Table of Contents
- Introduction
- The Evolution of Rewards Network
- The Importance of Filling Unsold Seats
- The Network Effect and Its Benefits
- Monetizing Pain Points & Doubling Down on Data
- Expansion Beyond Restaurants
- Conclusion
- FAQ Section
Introduction
Imagine a world where every unsold restaurant seat, much like an unfilled airline seat, represents a missed opportunity - a fleeting moment that once passed, cannot be reclaimed or resold. This analogy, as highlighted by Rewards Network CEO Ed Eger, brings to the fore an intriguing aspect of the restaurant business that many outside the industry might overlook: the high cost of unsold inventory. In a recent dialogue, Eger shed light on how a data-driven approach, harnessed through decades of evolution, is now key to unlocking unprecedented growth and efficiency within the restaurant sector. This post delves into the transformative journey of Rewards Network, exploring the pivotal role of data in reshaping restaurant operations, customer loyalty, and ultimately, profitability.
The Evolution of Rewards Network
Founded in 1984, Rewards Network emerged during an era dominated by shoulder pads, the tunes of Tina Turner and Madonna, and the original "Dune" movie. From its early days issuing the Transmedia card, the company has evolved significantly, now standing as the largest local restaurant rewards network in the U.S. A key to its longevity and success lies in its ability to adapt and innovate, particularly in leveraging data to benefit both restaurants and consumers.
The Importance of Filling Unsold Seats
Ed Eger emphasizes a simple yet profound concept: an unsold seat in a restaurant equates to lost revenue that can never be recuperated. Recognizing this, Rewards Network has positioned itself uniquely within the payments ecosystem, focusing on monetizing restaurants' most perishable inventory—unsold seats—by enticing members of established loyalty programs with rewards for dining at local establishments. This approach not only increases margins for restaurants (with margins as high as 70% for filled seats) but also enhances engagement for loyalty programs by offering more everyday rewards options to their members.
The Network Effect and Its Benefits
The network effect plays a crucial role in the symbiotic relationships formed between Rewards Network, restaurants, and loyalty programs. For restaurants, many of which lack the resources for widespread marketing, joining the Rewards Network platform offers a valuable avenue to attract diners through word-of-mouth and loyalty rewards. Similarly, loyalty programs benefit by providing their members unique, local dining experiences that foster greater program engagement. This ecosystem enables diners to earn rewards redeemable within the programs they are already affiliated with, thus creating a win-win-win scenario for all parties involved.
Monetizing Pain Points & Doubling Down on Data
Under Eger's leadership, Rewards Network has more than doubled its restaurant clients and actively connects 6 million dining loyalty customers with over 20,000 restaurants. The secret sauce? A relentless focus on monetizing restaurants' biggest pain points and a robust use of data. The platform collects high-quality, back-end data that provides restaurants with invaluable insights into customer behavior, enabling them to fine-tune operations, tailor marketing efforts, and even secure working capital based on the platform's insights into spending patterns and seasonality.
Expansion Beyond Restaurants
Looking ahead, Eger envisions broadening Rewards Network's horizons beyond the restaurant industry. The same model applied to unsold restaurant seats could theoretically extend to any local business that operates on a schedule, from spas and hair salons to concerts and sporting events. The idea is to grow the network in a balanced manner, simultaneously catering to both the supply and demand sides of the marketplace.
Conclusion
Rewards Network's journey from issuing the Transmedia card to harnessing the power of data-driven insights illuminates a broader trend within the hospitality sector: the critical role of data in optimizing operations, enhancing customer experiences, and driving profitability. As the industry continues to evolve, the company's approach offers a compelling case study in leveraging technology and data to address age-old industry challenges. In the words of Eger, the goal is clear: to make Rewards Network "relevant to the member from the first cup of coffee in the morning to the last dinner and dessert they eat at night.”
FAQ Section
Q: How does Rewards Network help restaurants fill unsold seats? A: Rewards Network drives diners to local establishments through a merchant-funded platform that rewards members of loyalty programs for dining at participating restaurants. This not only fills unsold seats but also boosts restaurant margins.
Q: What type of loyalty programs are part of the Rewards Network? A: The network includes 30 of the top loyalty brands in the U.S., spanning airlines, hotels, fuel, and mobile phone service providers, offering a wide range of rewards options for members.
Q: How does Rewards Network use data to benefit restaurants? A: The platform collects enterprise-quality, back-end data that enables restaurants to gain insights into customer behavior, spending patterns, and preferences. This information can guide operational improvements, marketing strategies, and financial decisions.
Q: Are there any fees for restaurants to join the Rewards Network? A: No, there are no sign-up or integration fees for restaurants to participate in the network. Restaurants only incur a fee when a loyalty program member dines at their establishment and pays using the card registered with their loyalty program.
Q: Can other types of businesses join the Rewards Network? A: While its core focus remains on restaurants, Rewards Network is exploring expansion into other areas with perishable inventory, such as event tickets and appointments for local services, leveraging its existing infrastructure and network effects.
