What Is a Loyalty Program for Restaurants and C-Stores?

Loyalty programs are the new ladder to success in today's hospitality and retail marketplace. These programs are more than business promotional tools; they foster deep connections and encourage repeat visits. 

Do you operate a restaurant, café, or convenience store? Building your data-driven loyalty program is essential. Each type of program design brings specific advantages to different business models, but there are clear, universal advantages to having one in place. 

This article will explore a variety of loyalty program structures. You'll learn how each can enhance your restaurant or C-store business.  

What Is a Customer Loyalty Program?  

A customer loyalty program is a means by which to reward customers who make purchases from and patronize a brand. By participating in these programs, customers earn rewards and often the opportunity to exchange their tracked achievements for financial or experiential benefit.

Such rewards and experiences include discounts, free merchandise, services, or other special offers. Each of these offerings encourages repeat business, fostering a loyal customer base. 

Loyalty programs track customer purchases and interactions through a digital or physical card that records points. Points add up based on the amount spent, the number of items purchased, or the frequency of visits—and sometimes all three. They can then be redeemed for rewards like those mentioned above. 

Customer loyalty programs take various forms, depending on the company’s strategy and the behavior it wishes to encourage. Five common types include: 

1. Points-Based Systems: The most common structure here is that customers earn one point for every dollar spent, which they can later exchange for rewards once they have enough points to redeem. 
2. Tiered Programs: Each tier is based on customer spending or engagement, encouraging customers to “level up” and reach more enticing rewards sooner by spending more. 
3. Spend-Based Programs: These are like tiered programs but focused only on the total spending over a certain period. High spenders may anticipate receiving rewards sooner as well as exclusive benefits. 
4. Brand Loyalty Programs: A brand loyalty program is driven by an emotional connection with the brand and often incentivizes engagement that resonates with the customer's values and lifestyle. 
5. Coalition Loyalty Programs: Multiple businesses band together to offer a unified loyalty program, accelerating the benefits for everyone involved, including customers. 

Beyond rewards, these programs can also offer members-only perks that non-members cannot access. Rewards may include free products that others can simply purchase.

Members-only perks may include special sales access, birthday bonuses, exclusive event invitations, or early product releases. This can add exclusivity and enhance customer satisfaction and loyalty. 

Tailor your program’s structure to match your customers’ preferences and purchasing patterns, which maximizes engagement with your brand. You can also ensure your loyalty program supports your business objectives. For example, if you aim to promote a new product line, you might offer bonus points for members who try items from this line.

What Is a Brand Loyalty Program? 

A brand loyalty program is a mutually satisfying business strategy designed to deepen customers' emotional and psychological ties to a brand. This connection goes further than incentivizing repeat purchases and focuses on building a strong, enduring relationship between the brand and its customers. It encourages loyalty through emotional engagement and brand alignment rather than only transactional activity. 

Distinction Between Brand and Customer Loyalty Programs 

Customer loyalty programs often reward customers for purchases with points or perks. Brand loyalty programs aim to create a bond that will continue beyond the next transaction. These programs seek to engender a sense of belonging and affinity toward the brand and can influence buying behavior on a deeper level. 

For example, a brand loyalty program might involve customers in various tasks like storytelling or sharing brand values. The program can then involve them in community or charity events that reflect the brand's identity. This approach retains customers and turns them into brand advocates. 

Key Benefits of Focusing on Brand Loyalty 

1. Enhanced Customer Retention: Customers who feel connected to a brand remain loyal more often. According to a report from Motista, they tend to stay with a brand for 5.1 years as opposed to 3.4 years for other customers. This emotional investment is key to maintaining a stable customer base. 
2. Higher Customer Lifetime Value: Customers loyal to a brand spend more over time. The same report says emotionally connected customers have a 306% higher lifetime value. By aligning with a brand’s values and identity, they are more likely to choose premium services or products and make frequent purchases. 
3. Free Marketing: Brand-loyal customers often become advocates for the brand. Motista also found that they are more than four times as likely to share positive experiences and recommendations with friends and family. This word-of-mouth marketing is potent and cost-efficient. Review 42 found that word of mouth drives about $6 trillion of consumer spending annually.  
4. Competitive Advantage: A strong brand loyalty program is vital in crowded marketplaces. Such a program can differentiate a brand from its competitors—not only at the product level but also in how customers resonate emotionally. 

Brand loyalty programs impact a business’s growth and sustainability when executed well. These programs are crucial for hospitality and retail brands because such businesses already combat small profit margins daily.  

What Is a Coalition Loyalty Program? 

Coalition loyalty programs involve multiple businesses that offer a shared loyalty program. This approach allows customers to earn and redeem rewards across different but related brands or products. 

Overview of Coalition Loyalty Programs 

In these programs, companies from different sectors unite under one loyalty platform. For example, customers can accumulate points at a grocery store and then use them at a partnering gas station or online store. This interconnectivity increases the utility and appeal of the loyalty program and makes it more attractive to a bigger audience without equal amounts of manual labor involved. 

3 Pros and Cons of Joining a Coalition 

Pros: 

1. Broader Reach: By partnering with other businesses, brands can reach a larger customer base. 
2. Shared Marketing Costs: Marketing expenses are distributed among the coalition members, often reducing individual costs for each brand. 
3. Enhanced Customer Data: Brands gain shared insights into customer behavior across different sectors. In the right hands, this information leads to better business decisions and greater access to valuable data. 

Cons: 

1. Profit Sharing: Rewards costs are shared, which can lead to reduced profit margins on redeemed rewards. 
2. Complex Management: Brands must coordinate between multiple partners. This challenge can complicate the management of the loyalty program. 
3. Customer Overlap: There is a risk of diluting brand loyalty. Customers might not associate their loyalty with one brand but the whole coalition. 

Coalition loyalty programs offer a unique way for businesses to expand their reach. They can also boost the utility of loyalty offerings. Yet, such programs require careful management to balance benefits against potential drawbacks. 

What Is a Tiered Loyalty Program? 

Tiered loyalty programs categorize customers into levels based on their engagement or spending. These levels provide escalating rewards and benefits as customers reach higher tiers. A tiered system motivates customers to deepen their loyalty to receive better perks. 

Overview of Tiered Loyalty Structures 

The structure of a tiered loyalty program involves several levels, each offering a greater degree of rewards than the last. For example, a basic level might offer 5% off purchases, and the next level might offer 10%. 

A top tier might provide exclusive access to new products or special events. The criteria for moving up in tiers can vary, but they are often based on points accumulated through purchases or activities over a defined period. 

How Tiered Programs Enhance Customer Engagement 

Tiered programs encourage increased engagement by rewarding customers for their loyalty. Here are four ways they boost engagement: 

1. Incentives for Higher Spending: Customers know higher tiers offer better rewards. They’re likely to spend more to reach these levels. 
2. Personalization of Rewards: Tier-specific rewards cater to the behaviors of different customer segments. This can make the rewards feel more personalized and valuable. 
3. Personal Sense of Achievement: Moving up a tier creates a sense of accomplishment among customers, enhancing their emotional connection to the brand. 
4. Increased Brand Interaction: Customers want to maintain or advance their tier status. To do so, they may engage more frequently with the brand. This could be through purchases, social media interaction, or event participation. 

Tiered loyalty programs are effective because they create a continuous cycle of engagement. Customers are motivated to maintain their current benefits and aspire to the next level’s rewards. This ongoing engagement helps build deeper customer relationships and increases customer lifetime value. 

5 Customer Loyalty Programs Examples 

Points-Based System: Starbucks Rewards 

Starbucks Rewards is a leading example of a highly successful points-based loyalty program. Members earn stars for every dollar spent at Starbucks, which they can redeem for free drinks, food items, and branded merchandise. 

Starbucks’ loyalty program is exceptionally user-friendly. Members can track their stars and rewards via the Starbucks app. 

Members also enjoy special perks like free birthday drinks, mobile ordering, and free refills on basic coffees and teas while in the store. These benefits simplify transactions and enhance customer experience, increasing repeat visits and brand loyalty. 

Tiered Program: Sephora Beauty Insider 

Sephora’s Beauty Insider program is a comprehensive tiered loyalty system that's designed to increase customer retention and spending. The program has three levels: Insider, VIB (Very Important Beauty Insider), and Rouge. 

Based on annual spending thresholds, each level offers better perks than the last. Benefits range from birthday gifts and exclusive sales to free shipping and early product access. 

Sephora also enhances its program with personalized beauty consultations. Members can also get exclusive set-asides of coveted beauty products, making each tier feel particularly valuable. The program motivates customers to increase their spending and creates a personalized shopping experience. 

Spend-Based Programs: My Best Buy 

My Best Buy is a robust example of a spend-based loyalty program. Members earn rewards based on their spending at Best Buy stores and online. 

They accumulate points for each dollar spent, with the system offering 0.5 points per dollar as the base rate and more for Elite and Elite Plus members. Once members collect 250 points, they receive a $5 reward certificate that can be applied towards any future purchase. 

The program also includes exclusive offers, early access to sales, and special discounts. My Best Buy encourages frequent and higher spending, tying the reward system to the dollar amount spent. This makes it a compelling program for tech enthusiasts looking to maximize their purchases. 

Brand Loyalty Program: Nike Membership 

Nike Membership (formerly NikePlus) is an excellent example of a brand loyalty program known for deeply engaging its customer base. Nike Members receive many benefits that go beyond typical rewards, such as exclusive access to new products and special editions of sneakers. 

Customers can even get personalized training programs and coaching via the Nike App. The program emphasizes community and individual athletic achievement, aligning with the brand’s ethos of inspiration and innovation in sports. 

Nike members can also participate in exclusive events and participate in the testing and development of new products. This level of involvement cultivates a strong brand connection and encourages a lifestyle centered around the brand, and members are more likely to remain loyal advocates for Nike. 

Coalition Loyalty Program: Air Miles 

Air Miles is one of the most well-known coalition loyalty programs, particularly popular in Canada. Members earn miles when they shop at various participating companies across different industries. These include grocery stores, gas stations, and online shopping portals. Miles can be redeemed for flights, merchandise, or event tickets.  

The program includes major brands such as Shell, Sobeys, and Staples. The variety of partners highlights its broad appeal and flexibility. Air Miles is a prime example of how a coalition loyalty program can offer added value to customers. This program allows users to earn rewards across a spectrum of everyday purchases. 

Combination Program: Delta SkyMiles 

Delta Airlines’ SkyMiles program is an extensive spend-based loyalty program. Members earn miles for every dollar they spend on Delta flights. Miles can be redeemed for various rewards, including free flights, seat upgrades, luxury lounge access, and more. 

Delta also offers benefits through its tiered Medallion program. Higher spending leads to more prestigious status tiers—Silver, Gold, Platinum, and Diamond. Each tier provides additional benefits to those who earn it. 

These include complimentary upgrades, priority check-in, and bonus miles earned. This structured incentive encourages more frequent and higher spending and fosters deep loyalty to Delta by improving the travel experience. 

The Bottom Line 

Understanding the various types of loyalty programs is an important step in fostering customer loyalty and increasing engagement. From points-based systems to spend-based programs, each type offers unique benefits and is designed to meet different business needs and customer preferences. 

A well-structured loyalty program can transform your business for restaurants and convenience stores. It can change how customers interact with your brand and boost your bottom line. 

This is where our platform comes into play. Our advanced loyalty solutions empower customer engagement and profitability in a way your team has never seen before. You can create customized programs that resonate with your brand and customer base.  

A well-implemented loyalty program can change the game in today’s competitive market. Schedule a demo now to see what we can do for you.