Part One: The history — and importance — of customer loyalty

Megacity, small city, town or edge-of-town, few of us can step out of our own front door these days and walk but a short few steps before encountering an artisan coffee shop, pop-up pie stall or concept cake outlet. It seems everyone’s offering us a piece of their pie; but whilst many of these new cafe staples can bring tears to the eyes of traditionalists, competition for your loyalty to our new foodie overlords is fierce. It’s also just one reason why customer loyalty strategies sit at the very epicentre of their business models: if they fail to get your repeat business, wave bye-bye to that free turmeric latte next time you’re passing.

4 out of 5 people are more likely to engage with a brand that offers incentives (Loyalty360)

For cafés, fast food drive-thrus and other quick service restaurants, repeat business is critical for long-term success: it costs a business between five and twenty-five times more to acquire a new customer than it does to sell to an existing one. What’s more, existing customers spend on average nearly 70% more than new customers. Key takeaway — customer loyalty matters — and well-planned, well-executed customer loyalty schemes will usually end up paying for themselves.

But hold your horses — it’s not as easy as printing a few stamp-cards and waiting for the stampede (no pun intended). It’s just that that loyalty is getting trickier and trickier to acquire the more crowded the sector becomes. Sure, a one-off donut purchase is great, but it’s hardly going to pave your drive-thru with gold, and nor is it going to have customers banging down your door for bags of the things for the next 20 years. No — it’s your devotees who sustain your business, and this fact of QSR life isn’t likely to be usurped any time in the future. Let’s tarry here for a second to emphasise:

• Loyal customers convert and spend more often with brands that they like than the ones they’re indifferent about (or of course, actively dislike).
• Loyal customers spend more than brand sluts (hey, don’t blame me — it’s a thing).
• Loyal customers tell anyone and everyone about positive — and especially negative — brand experiences …

So what does reward look like for these loyal followers? Frequent purchase stamps, booking priorities, a free (extra large for me please) bag of fries or a custom-built 4-storey pizza of your choice — these kinds of loyalty programs are good at getting us back through the door for more, but how hard are they really working for the brands that run them, and could they be doing better? Hell, yes! A lot better!
According to GartnerL2 research, 82% of US adults say they’re loyal to certain brands. That’s a lot of loyalty, but although many QSRs believe that their customers are salivating to buy into every loyalty program on the go, the fact is that only just over a quarter of us ever do — and another quarter of us don’t bother with loyalty programs at all. What’s more, only 27% of us think that the offers we get through these loyalty programs are actually relevant to us. In fact, these miserable figures are enough to make a brand think that loyalty probably isn’t that important anyway. Surely you’d be better off investing in other more profitable areas of your QSR business? Well maybe not …

A (very) brief history of loyalty …

Loyalty programs have come a long way since the Donny Osmond Fan Club’s purple lollipop giveaways to loyal fans circa 1974 (don’t ask me how I know). But if Donny doesn’t tick your boxes (what’s wrong with you?), what about Green Shield Stamps, Air Miles or the coupons on the top of cereal cartons and cookie boxes — all early(ish) examples of brands attempting to drive loyalty across their customer base, and all operating in an internet-less, mobile-void world. Today, the world around us is a different beast, driven by digital and a very new world order — though sadly minus Donny and his lollipops.

… and Loyalty in 2020

In my purse today, a Target, Walmart and Starbucks card selection, and a drawer full of others at home. I’ve also got over a dozen coupons to use at various malls, restaurants and leisure venues uptown, but I’m willing to bet I’ll never get round to using any of them. Traditional loyalty programs like these might sound good on paper ( does anyone use that these days?) but in reality, they’re just putting obstacles in our path. Forgot your card? Too bad — it’s full-price coffee for you today. Didn’t remember you have a $5 off coupon gathering cobwebs in your wallet? Sorry, love don’t live here anymore. Small wonder these programs do little for their creators. Sure, your customers might still be spending money with you, or maybe they got a better, more valuable deal elsewhere. But either way, how would you know what your customers are doing without the intel these programs are meant to gather?

91% of consumers suggest that omnichannel experiences are either important or critical, with 29% suggesting that companies should be where I want when I want, ready to share and communicate how I expect (CMO)

And yet, the well-planned, well-executed Loyalty programs work — for business, for customers and for the bottom line. The best of the bunch mix a robust understanding of customer behavior, a seamless brand experience across each touchpoint they’ll find you, and valuable, relevant rewards that give consumers a reason to stick with you. If you think loyalty’s for the marketing department with too much time on their hands, it might be time for a rethink:

You’ll find it easier — a lot easier — to retain and engage your customer base. Elements such as gamification through points and rewards will give your audience reasons to keep coming back to your app. It’s not all about the purchase — engaging your customers beyond a mere transaction is the name of the game.

You’ll save money, and likely a shed-load. As we’ve already pointed out, it costs a business far more to acquire new customers (five — twenty-five times more) than it does to sell to an existing one.

Over time, you’ll find you can stop competing on price — instead, this new playing field will see you enhancing the customer experience of your brand by connecting with them on far more meaningful, value-add terms.

You’ll enhance your CLV — or customer lifetime value. The data gleaned from your rewards program will mean that over time you’ll be able to calculate the CLV for each and every one of your customers and build out a business model which focuses on strategies to engage and retain them over the long-haul.

And you’ll inadvertently create brand advocates — OK, so maybe not inadvertently, but word-of-mouth is the key factor for between twenty and fifty percent of all purchasing decisions (Branderati), and 73% of millennials feel it’s their responsibility to help friends and family to make smarter purchasing decisions (the pressure!), you better be on that list of recommendations.

Convinced? You should be! Loyalty programs have moved on, now a crucial element of the successful QSR business model that’s delivering massive opportunities for growth and longevity in an increasingly crowded marketplace. The numbers speak for themselves — Starbucks rewards program has seen them add two million active users to the scheme in just twelve months; Chipotle’s loyalty program and accompanying app have seen the enterprise practically double its digital sales since launch, and Domino’s stratospheric leap up the app charts with it’s For the Love of Pizza loyalty campaign, has yet to be beaten. If you’re ready to bring the love to loyalty, check back next week to find out what mobile’s got to bring to the rewards party, and what your loyalty app needs to do to keep that love alive.

Part Two: Why mobile — and what makes a good rewards app

In the first section, we talked about the history of loyalty, and how you pretty much have to nail it in today’s rapidly evolving QSR sector if you’re planning on being around for the long-haul. Today, it’s all about loyalty on your mobile — our favourite! — and what a great rewards app looks like. If you’re in the QSR sector and looking to loyalty to drive customer retention, today might just be your lucky day …

What’s so great about mobile anyway?

Here’s an interesting fact: according to the Pew Research Centre, a huge 20% of Americans primarily use their smartphones instead of having internet access at home — and we’re not just surfing. We’re spending around two hours every day using apps — to play, to share, to email, to message and to shop. What’s more, we use our phones during every stage of the shopping process — from discovering what’s out there to sourcing reviews, to performing price comparisons to making the actual purchase. We don’t just do it in our armchairs either, we’re doing it in the store, or walking to work, or on the train, or before we turn the lights off for the night… in fact, all the time … See where we’re going with this? Yep — rewards programs matter and are a super-charged, highly effective way to attract and retain brand evangelists, what’s more, mobile is the single best vehicle for doing so. Bottom line? Including a mobile-first strategy in your plan for rewards domination is a no-brainer — unless you plan on not being around in 5 years time.

Unlike the loyalty drivers of yesteryear, mobile isn’t going anywhere. You’ve only got to look around you to know that wherever we’re headed on this spinning cybernated sphere that our mobile devices will be coming with us:

• The global mobile population amounts to around 4 billion unique users
• As of February 2019, mobile devices accounted for 48 per cent of web page views globally
• Around 2 billion people made purchases from a mobile device in 2019,
• With around 95% of consumers conducting research via their mobile device before completing an in-store or online checkout.
• About $1 in every $4 generated in e-commerce comes via mobile, with annual spending figure surpassing $35 billion.
• Searches for branded restaurant apps which enable reservations, tracking orders, and discounts have grown 120% YoY.

In 2018, we Americans spent 140% more time using food and drink apps than during the two years before. Why? Well for a start, there are simply more food and drink apps out there, but we’re also a demanding bunch. We want convenience (with bells and whistles, thanks) and the restaurants are listening.

Brands spend up to 11 times more on recruiting new customers than retaining existing ones (Brand Keys)

Being able to order ahead and being rewarded for our custom is a compelling proposition which we really really like. The apps that answer our convenience cries provide value, but they also provide a bridge between a brand’s physical presence and their digital one, which means that wherever we are, our favourite QSR brands can meet us right there. If you’re a QSR looking to drive repeat business and loyalty from your customers, it’s time to start steering the future of your brand in the winning direction: meaningful, momentous — and mobile.

What makes a QSR app a great QSR app?

For a loyalty program to find an enviable level of success, there are a number of factors that need to be considered. Customers are generally happier with a rewards app when there are few requirements as possible at their side to accrue and activate their rewards and when the whole app experience is as quick as possible. These are non-negotiable standard elements of any app worth its salt. No one wants to be spending more time than they need to glean what they need from your app — gaming being the only exception. QSRs need to aim for a level of personalization that feels niche, not mass.

• Personalization that feels genuinely personal, relevant and which feels unique to the customer.

Personalization is one of the most persuasive tools in a successful reward app — both for you and for your customers. For you, the enormous potential of reams of customer data around their preferences and behaviors means you have the golden ticket that allows you to tailor your brand experience to each of your customers — you’re happy, your customers are happy, and you’ll also have the intel to hand that allows you to innovate with new products and services that you know your audience is looking for.

• The ability for customers to accept or reject offers

Again, it’s an intel thing. Providing your customers with a selection of rewards which they can either accept or reject, you learn what type of offers your customers prefer and those which they’ll actually use. Over time, you can fine-tune your offers, and your customers get more of what they like. That means there’s a higher chance of them using their rewards, powering brand loyalty and ensuring that stickiness the clever rewards programs are known for.

• Providing personal recommendations based on a customer’s purchase history

Not everything in life has to be free — sometimes a personalised recommendation goes a long way to building brand loyalty too. Got a new product that big data has told you will be a sure-fire hit with some customers? Pushing these recommendations via your rewards app will help drive sales — with money off the next purchase if your audience is willing to provide a review of said product (you’re welcome).

• Being notified when new products or services are launched

Akin to the personal recommendations above, the ability to notify customers when you launch new products or services can be a great way to engage your audience base via your loyalty app. These notifications need to be relevant — as a vegetarian, I probably don’t want to be notified when you’ve put that new Big Bison Burger on the menu.

• The ability to view detailed information on products

This one seems a bit ‘meh’ — but bear with me. In a world where suddenly everyone’s taking a vested interest in what goes into the food that they eat, its provenance, production, environmental and sustainability credentials, you bet I want to know what’s in that dairy-free cream bun, and if I’m helping or hindering the planet by eating it. Not critical, but hey, we’re talking loyalty here and my loyalties are to cleaner, greener, transparent businesses that are vocal about their social responsibility. It may not be big now, but who wants to be a follower when you lead by example?

• Redeem rewards on relevant products and services — that is, personalized!

Your loyalty app should allow customers to redeem their rewards via the app — on products and services that are relevant to that customer. There’s little point at all in amassing a shed load of rewards on coffee that as a tea-drinker I’ll never purchase, or services that I’ll never use (like that discounted delivery service that feels rather pointless when I can walk to your outlet in less than 60 seconds).

• The ability to order products and/or services via the app

… and the functionality to receive updates about order status. QSRs by their very nature are fast when it comes to service. But today’s consumer wants everything yesterday and waiting in a queue for more than 60 seconds can cause symptoms ranging from mild irritation to murderous rage (I speak from experience). As such, it makes sense for your loyalty app to provide the twitchy customer with the ability to order in advance and collect when turning up. You win for being an easy brand experience, and your customer wins for avoiding an uncomfortable restaurant rage incident.

• Make it easy to settle the check

Ordering to collect, then having to wait ten minutes to pay while your staff struggle with the lunchtime rush makes absolutely no sense at all. Not only will the customer lose all sense of that warm, fuzzy jump-the- queue joy they experienced by being able to click-and-collect, you’ll also risk losing their custom to the outlet that bothered to make the whole purchase experience a seamless, irritation-free ride.

• Location-based offers

Make sure that rewards are relevant. Giving your customers a choice of how to engage with you, whether it’s via mobile, social or another platform, increases the likelihood of engagement.

The results are in … as more QSR brands embrace loyalty, the customer experience improves. And as the technologies that power our digital lives continue to advance, allowing brands to connect with customers in truly value-add, meaningful ways, mobile will undoubtedly be a core driver of this new customer-centric approach to growth. Already, the big QSR brands are making bigger waves across their customer base with their rewards apps — growing revenues, driving loyalty and laying the foundations of a truly mobile future. Who’s blowing the competition out of the water, doing rewards right, and strengthening their position in an increasingly crowded space? Check back next week to find out!

Part Three: Who’s smashing it

Loyalty and rewards apps are about so much more than user acquisition; what’s the point in 50,000 downloads if no one’s using it? (Clue: none whatsoever). So, while it’s very tempting to focus on acquisition when it comes to your loyalty app, engagement and retention will be the drivers of success — they’re also why the behemoths of the QSR sector are doing so well. Don’t believe us? After downloading an app, just over 30% of users will return to it, and 25% will abandon it just after one use. So, who’s smashing it when it comes to loyalty apps — which brands have nailed engagement, focused on personalizing their customer’s experiences, and now reaping tangible rewards for themselves in the process?

Chipotle

Chipotle was always ahead of the game when it comes to digital, launching their brand app in 2009 thru which customers could place their order rather than having to turn up at one of their near 2,500 restaurants. If you think back to 2009–3G, no Facebook Messenger, and a one-year-old App Store — this was pretty radical, and certainly way ahead of many of its competitors. It’s now nearly 12 months since

The Chipotle Loyalty App

Chipotle rolled out its much-lauded loyalty program (March 2019), and already they’re pick of the pops in the rewards stakes (no pun intended). Why? QSR’s loyalty program and accompanying app have seen the enterprise almost double its digital sales since launch, no doubt driven by the 7 million loyalty program signups since it was implemented. Result. What’s so great about the app? Let us count the ways:

• Personalization: the burrito you like, where you like it, based on purchase history
• Fast — allows quick ordering /reordering
• Easy to pay with Apple and Android Pay functionality
• Super-easy to redeem rewards and offers

The company have also implemented “Chipotlanes,” where customers can pick up app-ordered food without having to get out of the car (perish the thought!).

Dominos

Top US pizza progressives Domino’s launched their first app in 2011, and in the (almost) ten years since, we’ve seen their stock price jump nearly 1000%. All things considered (we won’t bore you with the balance sheet) that’s almost $7.8 billion in value creation since bringing their products to your smartphone. As if that wasn’t enough, last year the enterprise eatery had an ingenious loyalty idea, one that should have tanked, but instead propelled it to legendary status for its sheer boldness.

During the 2019 Super Bowl, the company turned its own loyalty program on its head by launching the now-infamous “For the Love of Pizza” campaign — and rewarding its customers for eating any pizza. That’s right. Your mama’s, Pizza Hut’s, Papa John’s, even my pathetic midnight attempts at a margarita (base, ketchup and a handful of grated cheese — hey, at least I try). These pizza purveyors then had to upload a photo of said delicacy, when they would collect points that could be redeemed against a (much nicer looking) Domino’s pizza. This off-center idea paid off — on Super Bowl Sunday, the app moved up a whopping 158 ranks on the previous week.

Domino’s loyalty app

Post Super Bowl, Domino’s app continues to drive downloads and customer engagement offering:

• Order tracking with Pizza Tracker — tells users where their pizza is in the delivery process.
• Customization — customers can create their own pizza, however they want it.
• Rewards — One of the most generous rewards programs, free pizzas are pretty easy to come by — and not the one-freebie-a-year so prevalent across the industry.
• Our favorite, Dom, the in-app equivalent of Alexa, means customers can order the way they would in an outlet — by talking.
• Easy ordering based on purchase history.

It’s worth noting that Domino’s success has digital transformation written all over it — no technology is an island, and they’ve been busy not just with their loyalty scheme but with a whole host of digital initiatives that are paying dividends: voice-based tech and self-driving delivery vehicles being our favorites. Key takeaway? Meet your audience where they are and the rest will take care of itself.

Globally, consumers sourced food & drinks through apps 130% more often in 2018 than 2016 (App Annie)

Starbucks

A piece on QSR loyalty apps wouldn’t be complete without Starbucks. Try as we might, we can’t get away from the fact that the coffee behemoth smashes it on every level when it comes to their rewards program — and the results speak for themselves: 48% of smartphone users who regularly use QSR rewards apps use Starbucks Rewards.

Starbucks Rewards App

Last year, Starbucks reported an increase of $2.65 billion in revenues, attributing most of that success to their rewards program. Not convinced? Over the last two years, Starbucks Rewards membership has grown more than 25%; 16 million loyal customers are in the Starbucks’ membership program which now accounts for around 40% of sales at their US outlets. Someone, somewhere is doing something right … CEO Kevin Johnson is clear about the reasons for this monumental success: “… a more seamless customer onboarding experience, greater mobile order-and-pay adoption, and enhanced personalization features”. Let’s take a look at what makes this the holy grail of QSR rewards apps:

A personalized brand experience — The epitome of a personalized mobile experience, the Starbucks Rewards app has it all — from telling users what’s “Now Playing” in the Starbucks store they’re in, to where their nearest outlet is to recalling a favorite order, this is all about the customer, just as it should be …

• Mobile Order-and-Pay — the ability to order your coffee ahead and skip the queue when you get there to collect is one of the most popular app functions; the app also provides quick access to the Starbucks Card, moving customers through the queue even faster and without them ever having to reach for their wallet. Seamless customer experience? Check!
• Speaking of ordering, the mobile ordering platform doubles as a smart digital marketing tool, enabling customers to see new products before they’re launched.
• The gamification of rewards — Customers win stars each time they pay with their app, as well as giving members “challenges” which can earn additional stars to use towards free food and drinks. App engagement? Check!
• A geo-location feature means customers can find out where their nearest Starbucks locations are, the menu available at each location, and of course, the ability to order ahead so you can pick up when you get there. Helpful? Check!
• Starbucks card management — customers can check their Starbucks card to find out their balance, transfer money between cards, top-up their balance, pay for food and drink at Starbucks outlets, see payments history, collect stars for rewards, and even leave tips (our favorite). A flawless brand experience? Check!

Challengers

Of course, the big brands are the ones which make the biggest noise- but we’d be wrong if we think that big means better. Challenger brands too have been busy when it comes to loyalty. If anything, they perhaps understand more the importance of putting their customers first, grokking the necessity of relationship over retention and driving meaningful connection across an increasingly remote digital space. The result? Why, loyalty of course! And here’s our pick of the bunch …

Second Cup

The Second Cup Coffee Co. — now in the process of transitioning to new name “Aegis Brands” — is the largest specialty coffee retailer in Canada with over 240 outlets and a very loyal fanbase. Providing Canada’s coffee-loving contingent with over one million drinks every week, from over seven thousand pounds of fair-trade coffee every day, this challenger brand knows how to keep its fanbase happy. Launching their loyalty app in 2015, Second Cup customers today enjoy a loyalty app that offers points for beverages, tailored product offerings; order-ahead and mobile payments functionality and the nice gamification of rewards acquisition. You can read all about it right here.

Second Cup Loyalty appMenchies

Our next pick of the challengers is Menchies, fro-yo superstars that are no strangers to innovation when it comes to looking after customers. Today, their highly successful mySmileage loyalty program continues to smash expectations, boosting customer count, driving new revenue streams and rightly earning their place on the loyalty leader board of the challengers. The figures speak for themselves; over 13 million mySmileage members, a whopping 17% average ticket lift and a 50% increase in customer frequency, driven by the smart rewards features in the mySmileage app. ‘Smiles’ points collection, a $5.00 birthday credit; personalized offers and discounts; a Menchie’s payment account, store locator and e-Gift cards — you can learn more about Menchies mySmileage app here.

Menchies Smileage loyalty appPizza Pizza

In 2013 Pizza Pizza launched their Club-11–11 loyalty program, the first ever app for ordering pizza in Canada — result! Since then, their loyalty program has gone from strength to strength, powering impressive results across transactions, digital sales and repeat visits over any other touchpoint.

The Pizza Pizza rewards app

Value-add features such as order ahead and order tracking, outlet location, payments functionality, weekly deals and gamification of the ordering process (users can opt to play a game on closure of an order and can win a free item with their next one) keep Pizza Pizza customers engaged and coming back for more.

Big brands or challengers, QSRs are leveraging mobile strategically to both reach and engage their customers through their smartphones — the devices that never leave the side of these customers. That’s one of the reasons that in 2018 we spent 140% more time in food and drink apps than in the two years prior. But access to, and growth of, mobile technology doesn’t a great rewards app make — this particular ecosystem is about simplicity, efficiency and the myriad on-the-move benefits that put ME at the center of the brand experience. A brand experience that must be relevant, personalized and bridge the (increasingly diminishing) gaps between the real and digital worlds.

87% of companies are primarily using Loyalty data to optimize member experience, 60% for measurement and forecasting, and 48% for marketing (LoyaltyOne)

The best loyalty programs and apps which manage to successfully create these bridges must provide customers with value — such as the super-convenient pay-and-collect facility, the gamification of relevant, niche rewards, or the personalization of the purchase experience. It’s that satisfying, seamless, engaging customer experience that meets all of the demands of a new digital audience — and the digital brands that are ready to embrace it. And it’s not all about the customer (I know, sacrilege!) For brands ready to take on the mobile marketplace, the rewards are there too. The big data gleaned from doing business in the loyalty app space means the ability to create personalized digital marketing campaigns that can both reduce spend and increase ROI. Sounds like a win-win to us …

Final Thoughts

After discussing the need for consumer loyalty, the importance of mobile and the brands that are really dominating the market. The themes remain the same through-out. Users need to be engaged in order to increase retention rates and create brand loyalty. Brands need to create personalized user experiences to connect with their audience, you can learn more about the tools you need to create mobile engagement and retain your app users here.