Case Studies
Red Robin on strategy behind loyalty program
May 4, 2011 | 
Author By Mark Brandau Restaurant News
Red Robin Gourmet Burgers’ new loyalty program is about more than just building frequency, said chief marketing officer Susan Lintonsmith.
The Red Royalty program, which the 450-unit chain rolled out in January, will help the chain track registered users’ preferences and purchases in order to understand guests better and determine which incentives can drive repeat business efficiently, she said.
“We’re hoping to drive sales primarily through traffic gains,” Lintonsmith said, “and national TV and Red Royalty are our two biggest and strongest ways to drive that through retention and frequency. Then we’ll have product news from appetizers, desserts and beverages to drive the incremental guest check, but first and foremost, it’s about traffic.”
The loyalty program is part of parent company Red Robin Gourmet Burgers Inc.’s Project RED plan, which is aimed at driving traffic, improving sales, reducing expenses and improving margins. Red Robin executives discussed the initiative during the company’s earnings conference call on Feb. 18. (EARLIER: Red Robin details its turnaround plan)
Lintonsmith spoke with Nation’s Restaurant News on Monday about how the program was developed and how customers are responding so far.
Red Robin reported a 2-percent increase in guest traffic at stores that tested the loyalty program. Could you elaborate on those results?
That 2-percent lift was in 45 test restaurants, and currently we’re seeing even stronger guest acceptance in the first month: one in three guest checks is getting captured in the Red Royalty system, while only one in 10 were during the pilot program. In the first month, we’ve activated more than 600,000 cards. Based on what we saw in the pilot and in these early weeks, the lift in traffic systemwide could be comparable or greater.
We launched Red Royalty before the nationwide TV campaign for the Prime Chophouse Burger began to enroll new guests or customers coming back for that promotion. The question becomes how you incentivize those guests to register their cards, because that’s how we collect their preferences and get attitudinal info. We offer a free appetizer for registering, and that’s a piece we added after the pilot test.
What led Red Robin to construct a loyalty card program? It’s not too widespread across casual dining.
A couple things led us to develop it, starting in early 2008. We had our first national TV campaign in 2007, and we know that brought a lot of new traffic into the restaurants, but we didn’t know who those guests were. We have a great database, with 2 million guests in our e-club. I have all their e-mail addresses, but we don’t know much about them from an attitudinal or behavioral perspective. We wanted to know what they bought and what they thought about the brand so that we could communicate in a more relevant and targeted way.
Red Robin’s chief executive Steve Carley said during the company’s last earnings call that Red Royalty would be more about loyalty than frequency. What does that mean?
He meant Red Royalty is more than just a punch-card program. It’s not just about getting [guests] to come back more often, but also understanding their preferences so we can send them relevant messages. Once we can segment this database, we can communicate with customers based on their past behavior.
The messaging sometimes has nothing to do with an incentive. The free birthday burger is a big reason why people join our e-club and activate this program, but another big part are our surprise-and-delight offers. We may decide, “Hey, it’s Guacamole Day,” and offer a free or discounted guacamole appetizer or burger with guacamole. That part is about having fun and celebrating some other tidbits of our brand.
If a person comes in four times a year, we can provide her incentives to come back more often with something that is lower-risk, like a free meal if she visits three times in the next 30 days. But if we have a guest who comes in more often but only for a chicken sandwich, we can message that person any time we have news about chicken. And we can get that person to add incremental sales with offers for an appetizer or a signature beverage.
What best practices did you see from other loyalty programs?
We looked at a number of programs outside the restaurant industry, and we were impressed most by grocery [stores] and bookstores. With grocery store programs, it’s very easy to punch in a registered phone number if you don’t have your card, and you get your credits and discounts right then and there for things you’re already buying. When they message customers with direct mail, it’s based on what they typically buy. Bookstores track behavior, so if I buy one kind of book or like one author, they’ll message me and ask if I’ve considered these similar books. It’s very relevant, and I would come back more often because I felt they understand me and are targeting me.
Contact Mark Brandau at mark.brandau@penton.com.
Read more: http://www.nrn.com/article/red-robin-cmo-strategy-behind-loyalty-program#ixzz1LOjSTn9l
Posted in 
Aloha Loyalty – Altitude Chophouse & Brewery Case Study
Altitude Chophouse & Brewery
Launches Successful Mug Club Program with Aloha Loyalty
Altitude Chophouse & Brewery is a locally-owned and operated restaurant and microbrewery
located in downtown Laramie, Wyoming. Since opening its doors in 1999, Altitude has enjoyed
national publicity from magazines such as Via, Better Homes & Gardens and Wyoming Homes
& Living as well as won numerous regional and national awards for its microbrews.
Challenge
Although it is home to the University of Wyoming, outside of the college population, Laramie
is a small town of only 25,000 residents. While small in size, there are a variety of diverse
restaurants all marketing to locals and students. Altitude knew that in order to succeed and
continue driving profits, it needed to develop a following of local residents who would dine
and drink in its restaurant frequently.
Solution
In order to stimulate repeat business and reward loyal customers, Altitude turned to its
POS technology provider, BEC POS, who recommended implementing the Aloha Loyalty
application because of its seamless integration into the existing Aloha POS system. In March
of 2009, Altitude developed and launched its Mug Club program with Aloha Loyalty. “We
ultimately decided to use Aloha Loyalty for our program because it is a comprehensive
loyalty application that tracks sales and spending habits of our members, makes it easy for us
to reward them with incentives and discounts and intuitively ranks members in areas such
as frequency and spending,” says Karen Robillard, co-owner of Altitude. In order to remain
exclusive, only 200 members are allowed to be a part of the Mug Club. Members receive
personal mugs, which are assigned a unique code within the Aloha system, to decorate and
keep at the restaurant’s bar. With the $40 annual membership fee, Mug Club members receive
several benefits, including discounted beer at every visit, $25 rewards dollars for every $350
spent at the restaurant and invitations to exclusive events such as brewery dinners, beer
tastings and happy hour parties. As an additional incentive, the top five members with the most
points at the end of each year receive a free five-gallon keg of beer and free membership for
the next year.
Results
“We have definitely achieved our goal with the Mug Club,” says Robillard. “We have a very
regular clientele of Mug Club members who frequent more often than other guests and spend
more money on average.” Altitude currently has more than 100 people on a waiting list to be
part of the club. During the Mug Club’s first six months of operation, there were 7,266 visits
from members with sales totaling more than $144,000. “We were excited to see that our top
10 Mug Club members visited the restaurant and bar an average of 150 times each during
the first six months, which is almost every day!” says Robillard. “We also found that the top
40 members each spent more than $1,000 during that time period. We are thrilled to secure
such loyal customers with the program.” Aloha Loyalty helps Altitude easily track visits from its
membership as well as automatically distribute benefits to them. With Aloha Loyalty, Altitude
has increased customer spending and visit frequency. “Tracking sales and spending habits of
customers can’t be done any easier than with Aloha Loyalty,” says Robillard. “We are extremely
pleased with this application and its contributions to the success of our Mug Club program.”
Consumer Reports ranks fast-food burgers
Tags: Aloha Loyalty Case Study
New study on the aloha Loyalty Program and how it can help you……
http://www.becpos.com/pdfinfo/casestudies/loyalty-McLooneCaseStudy.pdf
After extensive research, McLoone selected the Aloha Enterprise solution, including
the Aloha Loyalty and Aloha Stored Value applications. McLoone used the combination
of these marketing tools to develop its Premier Club program, which charges guests
$25 to join, but membership comes with $20 pre-loaded on the card. “We want our
customers to see value in joining the Premier Club and to get their money’s worth
of becoming a member,” said Tim McMahon, director of operations at McLoone
Management. “We do not want to manage a database that has no value, like many
restaurants that just give loyalty cards to anyone.” Using Aloha Loyalty, McCloone’s
can support all of the perks offered to Premier Club members, such as half-priced
bottles of wine, preferred seating, discounts off of retail purchases, and $40 rewards
loaded back onto cards for every $500 spent at McLoone’s restaurants. In addition
to its Premier Club, McLoone also combines the capabilities of Aloha Loyalty and
Aloha Stored Value to manage a dozen different local programs, such as co-branded
residency cards for patrons living in large neighborhoods where restaurants are
located. Other local businesses use McLoone’s loyalty club cards as incentives for
trying a new service. In addition, McLoone is using loyalty cards as a way to give back
to the community – a valuable tool for the restaurant group, as charitable giving is a
large company priority.