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New Generation of Loyalty

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When Matthew Janopaul heard that more than 80 percent of American consumers are unaware of the benefits that retailers’ loyalty programs offer, he completely agreed. The president and CEO of Pasta Pomodoro, a 26-unit Italian casual dining chain, called the restaurant’s loyalty program “old-fashioned,” with a process he described as “clumsy.”

Eager not to fall into a loyalty “black hole” with its own customers, Pasta Pomodoro is replacing its POS-supported, card-based program with a smartphone-based concept that tracks guest frequency and rewards them for visits and recommendations.

San Francisco-based Pasta Pomodoro has a loyal customer base of tech-savvy guests who visit the restaurant multiple times a month; some even dine there weekly. The company loved connecting with guests and providing real-time incentives to sustain frequent visits, but the antiquated loyalty program was making this a difficult task.

“When settling the bill, guests present their loyalty card, which features their account number,” Janopaul says. “If they don’t have the card, they can provide their telephone number. If they don’t provide the right number, however, it’s difficult to find them in our database, which slows the entire process.”

Janopaul was ready for a modern alternative, one that fit the personality of the chain and its guests. “Our guests have a strong interest in technology and media, and there is a strong penetration of smartphone users,” he says. “These factors made it clear that we should consider a more innovative platform that is not tied to POS.”

Putting the restaurant first
To cater to its highly-connected clientele, Pasta Pomodoro explored location-based mobile platforms and apps like Foursquare, shopkick and Yelp, a blogging site that invites consumers to create word-of-mouth reviews of local businesses and services. None of those platforms “really put the restaurant or service first,” Janopaul says. “We wanted a partner that was focused on Pasta Pomodoro [rather than] the coupons it could deliver.”

While the social media platforms weren’t the perfect fit, Janopaul did like the idea of social marketing — somehow tying the program to social media and rewarding guests for recommendations shared on sites like Facebook.

From a functional perspective, Janopaul also wanted a simple program that could scale in the future, “especially as we continue to build relationships and communicate with our guests.”
The company found the best of both worlds with Punchh, a company that provides a turnkey loyalty and referral program. The partnership also allows Pasta Pomodoro customers to receive the newest generation of loyalty.

Consumers no longer have to carry a physical card: The program is based on a mobile app that participants download directly onto their smartphones. The app connects with the smartphone’s GPS function, electronically finding all nearby restaurants that participate in the Punchh loyalty program. Guests choose a restaurant by clicking on its name or icon, and then receive a graphic resembling an old-fashioned punch card.

When guests have completed their meal and are presented with the check, they use their camera app to snap a digital photo of the bill, which is uploaded to the server and stored in a dedicated database maintained by Punchh. Once the app authorizes the visit, the electronic card receives a virtual “hole punch,” recording the meal for the guest and the restaurant.

“The photo also provides details we can analyze later, including the final cost of the bill, the waiter’s name, the tip, even points earned during the visit,” Janopaul says. “Besides giving us plenty of insight into the meal, it also reduces the chance for fraud and having false loyalty points entered into the system.”

Higher visit frequency
The app enables members to share their dining experience with Pasta Pomodoro, as well as post their thoughts on Facebook. Pasta Pomodoro can also monitor statistics of their guests’ visits and their Facebook posts.

After guests reach a threshold established by Pasta Pomodoro, they touch a “redeem” icon on the app and receive a unique confirmation code. The code is authorized at the restaurant and electronically redeems the virtual Punchh card for a reward.

The program has been available for six months, and currently runs in tandem with Pasta Po-modoro’s legacy loyalty program, but “We have four times more guests signing up for the new program than our traditional program attracted,” Janopaul says. “Analysis also shows that guests are using the program regularly. There is a higher average visit frequency from guests using the new program vs. guests still using” the legacy program.

While obviously off to a good start, Pasta Pomodoro is not getting complacent about the program. In fact, the chain already has more plans on the drawing board, including a virtual gifting program that will reward guests for referring friends to the restaurant.

“Using the analysis tool, we can determine if a guest’s Facebook friend visits the restaurant and signs up for the program,” Janopaul says. “In the long-term, we would like to enable members to ‘send’ a punch to a friend or donate a punch. It takes the program to another level.”