Editor’s Note: This post was originally published on September 20, 2016 and was updated for accuracy and comprehensiveness on Sept 19, 2019.
If there is one industry that lives and dies by repeat purchases, it's the food and beverage industry. The price tags are relatively low and margins are slimmer than other industries, meaning you need to sell in high volumes! Sales volume can be generated by getting people to buy more per visit or by getting them to visit more often, both of which are where a loyalty program comes in.
The food & beverage industry is extremely competitive. You are not only competing against other products like yours, but also against all of the alternatives. This stiff competition means that food and beverage companies are ripe to benefit from creating customer loyalty.
Wondering what this looks like in practice? Here are 4 examples of effective loyalty programs in the food and beverage industry, split between restaurant locations and retailers of food/beverage products.
Happy Way's Happyway Fam
Happy Way is an organic and natural health snack brand from Australia with a best-in-class rewards program. In an increasingly crowded space that often takes itself too seriously, Happy Way differentiates themselves with eye-catching pops of color and joyful graphics.
They leveraged this approachable branding by creating a brand community with their rewards program. While they do reward members for social sharing and making purchases, their program is primarily centred around the power of referrals.
Each referral creates a potential new customer and shows that existing customers trust and love the product. For a growing food and beverage small business like Happy Way, this is incredibly important. With a continuous cycle of engaging and sharing embedded into their brand experience, the Happyway Fam program will help them continue to experience this exciting growth for years to come.
Starbucks’ Starbucks Rewards
Not only does Starbucks have one of the best loyalty programs in the food and beverage industry, but it is also one of the best in the world. Starbucks has done a fantastic job motivating loyalty in their customers.
The thing I like the most about Starbucks is how easily and quickly customers can earn rewards. While the use of tiers is usually used to help customers achieve VIP status, Starbucks has employed a different type of tiered program: tiered rewards.
By using small increments between rewards, these tiers incentivize customers to increase their purchase frequency to reach that next level sooner. After spending only $25 you can get a free coffee and after just $125 you’ve earned a free lunch. Sometimes knowing that you’re so close to your next reward is just the motivation you need to splurge on that extra cookie. With this logic in mind, Starbucks Rewards has brewed up a recipe for success!
Starbucks put together an amazing loyalty explainer page to quickly explain how to use their loyalty program and the benefits you receive.
Chipotle’s Chipotle Rewards
While Chipotle's former loyalty program, Chiptopia, was simply promotional and is no longer active, Chipotle has made a comeback with their new and improved Chipotle Rewards.
To participate in the program, customers can purchase either in-store, online or in the app and earn 10 points for every dollar spent. After earning 1250 points, customers are rewarded with a free entree of their choice. Their simple Eat, Earn, Enjoy philosophy makes it easy to build real relationships and satisfy their customers by giving them exactly what they want with no restrictions.
Along with offering a reward that nobody can turn down: free food, Chipotle Rewards has incorporated bonuses to earn points faster. Shoppers are rewarded for purchasing on specific dates, trying new menu items, and completing various challenges. This encourages customers to remain engaged with the brand long after they leave the restaurant. All in all, this is a basic yet effective way to drive the metrics that a food and beverage loyalty program should deem important.
Maggie Louise Confections Club Cocoa
Maggie Louise Confections is an amazing example of a food and beverage loyalty program done right! While there are multiple reasons why, let's hone in on two. First, their Club Cocoa program makes use of premium reward levels to motivate customers. When customers reach that top status, they unlock exclusive experiential rewards like early access to new products and exclusive events.
These tiers are the perfect motivator for customers to shop more to achieve that desired Connoisseur status. Sometimes the thrill of the chase is even sweeter than the actual reward and Maggie Louise understands that.
The second area that Maggie Louise excels in is how they use their loyalty program to establish a sense of community. By selling gourmet chocolate online, Maggie Louise knows that they are asking customers to trust their brand and product without tasting it first. While it's initially hard for customers to trust companies without a reference point, they do trust other customers, especially their friends! Incentivizing shoppers to share the brand with their personal networks creates more of a conversation around the products and offers potential customers valuable social proof.
As you can see, Club Cocoa offers points for referring the product, as well as engaging on social and making purchases. This social community establishes trust for new shoppers by offering evidence that previous customers love the product. With valuable rewards on the table, Maggie Louise has ensured that this cycle will continue with every new member of their program.
Tips for loyalty food and beverage industry
I hope the above examples have inspired you to find ways to improve your own food and beverage brand’s retention strategy. Since we’ve had the privilege of developing rewards programs for so many businesses in this industry, we've compiled three of our loyalty best practices, just for you:
1. Gather customer information
Because the food and beverage industry is all about selling high volume, you need to collect as much information about your customers and their preferences as possible. We recommend giving bonus points to your customers when they register for a customer account. This gives you more info, making it easier to personalize their experience with your brand in the future.
2. Reward customers for sharing their experience
Because you cannot sample or smell online, it's important for your brand to establish trust in another way. The best way to do this is to encourage your existing customers to show new shoppers how awesome your products are.
We recommend that you reward points for actions like leaving a review, sharing your store on social media, and even following your social accounts. This gives new customers who have not tried your product the confidence to do so!
3. Try a percentage-based reward
A percentage-based reward encourages customers to spend more. The more they buy with that purchase, the more value they get from that reward. Just keep the percentage reward lower than your average profit margin and you have a win-win strategy.