Your Brain on Loyalty: Why Loyalty Programs Work

Savvy restaurants are always looking to find new ways to excite their customers. Some brands are getting creative by cultivating secret menu items or hosting exclusive events. Even with the buzz around new marketing tactics, one strategy – the loyalty program – has maintained its popularity.

In the past, restaurants have relied on punch cards, stamps and coupons to track loyalty. Today, leaders in the space like sweetgreen, Starbucks, and Taco Bell run loyalty via their mobile apps. Despite their changing forms, loyalty programs remain as part of restaurant brands’ core marketing strategy because they work.

But what’s really going on? Why do we, as humans, respond so consistently to promotions like this? According to recent research, there are three main psychological forces operating when customers are interacting with a loyalty program:

The Points Pressure Mechanism

When a customer is close to obtaining a reward, they will spend more than they normally would to reach the reward threshold.  Think about a time you’ve sprinted at the end of a race or stayed up late to finish a project. It’s likely that you were willing to spend more time or energy than you normally would in order to meet your goal. Approaching a loyalty reward creates the same effect, leading the customer to spring for a dessert or the extra guacamole they might not otherwise get. The result? Higher ticket prices and more revenue for your restaurant.

The Rewarded Behavior Mechanism

After a customer obtains a reward, they create a positive association with the business where they received the reward. People like to save! And, they appreciate and think fondly of businesses that help them do that. The Rewarded Behavior Mechanism turns customers into fans and curates the brand ambassadors your restaurant needs in order to be successful.

The Personalized Marketing Mechanism

Personalized marketing enhances the positive behavioral and attitudinal responses customers have towards your restaurant. Your loyalty program should use customer data to create completely customized promotions and messaging. When customers feel like you’re talking directly to them, they also feel valued and important…and they associate those good feelings with your business.

Loyalty programs are powerful. They appeal to the way the human brain works and help your business thrive. To see these effects in action, check out the results VERTS Mediterranean achieved with their loyalty program:

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Jackie Cooke

Jackie Cooke

Jacqueline Cooke is the Marketing Communications Manager at LevelUp. She's a firm believer in the power of avocado toast and chocolate chip banana pancakes. When she’s not trying out LevelUp partner restaurants (hello, Dig Inn!) you can find her dreaming up travel plans, trying out a new workout class or listening to her laundry list of podcasts.