Operations

Experts offer up tips for making loyalty programs work well

Restaurants often make these common mistakes when it comes to customer loyalty programs.

iStock Photo

June 13, 2022 by Mandy Wolf Detwiler — Editor, Networld Media Group

This is part two of a two-part series. Read the first article here.

Having a great loyalty program that is customer friendly and intuitive can make or break operations. While many programs used to simply offer a discount or gather customer data, often they're not used for customer acquisition and retention. That means more frequency and can lead to higher overall sales.

QSRweb talked to several loyalty program companies by email to learn what restaurants are doing wrong when it comes to using rewards programs.

Incentivize the right behaviors

One big mistake QSRs make with loyalty programs is not incentivizing the right behaviors. For instance, if you have a stamp card that only rewards the purchase of a specific item, you aren't encouraging customers to spend more money. In that example, the item counts toward their goal, so customers aren't encouraged to spend more money per visit, said Amin Yazdani, CEO of Craver.

"Instead, make sure the loyalty program is incentivizing the behavior that's most important for you," Yazdani said. "If they want a loyalty program in order to increase order sizes, then rewards should be linked to how much is spent each visit. If they want the loyalty program to increase repeat orders, then they should reward each individual order. A cookie-cutter approach won't work and differentiate you from other businesses that offer a loyalty program."

Limiting the loyalty

Brett Spiegel, co-founder and COO at Koala, said his company sees brands try to limit their loyalty to specific channels. For example, a brand may dictate that loyalty points can only be earned when ordering via the official mobile app. While this is a strong incentive to push app downloads, it dramatically reduces the program's accessibility.

"There are many reasons why a customer may not want to download a brand's mobile app: device incompatibility; lack of technical understanding; general unwillingness to download apps, or perhaps they simply do not own a smartphone," he said. "Instead of limiting access to the program, brands should be seeking ways to expand accessibility. This is an industry that prides itself on putting hospitality at the forefront, and that means meeting customers where they are. An omnichannel approach to loyalty, including on-premise options, will result in the highest possible customer participation."

Understanding boundaries

What consumers find creepy or cool when it comes to personalization has evolved considerably, said Jessica Bryant, vice president for NCR Hospitality Marketing. Twenty years ago, it would have been odd if a drive-thru worker knew a customer's name and that they liked extra crispy fries before they even pulled up to the window. Now this is a common occurrence, thanks to restaurant loyalty programs and smart technology. In today's world, consumers expect this level of personalization — 90% find personalization appealing, according to a Forbes report; however, there is a fine line.

"With a culture of data sharing, and pressure to personalize to remain competitive, next year restaurants will make more of an intentional effort to not cross the creepy line," Bryant said. "It will be critical to understand what consumers expect and the products they love, but also important to steer clear of any invasive practices."

Bryant calls up a scenario: "data enables you to know a patron — let's call her Mary — who regularly purchases a strawberry sundae with extra whipped cream and nuts. This data also gives the eatery the ability to greet her in the drive-thru with a 'Great to see you again, Mary. Would you like your regular sundae served up your way?' She'll appreciate the brand knows what she likes and will remember it. But what she won't appreciate is if you generate recommendations based on her personally identifiable information like address, neighborhood or personal life," she said.

Restricting users to an app

Restaurant operators also make a common mistake by requiring customers to download their app as the only way to join their loyalty program, said Brandan Rabdau, senior vice president of sales and marketing at Mad Mobile.

According to a Harris Poll, 58% of consumers polled said they would probably not join a loyalty program if forced to download an app. The survey also revealed 76% are more likely to join a loyalty program that collects only their name and phone number.

Mobile apps are nice and convenient for those who download them. But customers may want more information about the program before downloading something that takes up space on their mobile devices.

"Customers want a system that's easy to engage with and opt-in to," Rabdau said. "Being too rigid with your system takes away the chance to attract and retain customers.

"Give customers options by signing them up through text communications, the server, the website, or even the old-fashioned loyalty card.

Let guests sign up for a loyalty program how they want to. In time, as a brand proves its value, customers will quickly get to the point of downloading the app to use again and again."

About Mandy Wolf Detwiler

---

Mandy Wolf Detwiler is the managing editor at Networld Media Group and the site editor for PizzaMarketplace.com and QSRweb.com. She has more than 20 years’ experience covering food, people and places.
 
An award-winning print journalist, Mandy brings more than 20 years’ experience to Networld Media Group. She has spent nearly two decades covering the pizza industry, from independent pizzerias to multi-unit chains and every size business in between. Mandy has been featured on the Food Network and has won numerous awards for her coverage of the restaurant industry. She has an insatiable appetite for learning, and can tell you where to find the best slices in the country after spending 15 years traveling and eating pizza for a living. 

Connect with Mandy: