up to five times less to retain an existing customer than to acquire a new one.
- Higher conversions: The likelihood of converting an existing customer is 60-70%, compared to just 5-20% for new customers.
- Increased spending: By year three, loyal customers spend 67% more than they did in their first six months. They’re also 50% more likely to try new offerings.
- Unmatched advocacy: 86% of loyal customers recommend your brand to others, while 66% leave positive reviews after a great experience.
The numbers speak for themselves. Loyal customers don’t just generate revenue—they create a cycle of trust, steady business, and organic growth. This foundation provides stability, even during market shifts and times of uncertainty, setting the stage for long-term success.
Designing a loyalty program that works
Loyalty programs are proven drivers of customer retention—69% of customers are more likely to become loyal to a brand if rewards are on offer. But there’s no one-size-fits-all approach. To succeed, a program needs to resonate with guests, encourage repeat visits, and foster long-term engagement. Here’s how to design one that works.
1. Define your target audience & goals
First-things-first, get clear on your target audience. Who are you actually speaking to? Is it students looking for a quick bite between classes, local professionals grabbing lunch during the work day, or early risers craving their morning coffee? Go beyond age and gender—consider their lifestyle, spending habits, preferences, and behaviours. When you understand what makes them tick, you can begin to design a program that feels custom-made for them.
Next, set clear, strategic objectives that guide your program. What’s your ultimate goal? Is it reducing churn, boosting retention, gathering valuable customer insights, or strengthening ties with your local community. Whatever it is, make sure it’s a goal that’s specific, measurable, and aligned with your broader brand vision.
2. Make it easy to join and use
Simplicity is key. Interacting with your loyalty program should feel effortless from start to finish.
- Make it easy to sign-up: Whether it’s a quick tap on your app, a scan of a QR code, or signing up at checkout, ensure the process is quick and frictionless.
- Offer multiple ways to access the program: Provide options like a native mobile app, web-based options, and ideally, integration with a digital wallet. This ensures convenience for every type of customer.
- Clearly explain how to earn and redeem rewards: Use simple “Spend X, get Y” language. Avoid complicated rules or fine print that could confused or frustrate your customers. A transparent and easy-to-understand program keeps customers engaged and excited to participate.
Example: Take Nando’s loyalty program. After signing up for a Nando’s Card, you earn a “Chilli,” for every £7 spent. The system is simple—one Chilli per day, no matter how much you spend. Collect enough chillies, and you can redeem them for rewards, like a 1/4 chicken for three Chillies, a 1/2 chicken for six, and a whole chicken for 10. Checkin’ in on the Chillies? They’ve integrated their rewards program with digital wallets. No fuss, just rewards.
3. Ensure full integration across channels
Integrate your program with your entire tech ecosystem for a frictionless experience. Whether customers are ordering at the bar, a self-order kiosk, or directly from the table in a restaurant or pub, your program should work across all touchpoints. If your venue uses an order-and-pay system, make sure guests can redeem rewards directly through their phones during checkout.
This integration not only enhances the guest experience but also builds trust, giving customers confidence that their rewards are accessible no matter where they are in your venue.
4. Choose a core loyalty model
Select the loyalty model that best suits your business and resonates with your guests. Here are some approaches to consider:
Stamp-based systems: This classic, tactile model allows customers to earn stamps with each purchase, certain products, or a minimum spend. Take it a step further with a “progressive reward” system—offering bigger rewards the more customers engage.
Points-based systems: Customers earn points with every purchase and can redeem them once they hit specific thresholds. To add excitement, bonus points can be awarded for actions like purchasing during peak hours, in specific locations, or on featured items. This model offers flexibility to customers—they decide whether to save up for a big-ticket reward or enjoy smaller perks more often.
Tiered loyalty model: Imagine a loyalty ladder, where customers progress to higher tiers as they spend or engage, and unlock more exclusive rewards as they go. This model creates a sense of exclusivity, turning your loyal customers into VIPs that are recognised for their ongoing support. Businesses using tiered systems see a 1.8x higher ROI, demonstrating that this approach not only boosts loyalty but also fosters retention and lifetime value.
Example: McDonald’s MyMcDonald’s Rewards is a standout tiered loyalty program, with over 150 million users. Through their app, customers earn 100 points per dollar spent, and progress through four tiers as they accumulate points. With each tier, customers unlock better rewards, from a cheeseburger at 1,500 points to a Happy Meal at 6,000 points. The more customers engage, the more they get back. The result? Every customer feels like a VIP. For more inspiration, take a look at other successful restaurant loyalty programmes and the rewards they offer to keep customers coming back.
5. Explore membership models
Beyond traditional stamps or points, a membership model can be a great way to bring guests closer to your brand. With this approach, customers sign up as members in exchange for exclusive perks like app-only benefits, special pricing, early access to menus, or even VIP invitations to unique experiences like food tastings or cocktail-making classes.
For a more sophisticated approach, you could offer a paid membership model with classic and premium tiers. The classic tier offers basic perks, while the premium tier unlocks higher-value rewards. Alternatively, a hybrid model combines traditional loyalty features (like points or stamps) with member-only benefits, giving customers multiple ways to engage and more reasons to stay connected.
No matter the approach—whether free, paid, or hybrid—the goal is always the same: to make your guests feel exclusive, valued, and truly connected to your brand.
Beyond the basics: Advanced strategies for boosting loyalty
1. Personalisation is key
Today’s customers want experiences that feel personalised to them, and data is the key to delivering that. In fact, 91% of shoppers are more likely to engage with brands that offer relevant offers and recommendations. With brands like Amazon, Netflix, and Spotify setting the bar high, customers expect the same level of personalisation from every brand.
To truly stand out, it’s not just about addressing customers by name. It’s about deeply understanding their preferences and anticipating their needs. When you know what your customers want—even before they do—it creates a deeper connection. But remember, in exchange for their data, customers expect real value, not just generic promotions. Get personalisation right, and loyalty will follow naturally.
2. Leverage data to drive loyalty
Data isn’t just a byproduct of your loyalty program—it’s the foundation. By analysing customer data, such as demographics, preferences, and buying habits, you can create experiences that keep them coming back. Every interaction gives you valuable insights into when customers visit, what they buy, and even the times they prefer to engage.
But it’s a two-way street. 83% of consumers are willing to share their data in exchange for a more personalised experience. So, the real power comes from using that information to deliver offers and rewards that truly speak to them. This creates a feedback loop: you use the data to deliver better experiences, which leads to more data, stronger relationships, and smarter decision-making in the future.
Example: Take Tesco’s Clubcard. In 2020, they rolled out Clubcard Prices—exclusive discounts based on individual purchase histories. It felt like customers were winning every time they used the card. This personalised touch encouraged more visits, bigger purchases, and deeper trust, turning their loyalty program into a growth engine for the business.
Conclusion
The future of hospitality loyalty hinges on understanding your customers, anticipating their needs, and offering rewards that genuinely make them feel valued. It’s not just about points or discounts—it’s about creating experiences that leave a lasting impression. The key is simplifying your loyalty programs, harnessing the power of data, and delivering rewards that feel personal and meaningful.
Whether it’s a points-based system, tiered rewards, or an exclusive membership model, the best loyalty programs are those that make customers feel part of something special. Get it right, and you’ll create a loyalty program that’s a true win-win—a relationship that drives lasting value for both sides.
