The Last Word: Customer Solutions Profit Ideas

In the September 2007 issue of the American Express “Market Brief” the value of frequent diner and loyalty programs were analyzed. The results showed that there was a significant (doubling of year-over-year percentage of participants) increase in participation in frequent diner programs.

So the question is – are these programs finally gaining traction as customers solutions for profit maximization? Can they encourage the type of loyalty that pays off at the bottom line?

The report examines the fact that frequent diner programs translate into a consumer’s “short list” of consideration when planning to dine out. That these programs DO in fact motivate visits. And, while participants in these programs want financial motivation and tangible value from the relationship, the report indicates that these types of programs can deliver financial value to the restaurant, as well.

The tricky part is explained to be creation of a program that entices participation – and is structured in a way that “recoups the costs involved in building such a system and, in the end, increasing your bottom line.” While “10% discount off the total bill” was listed as the most appealing offer, “$5 gift card” was second, and “Free appetizer or dessert” ranked 3rd (43% saying this was preferred). As a consultant who helps restaurants, (as well as other businesses such as hotels, resorts, retail, banks, and hospitals to name a few) and find ways to improve suggestive selling of “easy to add on items,” I would prefer offering 10% or $5 gift card if the numbers work out – that way servers can be trained to upsell appetizers or desserts and check averages will increase overall, while still offering value to these loyal customers.

As the report concludes – there are tangible benefits BEYOND the immediate program results. There is the value of the database of loyal customers which can be used for direct marketing and building one-to-one relationships. As someone who surveys customer interaction points – we like to call them Customer TouchPoints -to provide organizations with the intelligence they need to improve their results, I like the idea of having a list of loyalists who can be used to create a benchmark of satisfaction which can then be used to test concepts, and compare data from these loyalists to new/prospective customers.

My advice – find a way to develop a frequent diner program, but be sure to test your program before launching (either with a group of diners or a single location) and make sure it is financially sound. And when launched, check in on the program – have mystery shoppers test it: are servers inviting customers to join and communicating the value? When these loyal customers identify themselves, are they recognized as “best customers?” Are their program rewards well handled and graciously transacted? Make sure that your program is well conceived, marketed and executed. Otherwise, you could be risking your very best customers. In the September 2007 issue of the American Express “Market Brief” the value of frequent diner and loyalty programs were analyzed. The results showed that there was a significant (doubling of year-over-year percentage of participants) increase in participation in frequent diner programs.

So the question is – are these programs finally gaining traction as customers solutions for profit maximization? Can they encourage the type of loyalty that pays off at the bottom line?

The report examines the fact that frequent diner programs translate into a consumer’s “short list” of consideration when planning to dine out. That these programs DO in fact motivate visits. And, while participants in these programs want financial motivation and tangible value from the relationship, the report indicates that these types of programs can deliver financial value to the restaurant, as well.