loyalty programs

The increasing importance of loyalty programs

Loyalty programs have become a vital tool for many restaurant operations. They’re nothing new in the foodservice space, but they are certainly evolving as a differentiator in a crowded industry.

Not only providing an incentive for customers to come back and spend more money but also making it easier for them to do so in a digital environment has only grown in importance in the conditions created by COVID-19.

Brands have been recognizing that, as chain after chain rushed to create or upgrade their mobile app and loyalty program model in 2021 in attempts to capitalize on the digital opportunities and shifting consumer preferences that resulted from the pandemic.

The likes of Popeyes, Burger King, McDonald’s, Wendy’s, Taco Bell, Chipotle, Starbucks, have all recently either launched new loyalty programs or enhanced or revamped their existing offerings. The core aims? Boosting sales and capturing data for the brand to provide a more customizable personal experience for customers.

And the demand is there from customers, that’s for sure.

A recent report from Paytronix and PYMNTS found that 47 per cent of diners now use at least one loyalty program. The share of consumers using a restaurant loyalty program increased by 12 per cent from January through April this year. Patronix and PYMNTS also found that over 57 per cent of users said they would spend more with a loyalty program.

Indeed, these incentives are not just exciting for increasingly digital consumers, they’re also helping brands recover from a devastating year.

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Forbes reports that many major foodservice players have experienced significant bumps in consumer spend as a result of focusing on their loyalty programs.

In the industry overall, digital orders grew by 124 per cent from March 2020 to March 2021, according a May report from The NPD Group. A recent survey found that 47 per cent of consumers believe reward incentives are more important now than they were before the pandemic.

While many major players have refined customer loyalty programs and offerings already, there is still room for expansion into the space.

Nearly 40 per cent of QSR customers don’t use loyalty programs because their preferred restaurant doesn’t offer one as of April, according to Paytronix.

For restaurants looking to launch or upgrade loyalty programs, Mike Welsh, CCO at digital consultancy Mobiquity writes in QSR magazine that a major focus should be offering a cohesive, complete experience within the program that allows customers to develop a meaningful relationship with the brand.

Welsh cites Chipotle’s revamped loyalty program as a strong example of doing things the right way, highlighting the brand’s race to rewards mobile game and Tesla giveaway in June. That has translated into a massive increase in digital sales during the first half of 2021 and company-wide profit gains during the pandemic.

Technology is a fast-paced and ever-changing thing, and restaurants that are slow to adopt these systems will generally be the ones to struggle. Quick-service restaurants that want to thrive into the future must one in on their customers’ needs and fully commit to staying abreast of the evolving needs of the industry. Creating individualized and engaging programs, based on up-to-the-minute digital offerings, that develop meaningful relationships with their customers is the clearest road ahead to success.

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