New loyalty schemes for food businesses? Tread carefully!
A few companies in the hospitality industry are introducing subscription services to enable their businesses to obtain recurring revenue and boost customer loyalty. This is following the recent US trend.
The loyalty scheme encourages customers to shop as often as possible with a food business, obtain free food offerings and may include the monthly coffee/ tea scheme, the breakfast selection, or food such as burgers for a set monthly fee. We anticipate these offerings will be popping up in locations that are particularly reliant on the office “lunch hour“ footfall.
Food businesses need to be careful as to the new relationship contract between them and the customer and the GDPR issues.
The business obtains significant data by tracking customer purchasing habits, has increased awareness of their potential future choices, and so can tailor products and rewards to them. This insight is an upside of the loyalty/ subscription (recurring revenue) service. This is very different from the traditional paper-based loyalty program (i.e. the stamp on a card which the customer retains) which gives a free coffee as a reward after ten purchases from the coffee shop. These new-style services are being run by multi-sited organisations to encourage repeat spending with a defined date limit, with the suggestion that consumers will have to spend more to obtain the reward.
If you intend to offer such services, then pay particular attention to your Ts and Cs and data privacy documents. Our food and hospitality team are available to help.
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