March 21, 2002
Case Study

Restaurant Email Loyalty Program Brings in Bigger Spending Diners

SUMMARY: This Case Study contains some helpful tips for anyone conducting a loyalty campaign via email, whether you are marketing a restaurant or not. Our favorite idea from it is the "thank you for staying on our list" campaign sent after a customer's first year. It is hard enough these days to get folks to opt-in for stuff, and open your email. Why not thank them (and profit while you are doing it). Includes links to creative samples that might inspire you.
As strange as it may seem to folks who live in less metropolitan areas, Bethesda Maryland boasts two competing Mongolian restaurants just about a mile apart from each other on the same street.

Allen Wolff, Owner/Operator of the local BD's Mongolian Barbeque®, needed a way to make sure Mongolian-style food lovers in the area would not only visit his restaurant once, but repeatedly. He knew that classic restaurant loyalty programs, such as gathering customer's business cards and then mailing them special offers, are generally very successful in terms of getting repeat diners.

However, these programs are also typically labor intensive. And if there is one thing a busy restaurateur does not have, it is time to handle hands-on marketing campaigns.

One day last Summer, Wolff heard through the grapevine about Fishbowl, an Internet marketing agency that specializes in helping restaurants. As he watched the economic climate worsen in early September, Wolff decided to pay them a call and test out an email-based loyalty program.

First BD's needed to start collecting email addresses with permission from customers. Wolff had his servers begin handing out a 3x5 card to every customer. (See links to creative samples at end.) The card headline reads:

News, invitations & more
Sign up for our email list!
Customers only have to fill out four lines to join -- email, first name, last name and birthday. There is plenty of space so even folks with big handwriting and long email addresses can fit the information in. This makes a big difference in the number of addresses the data entry staff can decipher on the back end.

Once a week, Wolff gathers up the new cards and sends them off in a pre-addressed, postage-paid envelope that Fishbowl provides him with. Fishbowl's marketer Marilyn Coffey says, "Restaurateurs are so busy that to make this kind of campaign work, you have to take away all the barriers. It has to be really easy for them."

After the new cards are entered into the database, each new customer gets an automatically generated Welcome message. Instead of just saying, "You've been added to the list", this message immediately begins offering value. The subject line reads: Welcome, Enjoy your free dessert" (Now who's not going to open that?)

The system generates two other automated regular messages through the year for each name. The first is an emailed coupon for a free stir-fry that is sent out about seven days before a customer's birthday. Coffey says, "Birthdays are when people expect something nice."

The second automated message goes out on the anniversary of the date the customer joined the mailing list. Coffey explains, "Because the churn rate for email is normally so high, it's really important to say 'Thank you for staying on my list for a year.' Customers don't expect it." BD's anniversary thank-you offering a free appetizer is already set up in the system ready to go when it is needed starting this fall.

In addition, Wolff gets together with the creative team about once a month -- sometimes in person, sometimes on the phone -- to brainstorm a special promotion for that month. Each month's email has a different premise, driven whenever possible by offline campaigns the restaurant is running at that time. For example Wolff ran a Mardi Gras campaign using both email and in-store posters recently.

For his November 2001 campaign, Wolff ran a holiday party reminder to let local office workers know they could hold their parties at the restaurant. Since he'd already used the holiday theme the month before, Wolff needed a fresh idea for his December campaign. Together, he and the creative team brainstormed a viral, friend-get-a-friend campaign that with luck would bring in new diners and grow his email database.

On December 18th, Wolff had an email sent to his opt-in list with the subject line: Free Mongolian Barbeque for your friends. Recipients were asked to click to a form that allowed them to email gift certificates for free meals to up to three of their friends.

Wolff did not want to send the meal certificates immediately because while December 18th is a great time to capture gift-givers, it is not a great time to get folks to visit restaurants. He had the certificates sent out right after the holidays on January 9th. To avoid spam accusations, the email subject line clearly stated the first name and last name of the referring friend: Here is your free meal from [firstname lastname]. Plus referred email addresses were only added to the database for that one-time mailing. They would not receive any further unsolicited email from BD's whatsoever.

Recipients could click a button to join BD's email list and/or print out the email and bring it with them to get their free meal.

The creative team uses three tactics to make all of BD's email campaigns as effective as possible:

1. Every email is personalized
2. Every offer has a clearly marked deadline, usually a date about 15 days after the email is sent.
3. Graphics and colors used match the offline branding.

In just six months almost 1,000 diners have filled out the card to join BD's email list. For a restaurant seating a maximum of 174, this is an exceptional accomplishment. Coffey notes there is a pattern to sign-ups, "For the first three months you get a lot so it pays to be aggressive, then you've pretty much gotten all your regulars so you can go into passive mode. The sign up cards are always available in the guest check, but servers don't talk about them. Then you should come back and be aggressive again every once and a while."

Unlike other businesses, restaurants generally make more money per guest check when they offer something free. Coffey explains, "Even with the free gift, the average check goes up. Because of the free item you might order an appetizer, dessert or drinks you wouldn't have ordered before." Because the perception is that because you are getting something for free, you can afford to splash out a little on extra stuff.

Every time Wolff's email campaigns drove more traffic, he became more profitable.

More details:

- Wolff's emails get an average 60-65% open rate (this is unusually high for pure marketing email).

- While the initial welcome campaign works well, the birthday campaign is even more "lucrative."

- The friend-get-a-friend campaign was a tremendous success. 14% of BD's list entered friends' emails for the gift meal. Then more than 100 of these friends redeemed their coupons in person by dropping by for lunch or dinner, often with more friends in tow. (That's a 15.3% redemption rate.) Plus 14.5% of referred friends clicked on the button to join Wolff's email list to receive future offers.

Wolff says, "The friend campaign was very successful in helping expand our brand awareness and market coverage quickly and cost effectively." Not to mention profitably.

Useful links related to this article

Link to samples of the opt-in card, holiday party offer, and friend-get-a-friend viral campaign:

Franchise HQ -


Improve Your Marketing

Join our thousands of weekly case study readers.

Enter your email below to receive MarketingSherpa news, updates, and promotions:

Note: Already a subscriber? Want to add a subscription?
Click Here to Manage Subscriptions