If you look at a random person's wallet you most likely will find a few loyalty cards (chances are you'll find loads more in a woman's purse, but please don't get me started on this). I have a Club card from Tesco and a club card from the Coop. Does it mean I make my decision on where to shop based on club card points? Would I travel farther afield to get a bigger discount? Why do ASDA don't operate a club card scheme? Personally, and I don't think I am in the minority here, I just use the club card based on where I go and not the other way around. I go to Tesco because they are close to where I live and convenient. If there was a Sainsbury's closer to me I would use that instead. On the other hand I tend to use the same barber, the same Indian restaurant and the same farm shop, because I like them. None of them used to offer a loyalty card but the farm shop just started last month which made me think about this topic.
In my opinion you should only offer loyalty cards if you sell a product that is:
1. hard to differentiate
2. readily available in close proximity to you
For example this is the case with coffees. Can you really tell the difference between a Starbucks and a Caffe Nero? Probably not, but you may be keen to get your free coffee using your loyalty card.
On the other hand my local farm shop offers excellent produce, it's family run and the customer service is very good - if nothing else you get a smile and a chat every time you go. I could certainly drive to another farm shop or maybe use the butcher close to my restaurant, but I have now built a relationship with them so I am loyal. That's why I was a bit surprised when they started offering a loyalty card. Now every time you spend more than £10 you get a stamp, and after 10 stamps you get £5 off. That's more of less 5% off. Will that increase customer retention and loyalty? Will it bring in more customers? That's very hard to say. But I assume that a lot customers would have used the shop anyway and this loyalty card is just a whole in their pockets. This is not the sort of shop where you go to save a fiver.
You should aim at creating a restaurant where people come for a variety of reasons, and not price, special offers or vouchers. People will only look at those things when they can't see any other form of value, i.e. customer service, quality, unique products etc.
Alan shares his experiences, struggles and tips to help other small restaurant operators.