Why Your Loyalty Program Isn't Driving Repeat Visits (It's Probably Not Rewards)

On the Olo Professional Services team, I work with brands every day to improve results across their marketing efforts, and loyalty is a frequent topic. Loyalty programs are among the most powerful tools a restaurant has to drive frequency and AOV. The brands that get it right turn casual guests into evangelists. The ones that don't are usually repeating the same fixable mistakes.

So, here are my secrets to creating an effective loyalty program: one that increases AOV and frequency and creates superfans of your brand.

First, use data to find where guests fall off

When a brand comes to me with a loyalty program that isn't performing, the first thing I do is look at the data to find the drop-off point.

Are guests registering but never redeeming their sign-up offer? Are they making one purchase and never coming back? Are they getting close to their first reward and losing interest before they get there? Each of those scenarios points to a different problem.

The three most common culprits I see are friction to join, not enough value, and rewards that don’t deliver results.

• Friction to join is underestimated. If signing up requires five steps, a new password, and manual entry of personal information, you've already lost people. The bar for "worth it" is very low when someone's just trying to grab lunch.
• Not enough value, fast enough, is probably the one I see most. Brands get ambitious and build programs in which guests must spend $250 before they earn anything. But what percentage of your guests have ever spent $250 with you? Your first reward should be achievable on the next visit. Your second should come quickly after that. Habit-building requires momentum.
• A reward that is not delivering results can usually be solved by looking at data. Brands default to free dessert because that's what everyone else does. But guest data will often tell you something completely different—like that $5 off a popular appetizer shown to drive retention will keep guests coming back more. The question I always ask is: What does your data say your guests want? Not what you think they want. Not what the brand down the street is doing.

If engagement isn't the problem, look at your operations

If guests are signing up, redeeming rewards, and engaging with the program—but you're still not seeing a return—the issue is likely how the program is built operationally.

Loyalty should always be pushing two things: frequency and average order value. If your rewards aren't designed to move those metrics, you're essentially just giving money away.

A few things to audit:

• Are you discounting your most loyal guests instead of giving them a reason to change their behavior? Heavily discounting guests who would have come back anyway is just margin erosion. Use the data in your guest data platform to identify when a guest is predicted to lapse—not when they've already been gone 30 days—and reach them before they drift.
• Are your rewards structured around the behavior you actually want? If you want guests to spend more per visit, offering $10 off a $40+ check is more effective than $5 off any amount. Build the behavior into the offer.
• Are you protecting your margins? Every item on your menu has a different cost to make. Build your rewards around high-retention items that also make financial sense. And don’t offer a discount on lobster or steak.

Guest experience issues that kill loyalty programs

Even a well-designed program can fail at the execution layer. The issues I see most often:

• Confusing point structures. I am the strongest advocate for one point per one dollar. Some brands think that having more points feels more impressive, but the calculations to get there are confusing. The moment you make guests do math, you've lost them.
• A clunky redemption experience. If it takes more than three clicks to enroll in the loyalty program or apply an offer, guests give up. If the system tells them they don't have the right items in their cart but won't tell them which items, they abandon. Friction at redemption is just as damaging as friction at sign-up.
• No CRM strategy to keep guests informed. You would be surprised how many brands launch loyalty without a communication plan in place. Create messages to keep guests engaged: a "Happy birthday, here's our gift to you" email, a push notification when an offer is earned, or an SMS letting them know about a double points day. These nudges will keep your brand top of mind for your guests’ next meal.

Keep reading: 4 Ways Restaurants Can Use SMS Marketing to Drive Loyalty and Revenue

• Uninformed front-of-house staff. If a guest asks a server how the program works and the server doesn't know, that's a missed opportunity. Your front-of-house team should be your biggest advocates for your loyalty program. Make sure they know the program as well as the marketing team does.

One last thing

Loyalty programs should continue to evolve—the first version of your loyalty program is not your final version. Launch it, track where guests drop off, and optimize every 6 months. Observe how menu items become retention drivers and guest behavior shifts. The brands that treat loyalty as a living program—not a one-time build—are the ones that see results.

Create a framework based on the results you want to achieve and use your guest data to your advantage, and you’ll see a loyalty program that pays off—for you and your guests.

Macy Smith is a member of Olo's Professional Services team, where she consults restaurant brands on loyalty strategy, CRM, and guest engagement