How to reach Millennials through loyalty programs

Maybe Millennials expect discounts when participating in your restaurant’s loyalty program because they frequent sites like LivingSocial and Groupon where everyone, devoted customer or not, gets a cut-rate deal. Whatever the reason, a new study that examines how Millennials interact with restaurant-specific loyalty programs finds that monetary discounts are this key demographic group’s most preferred reward.

This finding comes from a study conducted by Software Advice, an Austin-based online resource for business software buyers. The company distilled its research to come up with five key tips for restaurant operators who wish to use loyalty programs to attract and keep Millennial-aged (16-35) customers.

Here’s the list.

1. Get the rewards mix right. “Loyalty programs that award discounts are most preferred by millennials, at 37 percent, followed by earning points based on dollars spent (30 percent),” the Software Advice (SA) study reports. “A loyalty program that combines these two—where points are accrued for dollars spent, which can be redeemed for discounts on future purchases—is most likely to be popular among millennial customers.”

2. Explore nonmonetary rewards that encourage Millennials to make an emotional connection with your restaurant. “You may consider aligning your brand with causes many millennials support to encourage them to join your loyalty program,” SA suggests. “This can be anything from serving locally sourced ingredients to taking a stand on a social issue. Building loyalty in these ways can help reduce the amount of discounts and other monetary rewards you offer.”

3. Seek feedback from your loyalty program members. “A survey or poll is an effective way to gather this information. Many POS systems offer marketing modules that allow you to send targeted email campaigns—which can include surveys—to loyalty members,” SA notes. “You can even incentivize them to complete the survey by offering extra points or some other (preferably non-monetary) reward.”

4. Joining is different from participating, so engage your loyalty program members often. “Our data shows that the speed with which points and awards can be gained has the greatest impact on millennials’ likelihood to participate in a restaurant’s loyalty program (51 percent),” SA points out. “Thus, a best practice might be to offer an initial reward for enrolling in the program and/or for the first visit as a loyalty member.”

5. Be mobile-friendly and make sure your app does what customers want it to do. “Our research finds that millennials would most often want to view their rewards balance (36 percent), followed by viewing menus and prices (29 percent). Be sure whatever app you choose allows users to perform these functions,” SA counsels. “It’s also a good idea to enable loyalty enrollment via the app. This will streamline the program sign-up process and take it off the hands of your staff.”

Good ideas all. But maybe you’d be satisfied by merely holding on to the customers already in your program. If they’re opting out faster than you’d like or your participation rate is stagnant, check out SA’s list of the top reasons Millennials quit restaurant loyalty programs:

1. Rewards not valuable enough—59 percent

2. Discounts not high enough—57 percent

3. Rewards took too long to accrue—50 percent

4. Not enough reward variety—32 percent

5. Program too complicated—27 percent

6. Received too many messages—24 percent

7. Didn’t offer smartphone/tablet app—14 percent

There are plenty of other insights in the Software Advice report. 

Contact Bob Krummert at [email protected]