5 Affordable Tips for Creating a Restaurant Loyalty Program

Table Of Contents

How Much Does a Loyalty Program Usually Cost?
5 Tips to Make a Cost-Effective Loyalty Program
Costly Mistakes to Avoid When Designing a Loyalty Program
Get Noticed: Low-Cost Tips to Promote Your Loyalty Program
Restaurant Loyalty Program Features That Would Get Your Money Worth
Conclusion

Does the thought of creating a loyalty program make you picture dollar bills flying out the window? Don’t worry—you’re not alone! Many restaurant owners worry that launching and maintaining a loyalty program will cost a lot of money, but here’s the good news: they don’t have to be.

In fact, building a loyalty program on a tight budget IS possible. With a few creative strategies and some savvy planning, you can create a program that keeps your customers coming back for more without putting a dent in your wallet.

Ready to make your dream loyalty program a reality? Let’s dive into tips, tricks, and solutions for crafting an affordable program that’s as satisfying as your signature dish.

How Much Does a Loyalty Program Usually Cost?

When it comes to loyalty programs, one of the first questions restaurant owners ask is: “How much will this cost me?” The answer depends on whether you’re building something in-house or outsourcing to a third-party provider.

Businesses generally allocate about 2-5% of their annual revenue investing in a loyalty program. The real costs can vary based on how you approach it.

When it comes to loyalty programs, restaurants have two main choices: go custom or go ready-made.

Option one: Outsourced loyalty programs—think of these as a tailor-made suit. You work with a trusted provider to create a program that fits your brand like a glove. The perks? Full control over the design and features. The downside? It can be a bit pricey.

Option two: Off-the-shelf solutions—these are like grabbing a stylish jacket off the rack. They come pre-built, ready to go, and typically run on a monthly subscription. More budget-friendly? Yes. But not as customizable.

So, which one fits your restaurant best? Let’s break down the costs:

	Outsourced	Off-the-shelf
App maintenance cost	$600	INCLUDED
App development cost	$17,000	INCLUDED
Acquisition cost	$88,000	INCLUDED
Total Loyalty Program Cost	$705,000	From $128

5 Tips to Make a Cost-Effective Loyalty Program

Creating a loyalty program doesn’t have to mean draining your budget. With some strategic thinking and clever planning, you can build a program that works as hard as you do—without overspending. Let’s dive into some practical tips to make your loyalty program both affordable and effective.

Establish Clear Goals

Before diving headfirst into launching a loyalty program, take a step back and think: what do you want to achieve with your loyalty program? Without defined objectives, it’s easy to overspend on features or rewards that don’t align with your business’s needs. Worse, you won’t know if your program is even working!

Here are a few goals to help you get started:

Bring in New Customers: A loyalty program can be useful to acquire new customers. Do this if you think your restaurant lacks a customer base, or you’re just opening a new branch somewhere.
Increase Repeat Visits: Customers come and go, but what if you can entice them to come back to you? This is useful if you’ve acquired new customers but struggle to retain them.
Boost Customer Spending: A loyalty program can be a solution to encourage your customers to buy more! When you offer rewards the more they spend, they feel like they’re getting more value for their money.

Once you’ve defined your goals, set key performance indicators (KPIs) to measure success. Here are a few examples to get you started:

Sign-Up Rate: How many customers are joining your loyalty program each month? A high sign-up rate shows your program is appealing.
Redemption Rate: Are customers actually redeeming rewards? A low rate might mean your rewards are too hard to achieve or not enticing enough.
Customer Retention Rate: Are more customers coming back? This metric will tell you if your program is keeping them loyal.

Understand Customer Needs and Wants

Not all customers are created equal when it comes to loyalty programs. Some might swing by once a month, while others are there so often they know your staff by name. To make the most of your loyalty program budget, it’s important to identify and prioritize the customers who bring the most value to your business.

Here are a few things to get you started:

Segment Your Customers: Dive into your data to group customers based on their spending habits and visit frequency. Are they frequent diners, occasional treat-yourself types, or only-here-for-happy-hour folks?
Reward the VIPs: If your goal is to increase repeat visits, start by identifying your top-tier customers. Use data analytics to track their spending habits and visit frequency. Then, you can reward them with something special—like a free appetizer after every fifth visit or early access to a new menu.
Personalize Offers: If your goal is to boost the average spend per visit, it’s time to get creative. Personalized offers, like a discount on high-margin items or bundled combos, can tempt them to splurge a little more. “Add a dessert for just $2 more,” who can say no to that?
Avoid Uninterested Customers: While it’s tempting to try to reel in every customer, some simply won’t engage with a loyalty program. Focus your efforts on those who bring value to your business. After all, a loyalty program isn’t just about handing out rewards; it’s about building relationships with the customers who matter most!

Keep Customers Engaged

So, got your big-spenders on the list? Time to engage with them. Keeping your customers engaged is like hosting a party—they need reasons to stick around and have fun. To make your program truly shine, you need to actively engage your members and keep them excited.

Here’s how to do just that:

Turn Customers Into Advocates: Encourage members to share their experiences on social media. Sweeten the deal with small rewards: “Post a photo tagging us and win rewards!” People love showing off their foodie adventures, and you’ll love the free publicity. Example: TGIF social media tag post.

Make It Fun With Contests: Who doesn’t love a good challenge? Run fun contests like “Post your favorite dish and tag us for a chance to win a free dessert!” It’s an easy way to engage customers while spreading the word about your program. Example: Jordan Winery #DineWithJordan contest.

Stay in Touch: Don’t let the conversation stop—keep the momentum going with regular updates through email or app notifications. Share program milestones, welcome emails, or updates about limited-time offers. Example: Corner Bakery welcome email.

Leverage Technology For Automation

While technology can’t define your loyalty program goals, it can help you achieve them more efficiently and cost-effectively. By automating key processes, you can save time, reduce errors, and focus on enhancing customer satisfaction.

Automate the Essentials: Streamline enrollment, point tracking, and reward redemption to simplify the program for your staff and customers.
Personalized Engagement: Set up automated notifications to remind customers about their points balance, upcoming rewards, or expiring offers. This keeps your program relevant without requiring constant manual effort.

Using the right platform can make all the difference. Affordable solutions like SimpleLoyalty offer tools to handle these tasks seamlessly, helping you implement an automated program that stays within budget.

Balance Reward Value

When it comes to rewards, you don’t have to break the bank to make your customers feel special. The key is offering rewards that feel valuable without costing you a fortune.

Here’s how to strike that perfect balance between cost and customer satisfaction:

Offer High-Perceived Value, Low-Cost Rewards: Some rewards don’t need to be expensive to feel luxurious. Consider giving customers early access to sales, exclusive events, or special menu items. These perks create a sense of exclusivity and make customers feel like VIPs, all while keeping your budget in check.
Optimize the Cost-to-Value Ratio: Look at each reward through the lens of cost versus impact. Small, simple rewards like personalized thank-you notes, priority seating, or “members-only” discounts can be just as effective as more expensive offerings—without putting a strain on your resources.

Now you know some of the valuable strategies to build a loyalty program with a tight budget. Next up, let’s take a look at some of the mistakes you should avoid when designing your loyalty program. Be careful, these mistakes will potentially cost you a fortune!

Costly Mistakes to Avoid When Designing a Loyalty Program

Designing a loyalty program might seem simple at first, but there are some common pitfalls that can lead to wasted resources, missed opportunities, and prevent your program from reaching its full potential.

Here’s how to avoid making costly mistakes that can strain your budget.

Lack of Clear Goals

Why this can strain the budget:
Imagine flying a plane without a navigation system! Scary, right?

Without clear goals in place, your loyalty program can quickly become a catch-all of random features and rewards. You might find yourself spending money on perks that don’t align with your business objectives, leading to a program that’s unfocused and ineffective.

Wasted Spending: If you’re offering rewards that don’t directly tie into your business goals (like trying to boost repeat visits or increase spend), you’re essentially throwing money away.
Difficulty Measuring Success: Without measurable goals, it’s hard to know if your program is working or if you’re just spinning your wheels. This makes it nearly impossible to adjust or improve your program.

Real example:

J.C. Penney aimed to simplify pricing by eliminating sales, discounts, and coupons, opting for “Every Day” low prices. Not knowing which customer base to engage and lacking a goal they want to achieve led to a decline in sales. This pricing strategy alienated loyal customers who enjoyed hunting for deals.

What you can do:

To avoid this, make sure you clearly define your objectives—whether that’s increasing repeat customers, boosting average spend, or attracting new guests—and build your rewards and marketing efforts around those goals. This will ensure every dollar you spend is working toward a clear, measurable result.

Complex Program

Why this can strain the budget:
Simplicity is key when it comes to loyalty programs. A complicated program might seem like you’re trying to offer more, but it can end up costing you in ways you didn’t expect.

High Administrative Costs: Managing a program with too many tiers, rewards, or rules can quickly become a logistical nightmare. More complexity means more time and money spent on training staff, handling customer inquiries, and tracking rewards—which adds to labor costs and operational headaches.
Confusion for Customers: If your customers can’t easily understand how to earn or redeem rewards, they’re less likely to participate. A confusing program leads to frustrated customers. This means fewer sign-ups, fewer redemptions, and less value for your investment.

Real example:

Plenti ended their rewards program because of its complex structure, where users could earn points at one retailer and redeem them at another. Consumers found the program too confusing and not rewarding enough.

What you can do:

The solution? Keep your program simple, straightforward, and easy to understand. The simpler it is, the more likely your customers will sign up, engage, and—most importantly—keep coming back for more!

Barriers to Earning and Redeeming Rewards

Why this can strain the budget:
Setting redemption requirements that are too high or giving barriers to how they can get rewards might seem like a good way to control costs, but it can backfire in a big way. Customers want to feel rewarded, not frustrated, so if your rewards are seen as unattainable, your program won’t deliver the value you’re hoping for.

Customers May Lose Interest: If customers need to spend hundreds of dollars or visit dozens of times before they can redeem a reward, they may give up. When rewards feel out of reach, engagement drops, and customers lose the motivation to participate.
Wasted Resources: Creating and managing a program with too many restrictions requires more time and effort, yet it doesn’t yield the customer satisfaction needed to justify the investment. You end up spending resources on a program that doesn’t provide value to either customers or your business.

Real Example:

Best Buy’s original Reward Zone program had a yearly fee, which didn’t sit well with many consumers, especially given that many other retailers offered free loyalty programs. The thresholds for earning rewards were relatively high, meaning customers had to spend big to start seeing any benefit.

What you can do:

To avoid this, set realistic and achievable redemption requirements that keep customers engaged. A balance of attainable milestones with exciting rewards can keep your loyalty program thriving and your customers happy!

Next up, we’ll explore some cost-effective ways for you to promote your loyalty program. Take notes, because this will be the driving fuel behind how many your customers will be aware about your awesome program and intrigued to join!

Get Noticed: Low-Cost Tips to Promote Your Loyalty Program

Marketing your loyalty program doesn’t have to be expensive. With a little creativity and effort, you can use cost-effective methods to get the word out and drive customer engagement. Let’s explore some budget-friendly strategies to help your program shine!

Take Advantage of Social Media

Why this works:
Social media marketing is a goldmine for promoting your loyalty program without spending a dime. Platforms like Instagram, Facebook, Twitter, and even TikTok provide free or low-cost ways to directly engage with your audience and get them excited about your rewards program.

Engage and Reward Members: Encourage your existing loyalty members to engage with your brand on social media by liking, sharing, or commenting on posts. Offer them small rewards in return—think bonus points or special shoutouts—to make them feel valued.
Boost Organic Reach: Social media is all about organic reach, and when your loyal customers share their experiences or rewards with their followers, you gain free exposure. User-generated content is like free advertising!

Real example:

Take Condado Tacos, for example. They nailed it by reposting a customer’s photo and giving them a shoutout on their official account. It’s simple, but it works—it feels great to be recognized by your favorite spot, and this kind of engagement encourages others to share their experiences too.

Market Through Email

Why this works:
Email marketing remains one of the most cost-effective ways to stay connected with your customers. It allows you to send targeted messages directly to their inbox, which is a powerful tool for promoting your loyalty program without spending a lot of money.

Personalized Outreach: Sending personalized emails helps you engage your customers more effectively. Remind them of their points balance, offer sneak peeks into upcoming rewards, or highlight special limited-time offers that encourage them to engage with your loyalty program.
Encourage Sign-Ups: Use email to encourage new customers to join your loyalty program by showcasing the perks and benefits. Send them a compelling, easy-to-understand invitation to sign up.
Regular Newsletters: Keep your loyalty program top of mind by including it in your regular email newsletters. Share success stories, program updates, and exclusive offers to keep customers excited about the rewards they can earn.

Real Example:

California Tortilla used email to nurture their loyalty program by sending birthday treats to members—because who doesn’t love a little extra love on their special day? Their inviting emails encourage customers to join their loyalty program for these exclusive perks.

Word-of-Mouth and Referral Bonuses

Why this works:
The best kind of promotion often comes from your existing customers. Word-of-mouth is a powerful tool, and when happy customers recommend your loyalty program to their friends and family, it builds trust and credibility in a way that traditional advertising can’t.

Natural Promotion: When customers love your brand and feel valued, they’re more likely to share their positive experiences with others. This organic promotion creates a ripple effect that brings in new members without any significant cost to you.
Referral Bonuses: By offering small incentives (like bonus points, discounts, or special rewards) to customers who refer others, you can create an army of brand advocates. This not only boosts sign-ups but also encourages existing members to stay engaged and spread the word.
Cost-Effective Growth: Referral programs are one of the most affordable ways to increase customer acquisition. Instead of spending money on ads, you reward loyal customers for helping you grow your customer base.

Real example:

NatureBox has mastered the art of referral marketing by offering customers discounts for referring friends to their brand. Each successful referral earns both the referrer and the referee a discount on their next purchase, making it a win-win situation.

Make Sure Your Offline Store Promotes

Why this works:

Last but definitely not least—your team is your best asset when it comes to promoting your loyalty program. Customers should be exposed to the program every time they interact with your brand, including in-store promotions. Your staff interact with your customers daily, and a simple mention at the right moment can make all the difference in driving sign-ups and participation.

Direct Interaction: Your staff is on the front lines, engaging with customers at checkout or during table service. This gives them the perfect opportunity to mention your loyalty program and its benefits, making it easy for customers to join right then and there.
Point-of-Sale Promotion: A quick explanation of the loyalty program—whether it’s offering a free reward after a certain number of purchases or a special member discount—can spark interest and encourage customers to sign up on the spot.
Personalized Recommendations: Staff members can tailor their pitch based on the customer’s behavior. For example, if a regular customer orders the same thing every week, your staff could mention how they can earn rewards for every purchase, making the program more relevant.

Real example:

Take ALDO, for example. They’ve nailed in-store promotion with their Aldo Crew loyalty program by putting up large, eye-catching signage in their stores. The bold visibility ensures that customers can’t miss it.

Now it’s your turn to make your loyalty program shine! You’ve put so much effort into making it, so let people know about it. Next up, let’s explore some of the must-have features your loyalty program should include to make sure you’re making the most out of your budget.

Restaurant Loyalty Program Features That Would Get Your Money Worth

Implementing a loyalty program for your restaurant will take a lot of work. So, how do you make sure everything you’ve spent on is worth it and actually valuable?

Let’s take a look at some of the must-have features of a loyalty program.

Customizable Reward System

Blanket rewards? No thanks. Your customers are unique, and your rewards should be, too!

Why this is important:

Customers are more likely to stick with a loyalty program that feels like it was designed just for them. A tailored program shows that you understand their preferences and value their loyalty.