Anatomy of a Loyalty Program: Armadillo Willy’s

Client: Armadillo Willy’s
Agency: FiveStars Loyalty
Provide a hyper-personalized loyalty program for Armadillo Willy’s already dedicated customer base

The Goal: Armadillo Willy’s customers are so loyal they were actually the ones who clamored for the brand to initiate a more robust loyalty program. It’s why the Northern California barbecue chain turned to FiveStars, a national network of interconnected loyalty programs that allows customers to earn store-specific rewards by using a single loyalty card at all participating small businesses.

For Armadillo Willy’s, one of the most appealing aspects of the FiveStars platform—which allows business owners to send SMS and email communications and track basic analytics through a consolidated dashboard—is its seamless point-of-sale integration. As a local restaurant chain with only eight locations, the ability to personalize the customer experience sits at the very top of Armadillo Willy’s loyalty checklist.

FiveStars can integrate with the software in roughly 90% of the point-of-sale systems in the market today, says the company’s marketing VP, Chris Luo. When cashiers scan a card, they see a series of key facts, including a customer’s name, the last time that person visited the store, how many times the customer visited in total, and whether she is a VIP. Over time, as the merchant gathers more customer data based on purchase history, it will also be possible for the system to display items a customer orders most. For example, if a certain customer always orders cornbread, the cashier would know and could offer it.

“The point-of-sale experience should be one that inspires loyalty so you can treat customers like people instead of transactions and start to develop real relationships,” Luo says. “It’s automation to inspire and drive customer loyalty.”

The Strategy: Automation is the key, Luo says. It’s transformed the day-to-day work of marketers and now it’s set to revolutionize the loyalty space for busy small and midsize business owners.

“It needs to be easy on the merchant side because these small business owners are time-pressed and they can’t take on tons of data,” Luo says. “But because of the confluence of technology trends, like software-as-service and Big Data, there can be loyalty automation for [business owners].”

While the ability to easily run a loyalty program on the merchant side is doubtlessly important, the same is true—if not more so—for customers in regards to participation. Loyalty programs that don’t follow the three golden rules are doomed to failure or nonuse.

First, businesses need an attractive reward structure and to determine what actually motivates customers—rather than what businesses think motivates them. “Ask your customers what they’d like as a reward,” says Gracie Binder, online marketing strategist at FiveStars. “Most businesses think they know their customers’ preference, but if they set up a reward structure that’s not appealing—like spend $300 and get 10% off—it’s not good enough to get users.”

Second on the list: Provide extremely clear opt-in and out-out options. Finally, businesses need to think about loyalty comprehensively. “It’s about having a great point-of-sale experience and engaging and communicating with customers after the sale,” Luo says.

Armadillo Willy’s ticks all those boxes. Point-of-sale, in particular, is a top focus for the brand. In fact, the restaurant expects its service hosts to learn three customer names every day—something the FiveStars card is very handy for, says Tim Ford, the chain’s director of operations and customer experience advocate.

“When you slide the card you see the guest’s name right away, and by the second or third time they come in, you can greet them by name right when they come in the door, which adds a nice touch,” Ford says. “If  you go to a place every day for a couple of weeks or a month and the service people don’t acknowledge you’ve been there before—that bugs the heck out of me, and it’s the opposite of what we want to drive home to our guests.”

Customers also have a variety of ways they can choose to sign up for the service to ensure they’re comfortable with the process. While some segments, like families who come in mostly for dinner or on the weekend, prefer providing a phone number—which is all that’s necessary to join—others, like the weekday lunchtime crowd, which is mostly composed of males ages 25 to 50, usually sign up with an email address.

Desired behaviors are incentivized, but how a customer interacts with Armadillo Willy’s is up to that particular customer. Signing up through the Web is worth an extra five points and connecting through Facebook is also worth more.

The Data: The reward structure at Armadillo Willy’s is gratifyingly simple: Every $10 spent is a point earned. After five points, members are rewarded with a free appetizer; after 10 points, the ante gets upped to a free burger or sandwich.

Easy-to-earn—and understand—incentives are essential to a successful loyalty program. “It’s driven a lot of sign-ups, because customers can see that their reward isn’t really all that far away,” Binder explains. “The idea is people get something free almost immediately to pull them into the program.”

It’s all part of what FiveStars calls “frequency compression theory,” a somewhat scientific-sounding term that can be simply defined as: If a customer is given a reward, that customer is more likely to come into the store. “In the case of Armadillo Willy’s, we’ve driven a 24% increase in frequency,” Luo says.

Customer referrals through the FiveStars network also drive value, as does the Armadillo Willy’s loyalty card itself—the first non-generic FiveStars card to carry cobranding with both the FiveStars logo and the Armadillo Willy’s logo.

“When a customer signs up for FiveStars, they’re able to see all the other places that also accept FiveStars, and that rewards other merchants in the network,” Luo says.

The Results: Since launching in February of last year, 12,500 customers have signed up for Armadillo Willy’s loyalty program. According to FiveStars, frequency compression is responsible for generating a 21% boost in foot traffic among members. As of January the chain had given out more than 4,000 rewards.

“An average restaurant might collect some email addresses here and there or contact information, if someone drops off a business card for a promotion or something, but that doesn’t drive a huge participation rate,” Luo says.

“Armadillo Willy’s does an awesome job of signing up customers, and now they have the ability to send even more relevant and timely communications.”

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