8 Steps to Build a

Loyalty and Rewards

Program that Converts
Guests to Lifelong Fans
Who is Grubhub Enterprise + LevelUp?
Grubhub Enterprise provides national restaurant brands
with a full-stack guest acquisition and engagement solution,
including the largest delivery marketplace in the United
States. LevelUp, the development shop inside Grubhub,
designs and develops branded app and web experiences
for 200+ leading restaurant brands.
Introduction
We’ve all heard the age-old adage: it costs five times more
to acquire a new customer than to retain an old one. In the
restaurant industry, loyalty and rewards programs help you
engage your best guests and keep them coming back for
a lifetime.
In fact, a Bain & Company study found that just a small
5% increase in customer retention can result in a 25% - 95%
increase in profits.
We’ve seen this in real-time at LevelUp, the development
shop within Grubhub. Looking at data across our 200+
restaurant partners running loyalty programs, brands see
an average 63% increase in ticket when customers are
reaching a new loyalty threshold.
Let’s dive into the steps you can follow to craft a loyalty
program that increases the lifetime value of your guests,
drives order volume, and increases same-store sales.
2
Step #1

Determine your goals.

First, set a proper foundation by listing out your primary goals. What
metrics does your business use to measure success?

How do those brand and business objectives translate to your digital

guest engagement program? Maybe your guests aren’t coming back
as frequently as you’d like. Perhaps diners are coming in, but you see
opportunities to increase average ticket.

Next, think through ways in which you’ve accomplished those goals in

the past. What marketing campaigns have worked particularly well, and
what consistent elements do you see that span those campaigns? Specific
messaging, incentives, and audience targeting all influence success.
Compile a list of other loyalty programs and rewards campaigns that
you think work particularly well, and take note of the types of tactics you
would like to test under your new engagement program.

3
Step #2

Implement a trustworthy
tracking system to pull
in guest data.
Access to customer data is a critical part of crafting and optimizing
Salad $6.75
a loyalty and rewards program that most effectively engages guests. Soda $1.25

Only digital experiences that require guest login and identification

allow you to collect customer-level data. You can typically see how
your business is performing financially thanks to your point-of-sale
(POS) system. But without an app — connected to a powerful CRM
and integrated to your POS system — your data can’t be tied to
individual customers.

This tracking system needs to work in tandem with your tech stack. In order to accomplish a seamless integration between your POS,
online ordering provider, app, and more, a great partner will have open APIs that allow data to be shared easily (but also securely!).
They’ll also have strong partnerships with a wide array of technology providers, including those you already work with and trust.

4
Step #3

Understand the behavior of your

most loyal guests.
Once you have transactional guest data
available in your existing CRM, deeply analyze
• Which first-visit menu items
the behavior of your most frequent guests.
generate the highest long-term-
Start with the following questions:
value customers?

• During which daypart are your

• What is my baseline guest frequency? most frequent transactors

placing orders?
• Which items on your menu generate
• What are your behavioral segments?
the highest frequency guests?

• How many purchases, on average,

does a customer make to increase the
chances that they are still transacting
after 30 days? 60 days? 90 days?
If you’re starting from scratch and don’t have
guest data available, think through creative
ways to better understand your customers,
including guest surveys, 1-1 interviews, or
focus groups.

5
Step #4

Decide on your core loyalty construct.

Once you have a solid understanding of guest behavior, use that data to decide what behavior you want to reward guests for and
over what period of time.

There are a variety of

ways in which brands
engage their customers.
Loyalty and rewards
programs may take the
following forms:

Spend-based loyalty: guests Visit-based loyalty: guests Item-based loyalty: guests earn
earn loyalty progress for the earn loyalty progress every time different loyalty progress when
dollars they spend. they place an order. they purchase certain items.

6
Step #4
Points-based loyalty: guests
earn points for spend, visits
or items purchased.
Surprise & delight programs: guests
receive “surprise” personalized rewards
and messages based on prior behavior.
Many of the most successful restaurant
loyalty programs pair surprise & delight
tactics with core loyalty programs.
If you decide to construct loyalty tiers, brainstorm
how you will brand those tiers. Should all of the
associated perks be monetary in nature? Do you
want to let your brand shine with creative (albeit
harder to fulfill) offers like swag, free concert tickets,
and more? The more you align your program with
your brand, the more likely guests are to join the
community you’re creating.
Smoothie King, a health-centric, purpose-
driven smoothie brand, prompts guests with a
series of onboarding questions — from primary
fitness goals to dietary restrictions — to inform
their rewards and marketing. Answers to these
questions help Smoothie King tailor personalized
recommendations and upsell goal-focused add-
ons. Guests earn “Purpose Points” as they spend
at Smoothie King and earn meaningful rewards as
they progress through the“Healthy Rewards” and
“Champion” loyalty tiers.
7
Step #5

Design your guest journey and choose your rewards.

Design your rewards cadence around the behavioral patterns that you desire from your guests. How can you segment guests that
aren’t reaching the spend or visit threshold you desire, and encourage them to meet your pre-determined goals?

Let’s look at an onboarding campaign as an example. What

behavior do you want to incentivize first and foremost?
Perhaps you choose to reward guests with a free item on their
first visit to get them into your loyalty program. Maybe you offer
a second-visit reward to encourage guests to return to your
store and create the habit.

Get creative with your rewards to encourage program

participation. &pizza, a 100-location fast casual pizza brand,
goes as far as offering their guests free &pizza tattoos, a free
in-house party for a guest and 10 friends, and a black-and-
white photoshoot. Potbelly offers guests access to a secret
menu. Kung Fu Tea gives out exclusive swag to their most
loyal followers. Think creatively about what offers will entice
your guests to spend, and analyze the cost of those rewards
to ensure profit margins stay high. Reserve the most expensive
and exclusive rewards for your top guests, and use the high
profit-margin rewards for those hitting the first thresholds.

8
Step #6

Craft your launch plan.

Once you’ve designed and developed your program, decide if you want to have a country-wide rollout or run a pilot to start. Many
brands start with a pilot. To do this, you’ll need to find willing franchisees or a set of locations through which you can begin collecting
transactional-level data from guests enrolled in the program.

In an October 2018 press release, Chipotle announced a loyalty program pilot launched in three test markets.

“As the latest innovation in Chipotle’s ongoing efforts to drive digital innovation and
make the brand more accessible, the points-based loyalty system is now live in three test
markets - Phoenix, Kansas City (both in Kansas and Missouri), and Columbus, Ohio.”

— PRNewswire, October 2018

After a successful pilot, Chipotle rolled out the program nationally. According to
CNBC, three weeks after their national launch, Chipotle had increased daily app
downloads by 480 percent and daily active users 273 percent as compared to
averages over the previous 12 months.

9
Step #7

Use an omni-channel strategy to launch

and heavily promote your program.
Use simple, clear language to describe loyalty tiers and
rewards in all marketing collateral. If you’re transitioning
from an existing program, be sure to communicate the
Brands that work with Grubhub Enterprise have
switch clearly to those guests that previously participated.
the option to integrate their loyalty program into
Guests should be able to seamlessly transfer loyalty
Grubhub’s delivery marketplace, so guests can
points and account information into your new program.
continue to earn loyalty even when ordering from
your restaurant through third-party platforms.
Facilitate program enrollment with an impactful onboarding
offer, which can take the form of a free item, percent-
off reward, or limited time offer. When Pret A Manger
launched their guest engagement program, they hit their
90-day customer acquisition goal in only 36 days thanks Promotion doesn’t stop at launch; consistent program marketing is
to their rich onboarding offer of 5 free coffees. crucial to continuous growth. Deploy a dedicated page on your website
that is optimized for search engines so guests can find you faster. This
Craft a strategic promotional plan to announce your page could also include an FAQ section so guests can get all their
new program. This plan could include your website, questions answered. Place signage near your register to encourage
paid and organic social, in-store collateral, your existing guests to pay with the app, and train front-end employees to mention
email database, and hiring a PR firm to announce it to the program at guest checkout. Mention the program consistently in
the media. your social media posts to translate followers into loyal fans.

10
Step #8

Continually optimize your

program.
After designing and launching your program, consistently monitor its
performance in accordance with the predetermined goals and metrics
you set in Step One. If you migrated from an old program, benchmark the
new program against past performance. Take advantage of your newly-
acquired guest data to test campaigns and rewards within your guest
engagement program. The more effort you put in to your program, the
more you (and your business) will get out of it.

11
 When developed with your goals in mind, restaurant rewards and loyalty
programs drive guest engagement and same-store sales. Grubhub
Enterprise and LevelUp have decades of combined experience developing
guest engagement programs for hundreds of national restaurant brands.

Visit enterprise.grubhub.com to learn more or contact us at enterprise@grubhub.com.