Scratch or 'Punchh?' Loyalty programs find innovative ways to drive repeat restaurant business
Loyalty marketing programs continue to be a big driver for restaurants. Tech companies continue to innovate to provide new solutions and more engaging ways to bring customers back. According to the 2011 National Household Survey, conducted by the National Restaurant Association, 38 percent of limited-service restaurateurs thought retaining customers during this year would be more challenging than in 2011.
Beyond the value perceived, food quality and speed of service ─ all high-ranking ingredients of a restauratant's recipe for success, according to the same survey ─ programs that reward customers are essential elements of building retention and rewarding customers, say most marketers. Restaurant marketers can use Front Flip, an app that customers can download on their Android and iPhones and use for the chance to win prizes from the restaurant. With the app, customers can virtually scratch for prizes in contents initiated by the restaurant.
App users scan a code, or "flip code," that the restaurant displays in point-of-purchase material and other print collateral around the restaurant. Restaurants set the potential prizes that can be won and the odds. Additionally, restaurant management can initiate direct campaigns for special offers from the Front Flip dashboard to entice guests to return.
In addition to the in-store use, and the fun engagement that might turn a quick trip for a sandwich into a longer visit with added incentives, customers can share prize winnings on Facebook and Twitter. The social sharing of winning prizes provides a chance for free marketing, suggests Front Flip. The company also says it can provide substantial demographic information and marketing intelligence on customers that are using the app.
Representatives for Kansas-based Front Flip say that the app is used by 260,000 customers across 727 active locations. The app is in use in cities like Houston, Kansas City, Dallas, Denver and Milwaukee. Chain restaurants like McDonald's, Pizza Hut, Del Taco and Wendy's have used Front Flip and have seen success in attracting customers and providing incentives to return more frequently.
Punchh goes for a more direct approach. The California-based company wanted to replace the punch card of days of yore to reward repeat business with an easy-to-use app. Restaurateurs will appreciate the "punchhing" that customers do on the way to rewards. Customers also have an incentive to bring new customers to participating restaurants. For each referral, customers can receive an additional punchh off the iPhone-based app.
Repeat guests can use Punchh to share their experiences on Facebook and Twitter. One of the innovative features of Punchh, which has some patent-pending technology behind it, is the ability to use the social graph to understand connections and potential referrals from social media for users. It then uses that intelligence to reward these types of referrals.
Users also have other social tools, such as social gifting and invitations to refer friends to a restaurant and receive an extra punchh.
A point-of-sale integration (POS) is active with Micros, and Punchh is working with other POS providers, including Aloha and Expient, to make some features more seamless with restaurants. The way that Punchh is currently designed is intentionally circumventing the payment line, says Jitendra Gupta, chief executive of Punchh, so that it doesn't interfere with line speeds and order delivery.
"We take a simple idea of punch cards,” says Gupta. “ ‘If you have five sandwiches, then the sixth one is on us.’ We've taken those cards and we put them on the phone.”
Gupta says that Punchh is amplifying the word-of-mouth factor that brings in 70 percent of customers, by his accounts. App users can also write reviews, sharing their experiences with others on Facebook, and connect directly with the restaurants. If there is a bad experience, for example, or an issue with cleanliness, the negative review can be analyzed and management can be alerted.
The analytics of the Punchh program are substantial in providing restaurant management information about retention, referrals and demographics trends, and it also gives management a way to reach out to guests and initiate marketing campaigns that use push notifications. The return on investment is easily seen through the analytics, providing insight into users' repeat business, customer spend and average ticket.
At Burger Life, a fast casual burger and sandwich fast casual based in Arkansas, about 10 percent of its customers are now punchhing and nearly 41 percent of app users are returning to punchh a second time, says Punchh’s chief. Gupta notes too that, through the Punchh app, the chain has seen 10 times the number of reviews they have on Yelp. The comments are pushed directly to Facebook, where they had 176 reviews when they documented results earlier this year.
In August, Punchh announced that Rita's Ice, with 625 units, retained Punchh to develop its loyalty and rewards program by the end of the year. Rita's Ice will push Punchh-active locations to more than 900 units in 2013.
iOS6 compatibility, and the Apple Passbook integration (in development), will be features that customers and businesses will appreciate. Additional POS integration will allow Punchh to test full-service guest features like customer recognition, ordering preference intelligence and the ability to open tabs from their phones.
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