Loyalty cards can work for pubs

Loyalty cards might fill your punters' wallets but it's unlikely they'll have one for your business. Despite success in other retail sectors, the idea hasn't caught on in the pub — yet. Phil Mellows reports.

The fact is, even among supermarkets, it's not completely clear how effective loyalty cards are. Consumer research shows that price and quality, along with 19 other factors, are ahead of loyalty cards in the list of reasons why people keep coming back to shop. Asda and Waitrose, for instance, manage to attract a loyal following without them.

Many pub groups, too, prefer to develop special offers and set prices that benefit all customers, with few going down the loyalty-card route. Whitbread is typical in focusing on value meal-deals. "They keep costs low and benefit all guests," says spokeswoman Claire Haigh.

And if big groups are doubtful about loyalty cards, independent licensees are even less likely to risk the necessary investment in back-office software.

The benefits, though, when they come, lie not simply in getting repeat business and encouraging customers to spend more. If you've got a loyalty scheme up and running at your business you've also got a customer database - and that opens up the possibility of direct mail, emails and text messages.

Carlsberg includes help with setting up a loyalty scheme as part of its We Deliver More online support package for freetrade customers. The loyalty cards themselves come attached to a backing card that allows licensees to record customers' personal details.

This means you can, for instance, invite customers for a half-price bottle of bubbly when they come for a birthday meal or send vouchers for money off their favourite drinks.

"The beauty of loyalty cards is that you are in control of how they work," says Carlsberg trade marketing director Dave Scott.

"You could reward customers on how much they buy, how often they visit, or even how many friends they recommend.

"But customer loyalty doesn't have to involve complex data-driven schemes and the type of cards used by big supermarkets. Going back to basics, customers will return to a pub if they enjoy their time there.

"The power of simply saying goodbye and asking them to come back soon is an essential part of driving loyalty."

So it's probably a sensible idea to get those basics right before you launch your loyalty card.

"For me, a business needs to show loyalty to its customers, rather than the other way round," says marketing consultant Gemma Teed. "It's about what it does to demonstrate that it understands and loves you.

"My theory about loyalty cards is that each person will use a maximum of six. So if a pub is going to make a loyalty scheme work, it has to be relevant enough to customers to get the card into that top six."

There is a key difference between pubs and supermarkets, too, that makes loyalty cards a less-than-automatic choice. In any good pub there will be a special relationship between staff and customers that can't be replicated at the check-out where contact is purely functional and interrupted by bleeping noises.

It's one of the great advantages pubs have, and they should be using it to grow loyalty, says Carl May, who, as the founder of business development company Catered4, advises pubs and restaurants on business development.

"Generally, for pubs, loyalty cards don't work. At best, they deliver only a short-term hit, and licensees should rather be thinking about how to build loyalty properly — and that's done through having staff who know their customers. There are no short-cuts. You can't take staff out of the loyalty equation.

"Ask 100 customers whether they'd prefer a loyalty card or good hospitality and 95 will go for hospitality.

"Loyalty comes from listening to customers and finding out what they want to make them feel part of the business. And it's about getting your product right: the staffing, the ambience — that's your loyalty bonus."

Targeting customers​

Among pubcos, successful loyalty-card schemes tend to be targeted closely at a particular group of customers or product:

• Orchid Group runs several schemes, including the Diamond Club for over-50s, Our Family, at its family-dining houses, and U Love It, a privilege card aimed at young people, for its late-night venues, giving members access to exclusive offers.

• JD Wetherspoon has a stamp-card loyalty scheme just for coffee. "We wouldn't rule out other schemes but we believe our offers are very good and there's no real need for specific loyalty schemes," says spokesman Eddie Gershon.

• Beds and Bars operates its Belushi's VIP loyalty card across Europe. Spokesman Robert Savage says it has been "one of the most successful campaigns in the history of the company". He adds: "Thanks to an excellent data-capture scheme and a targeted email strategy, the number of customers signing up for the scheme and returning to Belushi's bars across Europe has broken all previous records."

The Carnarvon, Teversal, Nottinghamshire​

Greene King lessee Mike Staniforth runs a "points-based system similar to Tesco" at the Carnarvon.

Around 1,000 loyalty cards have been issued to customers and half of them have been activated.

Points are accrued for every £1 spent across the bar and the core offer rewards regular punters with 20% off a main course.

"In today's market there's so much competition, but we didn't want to cheapen our brand with discounts," says Staniforth.

"Once you start offering two meals for £5 it's difficult to get back to where you were.

"There are lots of options with a loyalty card. We ran special offers around the World Cup last summer, for instance.

"The key for me was that it wouldn't generate too much work. Customers have to register their card on our website, which means we capture their details.

"The plan is to send automatic emails to those not using their card, to get them in on their birthday, and so on."

The Dove Street Inn, Ipswich, Suffolk​

Freetraders Ady Smith and Karen Beaumont have established a famous cask-beer emporium at the Dove Street Inn and also pioneered a unique, product-specific loyalty scheme.

Customers pay £5 for a card and, for every pint drunk, they earn two points which can be cashed in for more beer, food, merchandise or a place on one of the pub's brewery trips.

The pub is rare in using a loyalty card to promote an alcoholic drink, but Smith says he's had no problems with it.

"Members can go online and find out which beers they've bought, how many points they've got, and how many units they've consumed — so it's responsible from that point of view.

"We use it to promote certain beers at certain times by offering more points - such as when something's slow-moving on the bar, though that's quite rare.. Some customers just use their points for our festivals, when we use the scheme to steer people to the beers out the back.

"Analysing data on what they drink and their interests informs our choice of beers and events. One group wants to go ski-ing!

"It brings customers together and it gives people a sense of belonging to the pub. We're building a community, and that's great. I can see it growing."