The Reward Club at Beefeater: The effectiveness of a loyalty scheme vs. discounting

The idea:​

Hotel and restaurant operator Whitbread launched a new points-centred loyalty scheme, The Reward Club, across all of its 130 Beefeater Grill sites in March 2012.

The new loyalty card format is designed to encourage an increased frequency of visits to Beefeater restaurants while also helping Whitbread build a personal communication platform with customers.

The launch was supported in-house via point-of-sale material, on the Beefeater Grill website, via regular email communication with customers already on its database and external communications, including PR.

How does it work?​

When using the new Reward Club card, customers are able to claim five points for every £1 they spend on food and drink.

Once guests have collected 500 points, they will be able to exchange them online either for money-off vouchers or special food and drink vouchers to be redeemed in Beefeater Grill restaurants.

Customers could pick up their loyalty cards from any Beefeater Grill restaurant nationwide from 27 March and could activate them online or over the phone.

Why this promotion?​

Tanya Vinton, Beefeater Grill’s loyalty manager said the aim of the promotion was to help its restaurants build up relationships with customers in the areas they operate within, but it was also a chance to capture valuable data and build up a better picture of its customers.

“The new reward card now enables us to understand our customer’s behaviour, wants and needs, keep them informed about beefeater grill and grow our business,” she said. “We want to develop Beefeater Grill to be the best in the market and believe that a great reward scheme can help us deliver this to our customers.”

“Recently manybrands have become bound into the world of having to continue offering discounts, special offers and promotions as a way of increasing trade. A loyalty card can be an effective alternative to doing this as, although there are eventual discounts for members, it means that the business will likely receive a repeat custom from each customer.”

How effective has it been?:​

Just over 250,000 people have picked up a loyalty card since they were first released four months ago and half of them have activated them, giving Whitbread access to the ordering habits of 125,000 customers.

Vinton believes it is still too early to analyse the full impact of the loyalty card, but says the company knows that more than half of the customers who have activated cards are returning, as 58 per cent of customers with cards have already spent enough (£100) to collect enough points to earn rewards.

“Furthermore, we’re seeing great open rates on our communications to our members, as well as strong usage of our tailored offers at our sites. These initial results are very encouraging,” she said.

Would this be right for your business?​

As recent examples show, the dangers of discounting for restaurants are clear​​ – namely consumers and operators can become ‘addicted’ to them, they can lead to a loss in margins and the erosion of a consumers’ perception of value.

Nevertheless, times are still hard and many operators need a way of increasing trade.  Using a loyalty card scheme such as Beefeater’s Reward Club could be the middle ground restaurants are looking for; it does still offer discounts for customers, but it doesn’t mean a huge slash in margin for the majority of the restaurant’s menu and it ensures those customers keep coming back for more.

However, to set up a scheme as effective as Beefeater’s in capturing data also and enable you to communicate with customers via email, operators will need the right software in place first. If this doesn’t exist, there may be set-up costs involved which could make it unviable for operators with little cash to spare.