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Avoid missteps such as Chili's made with loyalty launch

We can't let our competition pressure us into offering loyalty programs that simply drive down our prices. We have to analyze our best customer and figure out ways to strengthen the relationship. Or we've just instituted a discount program that will be hard to kill. 

Bain & Company: Turning Rewards into Loyalty, 2017-Feb-7 by Aaron Cheris, Gerard du Toit and Brian Kmet

The Chili’s chain, an early innovator in casual dining rewards, initially stumbled when it introduced My Chili’s Rewards, because it stopped its email marketing program and focused the wait staff on signing up customers, which took attention away from selling appetizers and drinks. Both traffic and average ticket size decreased temporarily. As Chili’s illustrates, the transition to a new system requires careful planning and testing.

Successful rewards programs reach a high return on investment by building loyalty through customers who stay longer, buy more, cost less to serve and recommend the company to others—all combining to increase the customer’s lifetime value. That stands in marked contrast to reward schemes that merely bribe customers with extra points, freebies or discounts in ways that layer on extra costs without producing incremental value.... 

Tomatina, an Italian restaurant chain in California, gets feedback from about 75 guests every week, and at last count between 20% and 25% took the time to add written comments in the Thanx [rewards] system. Thanx research has shown that consumers are 7% more likely to return in the next two months after being asked for feedback—regardless of their response.



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