How To Create a User-Friendly Rewards Program for Your Restaurant Business: Things To Consider

This year, Banana Republic scored 9.04 in Newsweek’s America’s Best Loyalty Programs. This was compiled in partnership with Statista’s data analysis that recognizes standout rewards programs across 41 industries.

In 2023, Banana Republic only scored 6.98, 0.4 points less than their 7.38 score in 2022. In 2021, the chain received 7.5.

Despite low scores in the preceding years, Banana Republic bounced back, proving that user-friendly rewards programs can bring a business to the top of its industry. Now, they have topped the ranking in the clothing category (apparel subcategory).

The clothing line has outdone the competition by providing more rewards at less expense and with greater ease. Customers have become more satisfied, the perceived value has increased, and shoppers are more likely to recommend the services.

Banana Republic boasts a rewards program that offers one membership with perks for four brands: Banana Republic, Gap, Old Navy, and Athleta. 

On the chain’s website, the benefits are highlighted as “A Voyage Filled With Perks” with the following journeys:

• Free, fast shipping
• Early access to select sales
• Birthday bonuses
• Donations to good causes
• Free basic alterations on Banana Republic merchandise

As visitors scroll, they can see more information about the tiered membership: Core, Enthusiast, and Icon. The page also has multiple call-to-action buttons to encourage application or participation.

These perks and user-friendliness encourage repeat business. Customers are enticed to continue purchasing from the brand because they know they value their support.

However, creating a user-friendly rewards program for your restaurant can be complex. How can you ensure the program will generate successful conversions and retention?

But first, let’s discuss rewards programs and their types.

Understanding Rewards Programs

Rewards programs, or loyalty programs, are customer retention strategies.

These programs use discounts, exclusive products, gift cards, and other perks typically earned through repeat purchases and other required actions.

The ultimate objective of rewards programs is to establish a loyal customer base that organically advocates for the brand. Whether you’re a small or established restaurant, rewards programs help foster lasting customer relationships and attract new buyers.

Types of Rewards Programs

The types of rewards programs include:

1. Points

Point-based rewards programs are among the most common customer incentives. You reward customers with specific numbers of points for completing certain actions like submitting feedback and purchasing.

Then, customers can redeem their points for the following perks:

• Discounted products
• Giveaways
• Gift cards
• Free shipping
• Exclusive or limited-edition items

Customers can monitor their accumulated points through an online account, loyalty card, or mobile app.

The great thing about point-based programs is that they are recognizable reward formats, making them user-friendly. Customers can easily understand how to leverage the points, so it’s often an easy method of building customer loyalty.

One example of a successful point-based program is Jelly Belly’s “Sweet Rewards.”

This program boasts a straightforward interface and attractive benefits like exclusive gifts and free shipping. When customers sign up, they can easily earn 100 Sweet Rewards Points. They can also obtain 10 points for every $1 they spend on the website.

Other actions with Sweet Rewards Points include:

• Creating a Jelly Belly website account
• Writing product reviews
• Referring to a friend
• Sharing on X (formerly Twitter)

2. Tier-based

Tier-based rewards programs incentivize customers based on their spending level.

This type of rewards program motivates customers in lower tiers to reach the next level of spending. The more exclusive the perks, the more desirable they can become, driving higher revenue.

A successful example of a tier-based program is Sephora’s “Beauty Insider.”

This program offers three tiers: Insider, VIB, and Rouge.

These tiers have the same benefits except for seasonal savings events, point multipliers, Rouge rewards, and exclusive gifts. Also, some perks are exclusive to Sephora stores in Kohl’s in the United States and on Kohl’s website.

3. Cashback

Cashback rewards programs are incentives where a percentage of the amount spent is returned to customers.

These perks can be directly deposited into customers’ bank accounts, applied as credit for subsequent purchases, or used to redeem points.

Payment channels like PayPal offer unlimited cashback on eligible purchases using credit and debit cards. Customers can combine these rewards with merchant promos and apply them to purchases to earn more cashback.

Moreover, customers can unlock more exclusive cashback promos the more they pay using PayPal.

4. Mission-based

Mission-based rewards programs are ideal for advocacy-driven consumers.

These programs aim to reward customers for contributing to causes. You create programs where a percentage of purchases goes directly to charities of your choice, which can be more effective when you partner with non-profit organizations that align with your mission.

One example of a mission-based program is Lush’s Charity Pot donations.

For every Charity Pot Body Lotion purchase, Lush donates 100 percent of the price (minus the taxes) to small grassroots human rights, animal protection, and environmental justice organizations. Customers, therefore, get velvety, beautifully scented skin while contributing to the common good.

5. Spend-based

Spend-based rewards programs recognize customers with high spending levels. The more they spend, the more perks and discounts they can earn.

Delta SkyMiles® Platinum American Express Card is an example of a spend-based program.

With this card, customers earn miles based on their purchases.

• Delta purchases – 3X miles
• Hotel purchases – 3X miles
• Restaurant purchases, including delivery and takeout in the U.S. – 2X miles
• Groceries – 2X miles
• Per dollar on other purchases – 1X miles

American Express also offers a special welcome offer: Customers can earn 80,000 bonus miles after spending $3,000 within the first six months.

6. Subscription

In subscription programs, customers subscribe to products or services. They may sign up for a free trial before paying the monthly or annual fees.

Panera Bread’s “Unlimited Sip Club” provides members unlimited access to 20+ drinks, exclusive perks, select Sip Club Saturday deals, and VIP challenges.

This subscription program costs $14.99 monthly and $119.99 annually.

Customers can redeem Sip Club drinks once every two hours and get refills when they’re in the cafe. They can also enjoy surprise savings, an unlimited $0 delivery fee, early access to select menu items, Sipper anniversary surprises, and birthday week treats.

7. Referral

Referral rewards programs encourage customers to refer their friends and family to earn incentives.

These word-of-mouth marketing techniques help you acquire new customers and foster loyalty among existing ones. Plus, the referred customers may even introduce your brand to someone else.

At the same time, you can reduce your customer acquisition costs because existing customers remain loyal while actively finding new customers for you.

One of the most popular referral programs is Google Workspace referral. When users recommend Gmail, Google Meet, and other Google Workspace tools, they’ll earn cash rewards for eligible users they refer.

This program works by filling out the sign-up form and sharing unique referral links and promotional codes.

Tips for creating user-friendly rewards programs

To create user-friendly rewards programs, employ the following practices:

1. Outline your program goals and understand your target audience

Before building a rewards program, define your program goals. Use the following questions as your guide:

• What does the program aim to achieve for your restaurant?
• What actions do you want to encourage? (e.g., frequent visits, higher spending, or social sharing)
• What are the most appealing rewards to your customers?
• What systems or technologies will you need to support reward tracking and redemption?
• How will you ensure compliance with laws regarding consumer privacy and protection?
• What are your target Objectives and Key Results (OKRs) and Key Performance Indicators (KPIs)?

Afterward, conduct market research to understand your target audience. This research helps you identify loyalty motivations and choose a program that resonates with these behaviors.

2. Choose the appropriate type of rewards program

Once market research is complete, choose the appropriate type of rewards program based on the results.

Here are some examples of rewards programs based on customer behaviors and interests:

• Point-based programs with discounts or cashback rewards work best if you have price-sensitive diners.
• Tier-based programs with exclusive perks like appetizers and dining experiences are best for frequent visitors.
• Mission-based programs are best for eco-conscious diners who constantly bring reusable items like containers, tumblers, and metal straws.
• Spend-based programs with discounts and vouchers are best for diners willing to spend a predetermined amount.
• Subscription programs are best for diners who love monthly deals and free deliveries.
• Referral programs are best for customers who love sharing about your brand.

3. Design a compelling and intuitive program

A compelling and intuitive program helps increase conversions and retention. To ensure your program is straightforward to understand and participate in, follow these tips:

• Avoid complex and confusing terms and conditions
• Ensure the steps’ explanation and navigation are consistent across your platforms
• Use infographics to explain the program
• Provide a simple sign-up process
• Implement a responsive design that responds to different device sizes (e.g., desktop, tablet, and mobile devices)

Also, integrate technological mechanisms like restaurant POS systems with rewards support to manage your rewards program and boost participation. These tools help ensure a smoother transaction process, track customer engagement, and tailor the program to your diners’ needs.

4. Integrate gamification AI elements

Gamification AI integrates intelligent technologies to make rewards programs more adaptive, engaging, and personalized. This fusion lets you create responsive experiences tailored to diner preferences.

Gamification AI enables you to implement elements like badges, challenges, games, and levels to motivate customers to participate and earn rewards.

Customers who earn badges and stamps unlock levels with exclusive perks, such as free desserts or private tasting events. The AI then analyzes customer patterns and preferences to offer more personalized challenges, making the program more interactive.

5. Measure performance and update when needed

Once the program is ready, promote it across your channels, such as your social media profiles, brick-and-mortar store, and mobile app, to reach different customer touchpoints.

However, the process doesn’t end at marketing. You must regularly measure the performance and update the program when needed.

You can make data-driven adjustments to optimize the program’s impact and efficacy by tracking performance. You can also find areas for improvement in customer engagement, conversion, and retention rates, ensuring your program’s lasting success.

Benefits of Rewards Programs

With the correct implementation, rewards programs can bring the following benefits to your restaurant:

1. Encourages repeat business

The most common benefit of rewards programs is repeat business. Because of the incentives, you entice your diners to stay with your restaurant and make more purchases.

2. Builds lasting customer relationships

Rewards programs go beyond transactional interactions.

As such, you can build lasting customer relationships because you value your diners’ continued support, strengthening their emotional connection with your brand.

3. Promotes word-of-mouth marketing

Rewards programs are a form of word-of-mouth marketing.

Your existing diners can inform their loved ones about the rewards they receive from your restaurant. 

With referral programs, they can even earn perks from referring new customers. New customers can also save costs by receiving initial discounts on their first purchases, creating a win-win situation for you and your existing and new diners.

4. Show appreciation to customers

Rewards programs are a way to show customer appreciation.

With personalized incentives, you can make your patrons feel uniquely valued, encouraging repeat purchases and deeper engagement with your brand.

Launch a rewards program that converts and retains

Compelling rewards programs require thoughtful planning and strategic execution. With these tips, you can launch an enticing, user-friendly program that amplifies your restaurant’s appeal.

At the same time, aligning the incentives with your brand and diner needs helps promote sustained patron loyalty, ensuring a steady growth in your customer base and retention.