Industry News | November 22, 2016 | QSR Exclusive Brief

A Digital Renaissance of Loyalty Programs

Togo's new rewards program has been a hit so far. Togo’s Eateries

Is the punch card headed the way of the floppy disk?

Even as recent as 2015, Togo’s Eateries, a 250-unit sandwich chain that originated in 1971, was handing out those familiar pieces of wallet-friendly stationary.

You’ve seen them before: A customer gives a card to the cashier, who punches it each visit until a free item is earned. In Togo’s case, buy 10 sandwiches and the 11th is free. And so the process rewinds.

Leslie Lopez, Togo’s senior brand manager, says quick service is experiencing a digital renaissance on this front. In addition to the antiquated nature of handing somebody a physical card to stash away, having such a limited system misses the real point of a rewards program. In Togo’s case, given that the brand has been around so long, and enjoys a deep, fervent base, gathering consumer information is as important as inspiring loyalty. The two don’t have to be separated, either.

By the end of 2015, around 60 locations switched over to Togo’s new digital Paytronix-powered program. In early 2016, the platform became a requirement for all franchisees throughout the system. Then, on November 1, Togo’s flipped the switch to Paytronix’s gift cards, completing the overhaul. This combined platform allows customers to convert gift cards directly into loyalty programs, thus streamlining the entire experience.

With digital tools in place, Togo’s now asks rewards members to register. Lopez says they have around 50,000 members they can contact, email, and, in some cases, push notifications directly to their mobile devices. In addition, Togo’s has the ability to crunch basic information and track vitals across their units.

“Our Rewards program provides some very robust data,” Lopez says. “We know basic stats like age, visits, and spend. But we can also do a deeper dive to segment guests and measure how they’re responding to campaigns and offers. We can also see what types of delivery messages are getting greater action—from geo-fencing to standard email and/or mobile push notifications.”

Of course, there needs to be an incentive. Togo’s attracts guests through a point-based system. For every dollar spent, they get a point. When a customer hits 50 points, they earn a $5 reward. Also, there’s a 25-point bonus for signing up.

Even though it’s still early, Lopez says the brand has been thrilled with the response.

“Many restaurants have programs where they don’t require registration,” she says. “And they might have 300,000 members but if the members have not registered you cannot track and understand their behavior or reach out through messaging. Truly, the value I see in our program is that we have a two-way communication with our most engaged guests.”

Togo’s also has an email club with more than 150,000 members. Lopez says the goal is to get as many as those customers as possible to take the next step.

The value of the rewards program in undeniable, she adds. Lopez says members spend around 20 percent more per check, on average, than typical guests. They also visit a Togo’s once more every two months. The company hopes to boost that to three visits a month.

The rewards program allows Togo’s to drive traffic in spurts as well. For example, the restaurant runs a double-points promotion every month. Lopez says they see nearly a 50 percent increase in spend and transactions those days.

Getting the word out has been a key part of the challenge. Togo’s promotes the program on its menu board and hands out flyers to guests. But most importantly, Lopez says, Togo’s makes sure each unit has employees embracing and pushing the message.

“The most critical piece of the success is making sure the crew buys into the loyalty program,” she says. “It is so critical that the cashiers are engaging with guests, asking them if they’re members of the program, and asking them if they’ve checked in. Because that is what generates excitement and keeps them engaged.”

Togo’s also offers a free birthday sandwich to members, which Lopez says is a big driver.

Around 10 to 15 percent of Togo’s checks come through members. Lopez says they expect to see that number jump in 2017, just like it did with trailblazers Panera and Starbucks once their programs gained traction.

Keeping the communication personal is important, she says. Togo’s can direct messages to members, notifying them, for example, if a specific reward is about to expire.

“We have found that on average the rewards members open their emails from us about 40 to 50 percent more than our email club members because the content we are sending them is more relevant to them,” Lopez says.

But the end goal remains to attract those mid-level members and grow Togo’s base.

“We want people to pick Togo’s over other restaurants out there,” she says. “It’s heavily competitive right now, especially in the lunch category, and we want to make sure our loyal guests have a reason to pick us over our competitors.”

By Danny Klein

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