Lettuce Entertain You has lowered the threshold for its loyalty rewards in order to improve communications with customers and drive more business into its 80-plus restaurants, most of which are located in the Chicago metropolitan area.
Chicago-area members of the restaurant chain’s Lettuce Entertain You Frequent Diner Club had received loyalty rewards once they had earned 360 points, resulting in a $25 credit. Now the threshold is 140 points for a $10 credit, in line with Lettuce Entertain You restaurants in other cities.
“It’s a way for our frequent diners to earn rewards that much more quickly and to communicate with them in a relevant way that much more often,” said Mike Lynch, Lettuce Entertain You’s direct of loyalty marketing and market research. “We let them know that they have earned rewards via e-mail. This way we can communicate with them and tell them something that they are personally interested in, rather than just sending them a marketing message.”
A company can judge relevant e-mail communications by tracking the percentage opened by customers – the higher the percentage of opened e-mails, the more relevant the message, according to Lynch. The higher the percentage of relevant, opened e-mails, the more likely the diner is to revisit one of the restaurant group’s locations.
The frequent diners provide an additional value in that they are a good representative sample of Lettuce Entertain You customers, so their dining preferences, demographics and other information provide valuable marketing information for restaurant group executives, Lynch said.
However, the loyalty threshold still had to be high enough for customers to perceive value in it, Lynch added. “It can’t come out as a discount for every meal; it has to come out as a reward for loyalty. But you can’t set the threshold so high that guests can’t visualize reaching it relatively quickly.”
The loyalty program itself had started several years ago. Diners were rewarded with coupons when they achieved point thresholds. With more than 50 restaurants in the Chicago area, diners could quickly build up rewards. It was too expensive and too cumbersome to mail out stacks of coupons, so the threshold was set at $25, Lynch explained. With far fewer restaurants in other cities, the $10 threshold was much easier to handle.
Lettuce Entertain You charges $25 for Diners Club membership, which includes a $10 credit that can be used on the next purchase. Blue level Lettuce Entertain You Diners Club members earn 1 point for each dollar spent, silver members earn 1.25 points per dollar, and gold members earn 1.50 points per dollar. Members achieve silver level status after spending $1,000 in a calendar year, and gold member status for spending more than $2,500. The status stays in effect for the remainder of the calendar year and for the following calendar year.
The company changed to an electronic rewards system about three years ago, with credits going directly on loyalty cards instead of mailing coupons, laying the groundwork for the lowering of the threshold. But there were other marketing programs that took precedence, according to Lynch.
For example, Lettuce Entertain You has recently enabled frequent diners to register their credit cards, so that loyalty points are automatically credited when the registered card is used for a meal or related purchase. The restaurant group has also started a co-marketing program with some Chicago area sports teams.