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How Will it Benefit Me? Using a loyalty system encourages your customers to keep coming back to you, but also at the same time encourages them to spend more. With the Dining Rewards Loyalty System you can:
These benefits lead to the ultimate goals of business growth and security, through increasing your profits by keeping your customers happy No More Discounts - Avoid the Discount Disaster
So now instead of depleting your profits through discounting, you are actually putting a system in place that will increase your profits through repeat business. (back to top) The Discount Disaster: A Closer Look
A la Carte is a restaurant that has 15 tables, all of which can seat 4 people per table. The maximum number of people that can eat in the restaurant at any given time is 60. During a “full house” period where each person spends an average of £10, the business makes a gross income of £600. The total cost to the restaurant, which includes, running costs, staff costs, and the cost of the ingredients, works out at an average of £7.50 per person. This leaves a total cost of £450 during a “full house” period. The profit then during this period works out at £150 at a rate of 25%. However, if A la Carte decides to try and increase sales by offering a 10% discount to all diners, during the same “full house” period, its gross income is only £540. The total cost to the restaurant stays the same at £450. The profits are now reduced to £90 and show an 8% decrease at just 17%. This however is not the only problem. The major difference is that whilst the restaurant is full it is making a lower profit than it would if it served 36 customers at full price. The difference is that it has to sell nearly half as much more at a discounted rate to make the same amount of profit as it would at full price. The tables below sum this up:
The Difference: the Discount Strategy Results in an 8% loss in Profits. So whilst discounts may increase the number of sales you make, you require substantially more sales to reach the same level of profits as you would selling at full price. By using the Dining Rewards Loyalty System you never have to give discounts away again. Instead you reward your customers with Loyalty Points, which they collect to the value of what they spend. You decide the ratio, it could be 1 point for £1, or 20 points for every £10. Once your customers start collecting the points, they save them up to reach targets that you set. For example: A scheme running on the ratio of 20 points for every £10 spent will awards its customers a free meal once they reach 200 points. In order to get to that target though, a customer has to spend at least £100 to earn the reward. When a customer reaches that level you have already then established that they are – loyal to you, a returning customer, and a frequent spender. You choose what rewards to give, and by using Dining Rewards you have ended the dependency on discounts to try and drive up sales, and reinvested in your future growth, creating profitable and lasting relationships with your customers. (back to top)
Generating Repeat Business - The 80/20 Rule “The Trivial Many and the Critical Few” – Pareto's Law
Dining Rewards takes this principle and works upon the 80% of “walk in” customers and through the running of the Loyalty System converts them across and increases the 20% of your core, repeat business. For Example: Al a Carte restaurant analyses its monthly income and finds that it has taken £10,000 from the sale of 1000 meals. Further analysis shows that 800 of those meals were purchased by only 20% of the customers during that period. The other 80%, 200 meals, were purchased by “walk in” diners. In order to increase sales and profitability Al a Carte decided that it would start a campaign to capture customers from the 80% of “walk in” diners, and get them to become a part of the critical 20%. The table below shows a forecast of the potential sales increase by applying the 80/20 rule:
In reality it is unlikely that you will convince 100% of your customers to become part of your core, repeat business, but the effects of increasing only a small proportion of your customers to keep returning has a massive impact on your sales and revenue. By using the Dining Rewards Loyalty System, you are putting in place an incentive scheme for customers to return to you. By offering rewards every time they visit you, you are creating a compelling reason for them to keep coming back and spending more. (back to top)
Increase Customer Spending By rewarding your customers every time they spend money with you, you are providing them with an incentive to spend more. By offering “bonus points” on particular product lines you can make the difference between your customer buying just a main meal, or getting a starter, a desert or an extra round of drinks. Using reward points as an incentive to spend you can offer bonuses for particular items on your menu, for example those items that represent the greatest profit margins. (back to top)
Once you have happy customers who visit you regularly they are more likely to refer your restaurant to their family and friends. The impact of customer referrals to any business is one of great consequence in terms of increasing your sales and revenue. If you succeed in holding onto your referrals then your new customers will also refer you to their family and friends, and a referral chain has been set in motion.
The Customer Referral Tree Dining Rewards gives you the opportunity of capitalising on the referral strategy by giving your present customers added incentives for referring their family members and friends to you. You can do this by awarding bonus points for every referral a Loyalty Card Holder makes. For Example: Mr Smith is a Loyalty Card Holder at Al a Carte restaurant. The manager runs a promotion to Loyalty Card Holders, where if a cardholder refers a family member or a friend the he awards them with 100 bonus points. In order to track the referrals accurately he uses a Dining Rewards Referral Card, which he explains to the cardholder when he pays for his meal. Mr Smith then refers his work colleague John who visits the restaurant and hands over the referral card when paying for his meal. The manager rewards John by giving him a Loyalty Card and loading it with 100 bonus points. The next time Mr Smith visits the manager awards him the 100 bonus points for the referral, and given the opportunity to refer more people in the future. he added advantage of the referral chain once it is established is that it does not cost you anything in advertising costs for new customers, and with a minimum of effort involved it can create a steady stream of increased profit to your company. (back to top)
Show Your Customers that You Value Them
What's more, with a Loyalty Scheme, you are guaranteeing 3 things:
It is around these 3 facts that the big companies like Tesco, the Nectar group and Boots base their highly successful loyalty systems. If you have one of these cards you will understand why. For example, when one of these companies send out a points statement to a customer, they can guarantee that the customer will open the mail because the customer wants to find out how many points they have, and what they are entitled to. What these 3 companies then do is include information about all the current promotions that are running to draw their customers back. The success of these loyalty systems run by these huge companies comes down to the simple fact that they are marketing their products to the people who are most likely to buy from them – their previous customers – and providing them, through running a loyalty system, with the incentive to continue to purchase from them. With Dining Rewards you can take advantage of exactly the same marketing strategy as the giant companies like Tesco, at an investment each month that works out to be less than a one day advertisement in your local newspaper. With Dining Rewards you don't have to worry about spiralling setup costs, nor lengthy, costly consultations. You can be running the system on the same day that you receive it, without any complex training, and without any interference to the point of sale system you are currently using. (back to top)
Enhance Your Image with a Loyalty Card
If you would like more information personalised to your specific needs, including a quote, then please call us on: 0800 083 6977.
Call us now on: 0800 0836977 or email us here
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