Loyalty Cards Systems – Beware, Some Should Be Avoided

By: Jeff Walters

Recently, I discussed a loyalty card system with a vendor who was selling quite a number of his systems to restaurants. I was shocked to discover the lack of detailed information that this vendor catered for, and the opportunities the system he provided squandered.

The way their scheme works is that whenever a restaurant customer is presented with a bill, they provide their loyalty card to the waiter, who swipes it at the till. If the customer has accumulated sufficient points from previously purchased meals, he/she is awarded a rebate on the price of the meal.

This is simple price discounting based on repeat purchases. No other marketing activities are carried out - either by the loyalty card company, or by the restaurant - to proactively influence the number of times the card holder frequents the restaurant - they rely solely on the meal discount to attract customers back for more meals.

This is a system that is woefully underexploited.

I asked about the level of detail that was transmitted to the card site - and was once again disappointed - only the total meal cost was transmitted. The customer profile that was being created was extremely superficial. My view was further confirmed when I asked whether the 'significant other', or other family members' details were collected. Once again, no.

The key things wrong with this service offering:

* Lack of transaction details. These days, with broadband communication and high volume data disks, there is really no excuse not to collect data at transaction level.
* The simple act of recording the bill at individual meal item level opens up a wealth of information:

- Number of main meals - if there are children in the family unit (provided during signup), analysis of the bill will provide a clear indication of whether the whole family always eats out, or if on occaision the parents treat themselves to a quiet night on their own - possibly anniversaries, or birthdays, or just a regular night away from the kids.
- Types of meals - red meat, fish, vegetarian - which could be used for special promotions
- Beer, cheap wine, or expensive wine drinker

If you had the above information at your finger tips, who would you rather focus your marketing efforts on to get to come back to your restaurant - the family of six that buys budget meals, and drinks beer and soda, or 3 couples ordering starters, high-priced meals, drinking quality wine, and finishing off with expensive liqueurs?

* Even recording the value of the tip could be useful. A usually-generous tipper who awards a low tip (possibly to a new waiter) is giving a clear indication of a bad experience. This information could be used by the restaurant owner to contact the customer within a few days to establish what was wrong with the meal or service, and to invite the customer back with an offer of a generous discount for the next meal.

* Not getting the details of the 'significant other' and details of any children prevents marketing to special days. Its pretty pointless merely getting the birthday of the cardholder - it's not that compelling to get an SMS or postcard suggesting that you treat yourself to a special night out. It's far more effective to receive a prompt to take your significant other out for that special meal. Children's birthdays are another opportunity to encourage the family to come out to the restaurant for a slap-up meal -but this is only possible if you take the trouble to collect the data...

Hopefully the above points have provided some ideas as to how basic transaction data can be used effectively by an information analyst or direct marketer.

If you are approached by a vendor to implement a loyalty scheme, or you are thinking about calling for proposals from scheme suppliers, make sure that you investigate the level of data detail that each supplier collects.

If data is recorded at line item level - i.e. product ID, quantity, and price - then you will have a wealth of sales data that you can start using for a variety of campaigns. If they only provide you with a bill total per meal, then I suggest you look elsewhere for a more effective loyalty card scheme.

© 2005 Intellinova (Pty) Ltd. - All Rights Reserved
This article may be reprinted, provided it is published in its entirety, includes the author bio information, and all links remain active.

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Jeff Walters has transformed data into strategic information in banking, insurance, gambling, medical, government, leading several data-to-information projects: ABC Costing, CRM, datamart development, and Balanced Scorecard. Want to convert your raw data into strategic assets? Contact Jeff via : Customer Relationship Management, or Direct Marketing

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