A restaurant gift card program can be a powerful marketing strategy. In fact, restaurant gift cards are more versatile than you may realize.
Naturally, gift cards are great for bringing in new customers, and the research says that most of these new customers will spend more than the value of their original gift card. But if you really know how to use restaurant gift cards, they can also be a big part of your restaurant customer retention strategy.
But how exactly? We wanted to find out how to use restaurant gift cards both as a way to draw in new customers and as a way to keep them coming back again and again. To learn more, we sat down with Christopher Dravus, Director of Enterprise Business Development at eCard Systems.
As Christopher tells us, “eCard Systems has been around for quite a while. We are the exclusive gifting partner for brands like Toast and Square. We also handle production for countless other POS systems, and roughly 150,000 merchants as well. So, we're making a lot of gift cards — both physical and digital — every year.”
Christopher shares valuable tips on how to use those gift cards as part of your restaurant customer retention strategy.
Why You Should Be Offering Gift Cards
Before we dive into Christopher’s tips, let’s start with the basics. Does your business have an effective gift card program? If not, you might want to consider adding one. That’s because gift cards can be an excellent way to acquire new customers.
“The hardest thing for a restaurant to do is to get somebody to try something new for the first time,” Christopher explains. “With a gift card, you have somebody else doing that word-of-mouth marketing for you and putting that full-price paying customer into a seat for you without you having to do any work.”
So obviously, a good gift card program has tremendous promotional power. But there are also some clear financial benefits to selling gift cards:
- Cash flow: Selling gift cards means you get to collect payment up front for food sales that will ultimately happen at a later date. Think of it kind of like an interest-free loan. This can help to improve your margins in the short-term.
- Additional sales: According to Christopher, “Most people do over-spend on top of a gift card.”
- Unredeemed gift cards: Christopher also points out, “About 15% of the value of all gift cards never gets redeemed, so you're getting a free 15% on average.”
As Christopher explains, “That little bit that they didn't spend is money in your pocket that you get to keep forever. So the restaurant wins either way, whether gift card recipients overspend and order extra or they don't use the entire value of that card.”
5 Tips for Turning Gift Cards Recipients Into Regulars
So if your restaurant gift card program is working the right way, it should be bringing in new customers, increasing sales, and even slightly improving your profit margins. But what about using gift cards as a restaurant customer retention strategy?
As Christopher puts it, “Handing out the gift card itself is not the end of the process. It's the start.”
So where exactly do you go from there? Here are a few tips that should help you turn those first-time gift card users into loyal customers.
1. Make It Super Easy To Use the Gift Card
“At the highest level,” says Christopher, “when it comes to gift carding, the customer expects it to just work.”
Whether you provide customers with a physical gift card or a digital gift card, the key is to make redemption as easy as possible. This is really the most basic step when it comes to earning the loyalty of gift card recipients.
As Christopher points out, “nobody's getting patted on the back for a good gift card experience. Either you don't notice it at all, or it's a huge problem. And when it's a huge problem, it means you potentially lose that customer.”
Your goal as a restaurant is to ensure that redeeming your gift cards is an absolutely seamless process. To use the industry buzzword of the day, your redemption process must be “frictionless.” Any sign of a hassle could alienate a customer who is sizing up your restaurant during their very first visit.
So that means you need to have all your ducks in a row on the back end. As Christopher advises, “You want to be sure your gift card program is linked to your point of sale system.[Author’s note: eCard Systems integrates with more than 130 POS systems.] Ultimately, we want to make gifting as easy as possible, and integrating it with your POS system is an important first step."
2. Promote Your Loyalty Program
Why is the POS so important to your restaurant gift card program? As Christopher explains, tying your gift card program and POS system together “allows you to track spending habits, frequency, and exactly when your customer’s gift card balance gets low.”
This information can help you engage customers in ways that can improve loyalty. After all, explains Christopher, once you’ve placed a gift card in a new customer’s hands, you’ve created a tool that can be used as part of your restaurant customer retention strategy.
So whether you’re giving out physical gift cards or using a digital restaurant gift card program, make sure you provide recipients with a card or an account that can be easily reloaded.
“This is a big part of the restaurant customer retention strategy with gift cards,” explains Christopher. “Giving those recipients a way to easily reload that gift card is kind of like a loyalty program. Once you’ve gotten that first visit, make follow-up offers to encourage those gift card users to reload and come back to your restaurant.”
3. Collect Customer Data
“The gift card gets your foot in the door so you can start learning about that customer,” Christopher explains. From there, you need to leverage that information and data to create targeted marketing campaigns.
The good news is that a smart restaurant gift card program can help you collect the single most important piece of data — contact information. As Christopher points out, “If you're collecting information like ZIP codes, you can do targeted marketing. You can do your own flyering. You can personalize your outreach.”
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It’s worth noting that the more advanced your POS system is, the easier it is to leverage your restaurant gift card program for valuable insights.
As Christopher points out, “If your system is very sophisticated, you can track things like what meals are popular, what dishes customers are buying, and who’s buying them. You can use these insights to send outgoing messaging to specific customers to say, ‘Here's a new dish that's similar. Here's a promotion for that particular dish.’”
4. Always Provide a Superior Customer Service Experience
The effort to turn your gift card recipients into repeat customers should begin the moment they walk in the door. Today, customers are hyper-aware of the type of experience they receive while they’re in your restaurant. How attentive and responsive was the staff? How efficient was the service? How good was the meal? And once again, how easy was it to use that gift card?
Every one of these elements contributes to a customer’s experience.
“When it all goes smoothly, you get a stored value in that satisfied customer. They’ll be back,” says Christopher. “But when there’s friction, that prospective customer says ‘Oh, I'm just going to pick a different restaurant next time.’ So, you need to make it as frictionless as possible to get that person who is at the top of the funnel all the way to the bottom. Otherwise, you can lose them at any point in the middle.”
5. Use Special Offers To Incentivize Return Visits
Make sure you cap off that great customer experience by giving those first-time visitors a good reason to come back. This can be a great way to gradually onboard this one-time visitor onto your loyalty program.
Christopher suggests that you could “slip them a $10 gift card on the way out that could potentially get them back in the door. That might be enough just to say, ‘We really enjoyed having you here. Can we have you again?”
But don’t stop there, says Christopher. A reloadable gift card can be one of the most effective channels for ongoing outreach and incentivization, especially if you can find clever ways to “gamify” loyalty rewards. For instance, every time a recipient reloads their gift card, they might accumulate points or unlock achievements that can be redeemed for future offers or discounts.
“Gamifying loyalty is very popular, especially with the younger crowd,” Christopher points out. “So once you get those gift cards in their hands and you start collecting some of that information, you can send them birthday offers, you can send them holiday offers, you can get those follow-up promotions going. And that’s what ultimately brings in the repeat business you’re looking for.”
Ready To Optimize Your Gift Card Strategy?
Ultimately, gift cards represent far more than a simple one-time transaction. If you do it the right way, a good gift card program can also be an excellent ongoing restaurant customer retention strategy.
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