Want to Increase Loyalty? Reward Customers for Spreading the Word on Social Sites

By Tammy Mastroberte, Contributing Editor | September 07, 2012

The enormous growth of social media continues to influence how hospitality operators interact with customers. Marketing departments are branching out from the traditional means of advertising to include such social media websites as Twitter, Foursquare, and of course Facebook, which alone reaches 900 million monthly users.

Some businesses are now integrating social media activity with a formal loyalty program, for example rewarding customers for socially sharing information about their activity with a brand, or converting a friend from a fan to a customer. While some believe this is a passing trend, others are optimistic about the future possibilities this combination can offer the
hospitality market.

“To embrace the benefits of social networks just makes sense,” says Lee Holman, lead retail analyst for IHL Consulting (www.ihlservices.com). “This is the kind of technology that is moving forward, and if you choose to ignore it, it will blow right by you. Just like with mobile phones, operators have to make a conscious choice to embrace it, or they ignore it at their own detriment.”

When connecting loyalty programs to social media activity, it is important for an operator to understand the customer base and know if these incentives will resonate with them. Sucharita Mulpuru, vice president and principal analyst with Forrester Research (www.forrester.com) believes there is only a small segment of people who will embrace the trend, especially those programs that require customers to announce their locations each time they make a purchase.

“It remains to be seen how widespread the activity may be, but there will be some people who participate,” Mulpuru concedes.

The profit of being social
For those brands that do embrace it, social media-based loyalty programs can boost traffic and profits tremendously due to the word-of-mouth recommendations it facilitates.

“If a friend, who is a trusted advisor, recommends something, a person is more apt to engage with a brand because of that referral,” explains Mark Johnson, president and CEO of Loyalty 360 (www.loyalty360.org), a loyalty
marketers association.

At Beach House Bar & Grill in Kirkland, Wash., (www.beachhousekirkland.com) owners Maria and Ricky Eng started offering cash back to customers through the company Talktup (www.talktup.com), which facilitates posting onto Facebook and Twitter when a user pays at the restaurant because the vendor links the account to a debit or credit card. Then, when their friends click on the post, these customers get credit and once their Talktup account reaches $10, the vendor sends them a debit card for that amount. “Friend referral and word-of-mouth is the best form of advertising,” says Maria Eng. “You trust your friends the most.”

Eng gets weekly reports from Talktup showing how many people visited the restaurant as a result of referrals, how many were new customers, and the total revenue for each week. The only fee she pays is a percentage of what a customer spends at the establishment. Additionally, participating in the program did not require any technical upgrades or changes to the POS system since its done via an app, and Talktup tracks the clicks on each post. “In the past couple of months, our total revenue has gone up quite a bit, and so have customer visits,” Maria Eng reveals. “It’s pretty impressive.”

Another vendor, Plink (www.plink.com), that works with restaurant chains, including Taco Bell, Outback, Burger King and Arbys, takes a similar approach. Customers register a credit card with Plink, and the company tracks visits and purchases so an operator doesn’t need to change its existing structure or point-of-sale (POS) system. Plink drives customers into the restaurant via online and e-mail marketing and then rewards them with Facebook credits for online gaming.

The technology aspect of offering any loyalty program can make a big difference for business owners. “Operators want any interface at the POS to be invisible to the customer; if it’s adding two seconds to a transaction, that could impact them negatively,” Holman notes, explaining why providers that don’t add this burden are good to consider.

However, even when technical changes are required, they are not necessarily cumbersome. PC America (www.pcamerica.com) launched a social rewards program piece as part of its point-of-sale offering called SNAP (social network appreciation platform) (www.snapforbusiness.com), and is now partnering with other POS vendors to offer the technology. When customers visit a restaurant and their loyalty card is swiped at the POS, the opt-in program posts a message on linked social media networks alerting the customers’ followers that they were there.

Big Star Coffee (www.facebook.com/BigStarCoffee) a five-location chain in Idaho, began using SNAP six months ago and (as of press time) has sent out 435 posts from its customers using the system, explains owner Jason Wilson.

“Customers accumulate points based on the dollar amount they spend, but we give them an extra point if they participate in the social media part,” he says. “When we swipe the card, it can update Twitter, Facebook or both, and we have a queue of customized messages we created to appear on the pages.”

The posts either reference the brand or a certain item being advertised that month, and even though he thought only younger customers would embrace the option, Wilson was surprised to see that the user demographic spans all ages.
“People like free stuff so any time they can get extra they usually choose to do it,” he says. Wilson also notes that those who have opted in tend to stay with the program. “We have not had many opt out of it because they see they are increasing their points faster, which qualifies them for a free drink.”


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