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More restaurants layer loyalty programs onto smartphone apps

More restaurants layer loyalty programs onto smartphone apps

Dunkin’ Donuts, BJ’s, Starbucks, Your Pie and Forever Yogurt put rewards in customers’ pockets.

Loyal customers have long been the bread and butter for restaurant brands, and more companies are rewarding their best customers through smartphone apps.

From big companies like 20,500-unit Starbucks to smaller brands like 20-unit Your Pie, operators are finding that putting the rewards literally in the customers’ hands via their phones makes good business sense.

Besides driving loyalty, app programs that make it easy for customers to enroll and engage provide the brand with a competitive edge because of the other data they can provide, said Jennifer James, director of marketing at St. Petersburg, Fla.-based Kobie Marketing.

Users can automatically redeem awards through Starbucks' app.
BJ's rewards app

“The restaurant brand can evaluate loyalty program transaction data for segment offers, promotions and other communications to drive frequency, daypart or week-part visits, and encourage more profitable behaviors,” James said.

Seattle-based Starbucks Corp. has been a leader in the loyalty app space with its animated gold-level cup that captures “falling stars” as guests buy more items and allows redemption automatically through the payment part of its app.

Other brands have created in-app programs that offer incentives ranging from FitBit activity monitors, in the case of 150-unit BJ’s Restaurants Inc., based in Huntington Beach, Calif., to freebies, such as a special Sept. 9 one-day promotion by Canton, Mass.-based Dunkin’ Donuts that offered new enrollees in its DD Perks app a $5 gift card and a free medium beverage at its 11,000 units.

Other companies have followed suit because capturing loyal customers pays off for the restaurant brand, said James.

“In one client program, for example, we know members spend 10 percent more on average than non-members, and the trend increases upward at about 1 percent per year,” James said. “Using sophisticated lifetime value methodologies and other proprietary algorithms, we were able show customer lifetime value as a result of loyalty program revenue to be $500 million over a three-year span.”

James added that the best loyalty programs help restaurant brands deliver “more convenience through simplified and personalized customer experiences.”

Drew French, founder of Athens, Ga.-based Your Pie, said in an interview that his brand will launch a custom-built app-based loyalty program over the next few weeks.

“The app is a payment system as well as loyalty,” French said. “It allows them to pull up directions and phone numbers for the restaurants, and we will be integrating online ordering through the app.”

French explained the process of using the app: “We’re fast-casual pizza, so you go through the line, order the toppings and when you get to the register you just open your app — it’s integrated with our point-of-sale system — and there’s a scanner where they hold the phone up to that scanner. It’s seamless,” he said. “They pay and get their loyalty points automatically.”

As loyal guests accumulate points, the app builds a virtual pizza, slice by slice. Your Pie rewards loyal customers with a $10 off after they spend $100. The app also allows for special rewards on birthdays and anniversaries.

“Without our loyal customers, we’d cease to exist,” he added. “Giving them a reward and incentive to for being loyal — making them feel like they are part of the brand — is very important.”

Marketing expert James said one of the most effective in restaurant loyalty programs is the integration into devices such as tablets, mobile phones and kiosks.

“Restaurants are experimenting with digital and social to connect with members and to connect members with each other in an omni-channel fashion playing off of patron behaviors — such as encouraging them to check-in via Facebook or share a photo via Instagram or write a review on Yelp or other social channels,” James said. “Restaurants are also embracing digital channels to tell their story, test new menu items and encourage repeat visits. Mobile integration with the POS has helped speed up the check process, collect feedback, deliver coupons, etc.”  

The importance of mobile

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When execs at Chicago-based Forever Yogurt began considering a loyalty program last year, they immediately decided to put it in a smartphone app.

“People are spending more time on their phones compared to other media platforms, so we really wanted to capture that market and create an instant connection with our customers,” Miranda Wilson, the 25-unit Forever Yogurt’s marketing analyst and consumer consultant. “The convenience factors of locations, promotions and flavors at favorite stores are important.”

The brand, owned by Forever Brands LLC, will roll out the app to the general public later this year. Several store customers, franchisees and corporate employees are testing the app.

After spending $50, Wilson said, rewards program members automatically get a $5 credit, which can be redeemed by giving the cashier the rewards program number. The brand offers 25 incentive points with a sign-up into the loyalty program, and Wilson said customers are more willing to enroll because it doesn’t require a card.

“You can easily check your loyalty balance on the app by typing in your rewards number, which is actually your phone number, and it shows your recent purchases and how many points you have,” said Wilson.

Customers can also send virtual gift cards to friends and family using the mobile pay via text.

Jerry Zhang, Forever Yogurt’s director of creative development, added, “mobile payments are always live, but you have to put in your phone number —which is your password — to check your balance.”

The app also lets loyal customers get first notice of new promotions and other brand news and gets “them more involved with the company and brand,” Zhang said.

The company designed the app in-house and used outside teams to develop it and its loyalty component. “This is a long process,” Zhang advised.

James of Kobie Marketing said the loyalty information can be used to hone and improve the guest experience in the stores as well.

“One of our restaurant clients uses profile and preference data shared by their members to enhance the experience from the moment they arrive at the hostess stand,” she said.

But while new and existing technology will enable more personalized experiences, restaurants must deliver on the promise, operators noted.

“At the end of the day, if we don’t everything right in terms of quality of food and customer service, there’s not a loyalty program in the world that is going to fix that,” said French of Your Pie.

This story has been revised to reflect the following correction:

Correction: Sept. 22, 2014
  An earlier version of this story misstated the name of the Forever Yogurt’s parent company. The parent is Forever Brands LLC.

Contact Ron Ruggless at [email protected].
Follow him on Twitter: @RonRuggless

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