As loyalty programs move from a novelty to a given, restaurants are rethinking their rewards platforms to be more personalized, customizable — and simply more fun — to grab consumers’ limited attention.
The competition for customer loyalty is fierce. Of the 50 largest restaurant chains in NRN’s Top 200 report, 39 have digital rewards programs. And even pioneers in the space — like Starbucks, with its more than 16 million rewards members — are constantly fine-tuning their offerings.
“Most people are part of 16 to 20 different loyalty programs but are only actively engaged on a few,” said Mark Johnson, CEO of marketing firm Loyalty360. “If you can get into that active consideration group then you are set. Understanding what motivates your customer on an individual level, it’s a huge opportunity.”
The key, marketing officials say, is making a customer feel like part of an exclusive club and offering unexpected treats to make a brand memorable and drive repeat visits. Today’s loyalty programs offer more than just discounts and classic punch-card-style freebies. Instead, your purchases might let you jump the line, get access to exclusive merchandise, win a trip or make a charitable donation.
Here’s how three brands — Schlotzsky’s, MOD Pizza and Newk’s Eatery — are developing loyalty programs designed to stand out in a crowded marketplace.
Mastering the art of guest experience personalization was the main goal when Schlotzsky’s, the 375-unit chain out of Austin, Texas, revamped its loyalty program in July 2018.
The Schlotzsky’s Rewards app first launched in 2016 with a basic dollar to “bites,” or points, rewards structure. For every seven bites, guests get $7 off their next visit.
Last July, the brand revamp added some gamification to the loyalty program. Guests could spin a rewards wheel once a day to get a free bag of chips or other small daily treats. The daily game worked well to get people to download the app, but did not garner much brand loyalty, Schlotzsky’s social media manager Victoria Nielsen said.
“We had to take a hard look at our program and think, ‘Is it truly a loyalty program if they just come in for that discount and leave?’” Nielsen said. “We looked at our app and realized we were trying to do too much. Now we’re really targeting our regulars to engage in the program further.”
Now with more than 891,000 members — a 26% increase since last year — the Schlotzsky’s loyalty program has ditched the chance game and scaled back the initial 20 in-app segments to just the basics. For example, loyalty program members might be the first to hear of an LTO or be invited to test out a new menu item. Their feedback would then be used for research and development.
Gamification will still be a valuable loyalty tactic, though not quite as blatantly as a daily prize wheel. For example, the Schlotzsky’s rewards app might one day challenge regular users to come in a couple of extra times in one month for a surprise or unexpected discount, the company said.
“We’ve learned that you can talk at guests all you want but it’s when you’re talking with them that it makes a difference,” Nielsen said. “Make them feel they are part of the journey and are part of an exclusive club.”
In the future, Schlotzsky’s said it will focus more on “surprise and delight” features that go beyond the typical discounts or freebies. Nielsen said the team is working on picking a select group of Schlotzsky’s superfans to fly them out to the company’s Texas headquarters for a bread-making class in late 2019 or early 2020.
Another key aspect of the revamped loyalty program is customization, which includes implementing user data to tailor the app’s user interface based on individualized behavior, including past purchases. They also might promote exclusive items — like Schlotzsky’s limited-edition brisket-scented T-shirts — to a select group of customers.
“Last time we just offered it to everyone, but next time we might alert our brisket lovers first,” Nielsen said. “I don’t think we realized how much we had been leaving on the table by not using data at first.”
MOD Pizza — the 416-unit, Seattle-based fast-casual pizza chain — did not want to simply introduce custom deals for loyal guests. MOD Pizza’s first loyalty program, which launched in February, was inspired by airlines’ frequent flyer programs, which often offer highly personal experiences.
“If you think of rewards programs outside of our industry like frequent flyer programs, the airline will usually recognize you by name and know your favorite drink and treat you extra special,” Kevin Flaherty, vice president of digital marketing, said. “We need to do something similar for the restaurant industry. The points and basic rewards are expected by now. The next generation of loyalty is built on enhanced customer experience. That’s when it goes beyond a transactional interaction and really builds brand regard.”
MOD Pizza’s loyalty program is built on a dollar-for-points structure and customers can trade in for a free item of their choice once they hit 150 points. Customers can redeem points for ordering online, through the app, on the phone or in person.
This type of customization also extends to the unique, charity-based feature that MOD launched alongside the app. Customers can choose to cash in their points or donate them to MOD Pizza’s charity partner, Generosity Feeds, a nonprofit organization that helps feed children struggling with food insecurity.
MOD will also periodically send out messages to app users who have a tendency to order a particular item and invite them to enjoy an order on the house. They will also use user data to encourage regulars who have never ordered a specific item to try one, perhaps with a discount as incentive.
“Of course, there’s the traditional, ‘Get a free item on your birthday!’ promotion but that’s expected and uninteresting by now,” Flaherty said. “It’s what happens on a random Thursday in June that will make people stand up and remember you.”
Jackson, Miss.-based Newk’s Eatery, which has 125 locations, is in the process of launching its first loyalty program, which will be rolled out in select locations by mid-2019 with a full launch coming in 2020.
Through its revamped app, Newk’s Eatery is forgoing the traditional approach derived from punch cards and is instead creating what it calls a “brand engagement program.” Instead of just incentivizing guests to come back to the restaurants by offering monetary-based rewards, Newk’s is looking to offer other types of perks.
Michelle Spohnholz, vice president of marketing, said the brand is experimenting with perks that allow loyalty members sometimes to cut the line during peak lunch hour or have access to “prime” seating, or receive free samples of new items. However, she does admit that the logistics of these in-house benefits would be more difficult to execute than a simple app-based discount or uniform points structure.
“We want to be able to create a better way for consumers to be interested in what we have to offer and leapfrog over the digital glorification of a punch card,” Spohnholz said. “Traditional loyalty programs are one-size-fits-all, and we want to evolve toward meeting the needs of our guests where they are.”
Newk’s Eatery plans to do that by learning their ordering habits through the trove of data available in the back end of the mobile app. That way, they will be able to segment their app offerings based on customer preferences.
So the busy parent who is always purchasing macaroni and cheese for the kids will see different meal solution options than the person who is always purchasing lunch from the Newk’s grab-and-go case.
“Technology made [personalization through user data] an easy turnkey way to go,” Spohnholz said. “Guests have always liked the simplicity of points, but there are different customers who behave differently.”
Contact Joanna Fantozzi at [email protected]
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