Loyalty programmes

Technology is enabling pubs to get closer to their customers, and it is no longer something that only larger operators can take advantage of. Glynn Davies looks at the options available.

Loyalty programmes have until now been largely the preserve of the major supermarkets, but pub operators are now beginning to recognise the benefits of using them to create relationships with their customers.

Among these is Scottish & Newcastle Retail, which has recently made major advances with its three loyalty cards: Leisure Plus Gold, Diamond Club and Platinum.

Although there are 600,000 cardholders in total across the three schemes, S&N had previously used only manual methods to capture data and operate the cards.

However, the installation of new card-reading terminals in August that are able to handle credit and debit cards has given it the technology to crank up its loyalty capabilities.

Louise Cowley, senior brand manager at S&N, said: "We relied on manual methods of capturing data that were not immediate or accurate. With the roll-out of the new infrastructure we now have the technology to bring loads of opportunities to our customers in the future."

She suggested that S&N had been targeting the wrong people in the past and that now the company will be able to address this problem. "We will be able to encourage those people who come into our pubs and restaurants once a week to come in twice a week, and those that don't come in at all we can remove from the database."

House-by-house marketing campaigns will be possible since the technology enables Ms Cowley and her team to hone down their marketing initiatives to a single outlet.

Although the cards are only accepted at outlets in S&N's restaurants division, its pubs are also in the process of receiving the terminals so they will have the capability to become part of a company-wide scheme in the future. "At the moment I'm not convinced that such loyalty schemes work for people that are just buying a pint of beer or a glass of wine, compared with buying meals," said Ms Cowley.

Mark Crowther, founder and director of bar chain the Front Room, agrees that loyalty in pubs is much more suited to food purchases. "With drinks people need instant gratification," he said.

He does, however, run low-tech loyalty schemes in his seven outlets in South East England, with customers receiving one free pint after they have bought a specified quantity.

The problem with this is that there is no opportunity to engender real loyalty since there is no data captured. For this Mr Crowther relies on a database of 800 email addresses that he uses to fire off details of special offers and reminders of future events.

He does, however, believe that pubs are more suited to loyalty schemes than supermarkets: "They are much more personal places, so you can do more interaction through loyalty. Even the most basic form of loyalty involves a discussion between staff and customers."

But, because of the high cost involved, he adds: "It is more suited to the very biggest pubs and chains."

Small operators​

However, things could be about to change. Small operators may soon be able to get in on the action with a little help from the latest developments from companies like Smart Voucher. The start-up company is soon to launch a system where pubs can install a card-reading and printer terminal that links into their EPoS for around £400. It can read loyalty cards and capture data on its holder and provide a trail of which outlets they have visited and what they purchased.

The revolutionary aspect of Smart Voucher, according to its founder Scott Thomson, is that it simply allocates a unique number to the holder and links this to the level of loyalty points that the user holds. Both these numbers are updated whenever the user makes a transaction. This gives a high level of security for the user, and for little cost provides a loyalty scheme that captures data and stores it in a centralised database, managed by third-party database handling company Telecom Service Centres.

Smart Voucher will dramatically reduce the cost of entry for pubs to loyalty schemes, said Mr Thomson. "At the moment it is just the province of the big boys, but Smart Voucher will be able to provide a bespoke system that will cost very little. Installing such a system is also future-proofing pubs, as it will give them the facility to accept smart cards and link into internet-related payment activities." The company is in talks with a major leisure company that is considering a trial of Smart Voucher technology when it becomes available in March.

Text messaging​

But if loyalty schemes do become available to even the smallest of pub operators then Dan Radice, managing director of Diageo subsidiary Nightfly - which uses text messages to target customers - believes that it could lead to consumers being blitzed with an unwanted barrage of communications. "You can't have the circumstance where all the high street operators are building their own loyalty schemes and customers are receiving information from many pubs."

Nightfly is intending to counter this problem by acting as a huge central repository of data captured from various pub chains' loyalty schemes. This gives it the capability to monitor the level of outgoing communications to consumers.

However, its chief objective is to sell the contents of its database to enable pub companies to market to a specific audience through text messaging to their mobile phones.

The company already has a database of over 150,000 people in the 18 to 30-year-old age bracket, which can be targeted with promotions based on the data that has been captured on them. This includes age, sex, the area in which they live, their favoured drinks and preferred entertainment.

It is this collection of data that gives loyalty schemes their true value. And with more efficient support systems appearing on the scene, the future will see an ever-greater opportunity for pub companies to target their customers much more effectively than has previously been possible.

Mr Radice says: "There is a big incentive for on-trade retailers to introduce cards as they want to know more information about their customers. They now want to know who their customers are, where they are, and why they are there."

One supplier that is playing a part in providing the technology to make this possible is Zonal Retail Data Systems, whose terminals support loyalty schemes in outlets owned by brewer Gales and the Davy's Wine Bar chain.

For an additional cost of £500 Zonal's EPoS terminals include the facility for swiping loyalty cards. This gives the pub operator the ability to link their payment systems together with their loyalty systems. This automates the redemption process and removes the problem of staff keying in the incorrect discount codes that are applicable to individual cardholders.

Mark Isaac, sales manager at Zonal, says: "The weak link with loyalty schemes was the dependence on staff doing the job properly. With our system they only need to swipe the card and don't have to press any buttons."

This link also stops fraud, as it is the EPoS that administers the specific discounts and offers applicable to each holder.

The system is linked directly to a database - where customer data is held - that can either be run by the pub operator or outsourced to Zonal's partner company Oxford Retail Data Systems.

Gales launched its loyalty card four years ago. It has 23,000 cardholders and it is accepted in 26 of its 44 managed pubs. It was recently used to do a mail-out to 13,000 cardholders with an offer of a £5 discount for them to celebrate the company winning Regional Brewer of the Year in The Publican Awards 2001. The response was an impressive 14 per cent.

Derek Beaves, head o