What is the best loyalty program to increase customer spending(Quick Reads)
Increasing order totals
The options for increasing order totals are a lot vast than increasing volume and much easier to implement and persuade upon customers. The 3 simplest loyalty programs to increase order totals are points per dollar spent to be redeemed later for a reward, cashback program, and ranks or levels.
Redeeming rewards is probably the most common loyalty program out there. A redemption program is when you create items that can be redeemed by customers with points they earned by spending money. Notably as of Aug 2021, this is the loyalty program implemented by Chick-fil-a and Chipotle.
A complaint from customers who are in redemption programs is that redemptions items are not consistent or more so, correlative price. Redemption programs would also be a great way to introduce new customers to your brand. If you allow customers to redeem an item and gift that redeemed item to a friend, you could also encourage that behavior by offering points for their generosity.
Another interesting feature about redemption programs is that redeemable items do not have to exclusively be physical items, you could redeem discounts, mystery/treasure boxes, or even redeem an action that donates X dollars to charity. Depending on your business and brand, I think these different redemptions can allow for an excellent and profitable loyalty program.
You could also have a different redemption list for different customers to add more personalization or even different loyalty ranks if that is something you have incorporated into your operations. Adding a time limit to rewards can also help encourage customer spending and can also drive customer behavior to redeem rewards early, but there needs to be a balance.
Secondly, cashback is the easiest to implement, customers can spend their money or credits for orders. Customers earn credits for each dollar spent and can use it as cashback. This is similar to the redemption program but instead, points are treated like cash and customers can use their points on anything rather than a fixed list.
You can also set a point minimum to make sure customers spend a certain amount. Cashback is an excellent way for a customer to feel as they earn something for each order. A lot of brands already have an existing loyalty program similar to cashback, where if a customer spends $60 they will receive a $10 discount for their next order.
Depending on how you present that sort of program to your customer, it is not as effective as cashback. Rather you should instead allow a customer to see their cashback earned, either it is $3 earned or $7 earned but set the minimum spend amount to $10 and make it so that they have spent at least $60 to earn up to $10 in cashback credit.
This difference will be more encouraging to a customer because it is ongoing and is much more self-aware to the customer. In conjunction with how I mentioned in the Redemption section, you could allow customers to spend cashback credits to order customers or redeem it as a gift card to help expand your customer pool, but it would be best to also set a minimum for this, so customers do not pool together.
Also to mention with cashback, you could set a time limit to how long credits last to add a sense of urgency to either spend credits or earn credits. Also if you want to boost order total spending, you could run events like 2x cashback this weekend or during happy hour on this day, or if you spend over X amount get double the cash back. Even to increase sales of a certain item, you could set that specific item to have an increased cashback reward. These two loyalty programs are closely similar and are a matter of language and presentation to the customer.
Ranks and levels
Last is ranks or level, basically the more a customer spends the higher the level up, you as the brand would attach better or more rewards to higher ranks to encourage customers to spend more to level up. This is a great option and can also be combined with other loyalty programs, like redemption, cashback, visit program. Rank programs are a great way to encourage more spending per order because it allows customers to feel a sense of pride or elevated customer status and increases in customer retention.
The best way to utilize a loyalty program to increase customer spending would depend on where you want to increase spending. When it comes to making more money in the restaurant business or any business in general, you have two options. Make more money from your existing customers or make more new customers. For this blog post, I explore increasing spending from your existing customers. You can increase customer spending by increasing order volume or increasing order totals.