Loyalty programs are proven revenue generators for both restaurants and convenience stores, often to the tune of double-digit financial growth. Unfortunately, proprietors of both types of establishments often make one crucial mistake: They offer rewards that aren’t aligned with their audiences’ most desired options.
Where is the disconnect? Many hospitality and retail businesses focus only on rewarding members with special promotions and discounts, but nearly two in three people most people—a full 61%—are more likely to appreciate reward dollars—“money” they can spend as they wish. Furthermore, 55% of loyalty program participants want the flexibility to redeem as they wish. (Runa)
THEIR REWARD, THEIR CHOICE
This is not to say people don’t want promotions and discounts, so don’t abandon those offers, but restaurant loyalty programs with reward dollars as a loyalty program component are more likely to give you the biggest bang for the buck. Think of it this way: A customer might not be in the mood for a free ice cream coupon, but she may be excited to use the reward of $5 off on her favorite iced coffee she’s been craving. By not limiting her reward, you are more likely to entice her to visit your business.
Reward dollars go a long way toward building customer satisfaction and loyalty, and that’s always good for business. However, offering reward dollars is also good for your bottom line because your average consumer is going to spend more than their total reward dollar amount.
An engaging loyalty program allows you to capture data on your customers’ spending habits and preferences. As you may know, data is the backbone of any solid marketing strategy, enabling you to send personalized messages and improve your product selection and services to better meet customers’ expectations.
Combining reward dollars with your loyalty program efforts may look like:
- Enabling customers to earn points toward a free reward
- Offering free reward dollars —perhaps $5—on customers' birthdays, anniversaries, or other special occasions
- Offering a reward which can be used toward specific items (i.e., to clear out inventory or to sell seasonal items)
- Rewarding loyalty members with a specific amount of reward dollars for every person they refer and signs up for your app
- Sending reward dollar prizes of higher amounts to your most loyal customers
The key to successful leverage of reward dollars in the context of loyalty programs is making them easy to access and use, and that’s why more consumers prefer loyalty apps that enable real-time access and reward redemption.
DRIVE GIFT CARD ACTIVITY BY INCENTIVIZING GUESTS
Another big question businesses often have when it comes to their gift card and loyalty programs is: "Should we also offer a rewards program for gift cards?" In other words, should consumers earn points or rewards for all their gift card purchases?
We say ‘yes’ because it can increase customers’ satisfaction and spending. For example, you may offer:
- Loyalty points upon gift card redemptions. Example: For every $25 redeemed on gift cards, loyalty card members earn 100 points.
- Comp bonus cards for gift card purchases. Example: For every $50 gift card purchased, the buyer receives a $5 comp bonus card.
- Tiered rewards. The more gift cards for restaurants or convenience stores the customer purchases, the higher their comp bonus cards amount. Example: $100 worth of gift cards earns a free $10 comp bonus card, whereas $200 worth of gift cards earns a free $25 comp bonus card.
- Bonus points promotions. Promote double+ points for gift card redemptions during specific periods. Example: During one week in December, offer triple rewards points for all gift card redemptions.
Each of those reward programs for gift cards incentivize customers to purchase your gift cards, either as gifts for others or even for themselves. If they plan on spending money at your business at some point anyway, those freebies can encourage them to purchase the gift cards to use instead of cash.
Reward programs for gift cards can build customer loyalty, keep them coming back, and encourage them to spend more on gift cards. Plus, when they use the gift cards as gifts, you’ll gain new customers.
Read how Paytronix helped Duffy's Sports Grill increase gift card sales by up to 10.9 times the daily average by offering bonus dollars!
4 SUCCESSFUL Rewards-Driven LOYALTY PROGRAMS
Some of the most successful gift card program examples we’ve seen strike a balance of offering personalized promotions, with rewards options, including some type of gift card that enables customers to spend their rewards on items they want.
- Starbucks Rewards® stands out. This app-based loyalty program sends out promotions for free items on birthdays and special occasions. Additionally, each time a person uses the app to make a purchase, they earn rewards toward free items of their choosing. For example, at 100 Stars, they can get a free brewed hot or iced coffee or tea, bakery item, or packaged snack. At 400 Stars, they can get free merch up to $20.
- 7REWARDS®, 7-11’s popular reward program offers members exclusive deals, and they can earn points on every dollar spent and redeem them for free snacks. Plus, they get a free Slurpee® during their birthday month, they can take advantage of Bonus Points, and they can play AR games for additional ways to earn points.
- At Cold Stone Creamery, the My Cold Stone Club offers a “Buy One, Get One Free Creation” after members join and on their birthdays. For each $1 spent, members earn one point, and the points are automatically converted to a $5 off coupon when they reach 50 points.
- Lastly, at BJ’s Brewhouse, BJ’s Premier Rewards Plus members get a free Pizookie dessert at sign-up and another on their birthday. Then for every $1 they spend, they get a point. When they reach 100 points, they receive a $10 reward. Plus, members get other exclusive deals and offers.
INTEGRATE REWARD DOLLARS AND COMP BONUS CARDS INTO YOUR LOYALTY PROGRAM
Earlier we shared just a small snapshot of combined gift and loyalty examples that offer a range of formats, point structures, and rewards. The type of program you choose for your business comes down to three factors:
- Your business type. Gift cards and loyalty programs for restaurants and convenience stores are proven strategies for driving repeat business, boosting sales, and building customer loyalty. They authentically offer a win-win solution for both the business and the customer.
- Your customer base. Loyalty programs hold the potential to satisfy every type of customer, offering your audience the flexibility to choose the items they want.
- Your tech stack. Your ability to offer an effective gift card and loyalty program comes down to your technology capabilities. A program that offers a seamless, friction-free user experience, real-time updates, personalized offers, and automated digital gift cards requires a robust technology platform.
Frequently Asked Questions About Gift Card and Reward Dollars Programs
What's the difference between a rewards card and a gift card?
A gift card acts as prepaid credit that a customer or gift recipient can use to pay for meals or services at your establishment. It’s primarily used as a gifting option.
A rewards card incentivizes repeat business by offering points, discounts, or perks based on spending habits. Customers earn rewards over time, such as free meals or discounts, which are redeemed after meeting specific criteria.
This program builds customer loyalty by encouraging patrons to return frequently. Gift cards focus on immediate sales and attracting new customers, while rewards cards emphasize long-term retention.
Both cards can coexist to strengthen your business strategy. Gift cards drive revenue and new customer acquisition. Rewards cards foster customer engagement and retention. Ideally, restaurants and other retailers should offer both.
Who benefits from gift cards?
Gift cards benefit both customers and restaurant owners. Customers appreciate the convenience of giving or receiving a practical gift that provides a memorable dining experience. They also find value in having a preloaded card that eliminates the need to carry cash or pay directly, making transactions smoother.
Restaurant owners benefit from the upfront revenue generated when gift cards are purchased. They also gain new customers who might not have visited otherwise but come in to redeem a gift card. This serves as an effective introduction to your restaurant. If their experience goes well, there’s a strong chance they’ll become regulars.
What is the main benefit of a gift card?
The main benefit of a gift card is its ability to provide immediate revenue for your business while promoting customer loyalty and engagement. When a gift card is purchased, you receive funds upfront, creating cash flow before services are rendered. It has the ability to simplify cash flow especially during off seasons.
Gift cards also act as marketing tools, bringing new customers to your restaurant. Someone who receives a gift card might not have dined at your establishment before, giving you an opportunity to impress them and turn them into a loyal patron.
For customers, gift cards provide a convenient and versatile present. Who wants to give someone a physical item which often ends up as clutter? Digital gift cards are better purchases for holidays, anniversaries, birthday presents, and dozens of other occasions.
How do companies benefit from gift cards?
Businesses enjoy numerous benefits from gift cards. Gift cards provide upfront revenue to restaurants and drive cash flow. If your business needs to generate money for growth initiatives, running a gift card promotion to increase sales is a wise move.
Gift cards often lead to higher spending. When new or existing customers come to your restaurant to redeem their gift cards, they’ll likely spend more than the value of their gift card. Customers are more likely to order appetizers, desserts, or drinks they otherwise wouldn’t have when they pay with a gift card.
Some gift cards go unredeemed by customers, which is known as breakage. When this happens, this increases revenue without any extra costs.
How do gift cards work for franchises?
Gift card redemption policies for franchises could be different, depending on the franchise. As a general rule, gift cards are often issued at the corporate level to be used at all participating locations.
For customers, this is a big benefit because it allows recipients to redeem gift cards at the franchise location most convenient for them, regardless of the location it was purchased at. It’s also convenient for sending gifts to someone in another state or area, as they can use the gift card near them.
Revenue sharing is often a key aspect of franchise gift card programs. When a gift card is redeemed, the franchise location where the card was used typically receives the revenue, even if the card was purchased elsewhere.
We can help with all of the above! Reach out now to learn how we can help you launch a successful customizable gift card and loyalty program.
