Rewarding loyalty and encouraging repeat business is a must in today's financial climate. Could your pub benefit from a loyalty-card scheme? Lucy Britner reports
A year after Tesco introduced the Clubcard in 1995, its holders were spending 28% more with Tesco and 16% less with rival Sainsbury's.
Loyalty cards have long established themselves as a powerful marketing tool for retailers such as Boots and Debenhams and research shows the majority of UK households have at least one card. But foodservice operators, including McDonald's and Caffè Nero, are also increasingly turning to the loyalty card as a way of harnessing repeat business in the ever-competitive battle for the food pound.
JD Wetherspoon (JDW) is the latest pub operator to launch a loyalty card. In February, the company introduced a JDW coffee card, which customers pick up from barstaff. Customers buy five coffees and get the sixth free.
But what benefits do loyalty cards have for licensees? Managed pubco Barracuda has seen sales of its VCard increase by 32%, since it was introduced in 2002. The company also offers a Barracuda BCard, launched last year, and a Smith & Jones card.
Barracuda spokeswoman Sarah Calderbank says: "We have found that loyalty cards create a bond of familiarity and trust among the customer bases,
fostering a great sense of loyalty.
"This has resulted in the development of a strong 'club' affiliation between the brand and its customers, which, in turn, increased sales and helped establish the pub or bar within its communities."
Last year, Varsity sold 535,000 VCards and is on target to retail 650,000 this year. Sarah says that one of the reasons it has been so
successful is because of the clearly-targeted customer base.
"Varsity is found in 40 towns and cities across the UK where there is a significant student population. So, while it is not exclusive, the
student element remains key to the fun ethos of the brand." A key feature of the VCard is online offers with 10 retail partners including Figleaves, STA Travel, Firebox, Domino's, Fitness First and Toni & Guy.
Time-rich senior citizens are a consumer group who enjoy a bargain. Orchid Group is enjoying fantastic success with its Diamond Club loyalty card for the over-60s, which it inherited from Spirit Group.
The club entitles holders to 25% off their food bill at
premium food sites, such as its contemporary dining pubs, and a two-course deal (£6.95 for two courses) in carvery sites. There are now 180,000 Diamond Club members, joining at a rate of 200 a day.
Sharon Hammond, Orchid's carveries concept development manager, says: "Potential Diamond Club members can apply in the pub and 10% of applicants apply online. One of the biggest
benefits for us is the database, which we can use to update customers on our offer. We only email members around twice a year as we don't want to bombard them."
Sharon says the scheme has given the
company a better idea of its customer base. She says: "Around 8% value of food sales across carvery is from Diamond Club members. Though in some sites this can be as much as 25%."
Admiral Taverns head of food Sam Pedder, who was food development manager at Coffee Republic, encouraged the coffee brand to re-introduce loyalty cards.
She says: "It's important to give something back to the regulars. At Coffee Republic it was just for hot drinks - you need it to be for lower cost items only, or you will end up out of pocket."
Loyalty schemes don't just work for large managed operators. Licensees Greg and Sara Martin at the Ansty Cross in Ansty, West Sussex, have produced flyers with a pop-out card. Customers fill in their details to claim a free pudding or starter with a main course on Monday to Thursday evenings, or - on the reverse of the flyer - customers can celebrate their birthday at the pub and enjoy a free bottle of local wine from Booker's vineyard in Bolney, with the purchase of two main courses.
Greg says: "The card scheme is better than having buy-one-get-one-free offers.
"We tend to give out the cards at Sunday lunchtimes and over the two to three months we having been operating the scheme, 100
people have come back during the evening to claim their free dessert or starter with the purchase of a main course."
Starters include wild mushroom ciabatta and pan-fried chicken livers. Desserts come from outside catering company the Flying Mackerel, and include crumbles, cakes and tarts.
"We also have a number of birthdays on the list," adds Greg. "The only limitation is that some people don't want to disclose all their details, but we're really happy with the build up of trade on Monday to Thursday evenings, when the offer runs."
Pubco Ever So Sensible's four Dogma bars
in Nottingham, Coventry, Reading and Lincoln offer a Dogma card. The card costs £3 and
savings include 50p off a pint of San Miguel, £2.50 off a cocktail jug, £1 off all desserts,
salads and pasta and £8 for a bottle of
house wine.
Operations director Scott Whittaker, says: "We launched the Dogma card in September 2007 and so far 20,000 people have got one.
"Dogma looks like a high-end bar and people think it will be expensive. The card has helped to get people into the bar and realise what it's all about."
London-based operator Food & Fuel, headed up by former Spirit Group boss Karen Jones, offers a simple birthday-club scheme. Customers register their email address on the pub's website and if they book a meal at the pub during the week of their birthday and spend over £35 on food, they receive a free bottle of house Champagne.
Card membership advantages can stretch beyond pub fare. South-west operator, the Food Club runs a membership scheme, which, in addition to food and drink discounts, offers card holders entry into the pub's wholesale supply chain, with customers able to buy whole cases of wine or meat at wholesale prices. Membership is £40 for six months, £60 for a year and £100 for two years. Customers also get 20% off accommodation and 5% off wine.
There's also no reason why retail and pub loyalty cards can't work together. Whitbread works with the Nectar card and customers can redeem their points against meals at Brewers Fayre and Beefeater sites.
Enterprise Inns has also launched a new Promotions Club, promising a range of offers such as two-for-one meal deals in news-
papers and across major grocery brands. So
far 300 pubs have joined. Among the first
offers is a two-for-one meal deal on packs of Walkers crisps.
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Loyalty card tips
1 Start simple and build up the offers.
2 Use data to market offers - especially email addresses, but make sure you're clear about what the information will be used for and don't bombard customers.
3 Ensure the offers are relevant to your customer base.
4 Customers like easy transactions and transparency - let them know exactly what they are getting in exchange for their data/money.
5 Have a food card as well as a drinks card and be very clear what it is for - for example, specify whether the drinks card is for hot drinks, beer, wine or soft drinks.
6 Always give away low-cost items or items with a high GP.
7 If you're introducing a stamp system, ensure the stamp doesn't rub off on the customer's hand and isn't easy to duplicate.
8 Make sure you have a button on the till for the free loyalty-card product - this will make accounting easier.
9 Get the member of staff who issued the free item to write their name on the transaction. If there are any problems, you will know who to consult.
10 Ensure the benefits of owning a loyalty card are well publicised. Mitchells