You have invested time, resources, and money into your loyalty program. But is it working? If your answer is “yes” to one or more of the following questions, chances are it’s not.
1. Has your program failed to gain at least a 20 percent participation rate after year one?
This could mean your program is too burdensome for staff and customers. If it’s difficult to enroll, requiring an app download or too much personal information, chances are guests will simply opt out. Even when you eliminate those barriers to enrollment and adoption, you still need to create a compelling program that excites customers enough to be willing to exchange their data for the perks of engagement. If your loyalty program isn’t capturing enough data to personalize offers and interactions based on your guests’ preferences, your program risks becoming irrelevant to today’s consumers who have become accustomed to hyper-personalized messaging.
2. Are you regularly discounting and sending out generic coupons to drive frequency?
Brands of all sizes are waking up to the fact that discounts can be detrimental. They are expensive to the bottom line, eroding profit margins as well as brand equity. They often fail to build true brand loyalty because they can attract discount seekers and train customers to just wait for the next coupon. If your brand is unable to diversify rewards options by including non-discount rewards such as hidden menu items, swag, or experiential perks like events—it may be time to make a change to your program.
3. Do you have more orders coming through third-party delivery than first-party delivery?
Third party marketplaces are more foe than friend. When a customer orders through 3PD rather than direct, your restaurant loses a significant portion of that revenue in addition to valuable customer data. While 3PD can be useful for customer acquisition, restaurants need to focus on retaining those customers and diverting them to owned channels to drive customer lifetime value in the long run. Loyalty programs are a primary defense against the threat of 3PD. Bespoke perks incentivize customers to order directly to earn progress towards exciting rewards.
4. Does your mobile app have fewer than 4.8 stars?
An easy to use app and online ordering experience is not to be overlooked. 3PD apps hook customers by making it easy to order from a variety of restaurants. Similarly, your app and native online ordering experience needs to get your customers’ orders placed in as few clicks (or taps) as possible. And if that online ordering flow is integrated with your loyalty program, your customer can engage with your program just as easily, giving consumers a real reason to order more and order directly. When your app UX is hard to navigate, off-brand, and doesn’t clearly give customers a reason to use it—your app rating will suffer, as will your bottom line when customers choose to use 3PD or competitors’ apps instead for a better experience.
5. Are you unable to effectively A/B test your loyalty communications?
Why offer a $5 off sign-up reward when $3 works just as well? And why offer $3 off when early access to a seasonal LTO works even better? These are the types of questions you can answer when you start to take a data-driven approach to evolving your loyalty program. There is value in testing subject lines and email content, and your loyalty platform should make it effortless to do just that. Some loyalty platforms allow marketers to take A/B testing a step further by measuring the efficacy of discounts vs non discount rewards, which can equate to measurable success in program savings for budget-conscious marketers.
If any or all of these factors apply, restaurants should feel real urgency to make a change. Loyalty programs have been one of the most important indicators of restaurant resilience both throughout COVID and now in the face of recent stressors like labor shortages, supply chain issues, and inflation. While making big changes to your techstack feels like a Herculean effort—changing your loyalty program does not have to be. Whether you have decided to change programs or you are starting an evaluation of new loyalty platforms, it’s important to keep in mind that not all loyalty program transitions are created equal.
Here are five important questions operators should ask when considering a loyalty transition.
1. What’s going to happen to customers using a previous app?
Today, it’s hard enough to get customers to download your app to begin with. “App fatigue” is real. Many customers do not want to add yet another app to their phone. If you’ve already overcome that hurdle, the thought of asking customers to re-download a new app might be a deal breaker. Ensure that with the loyalty provider you are considering, customers do not have to re-download an app to enjoy the new experience. Requiring the creation of a new password can also create friction for existing members. Vendors leveraging “passwordless login” technology eliminate that friction.
2. What’s going to happen with outstanding loyalty rewards and customer progress?
Transitions can be just as hard for customers as it is for restaurant brands to implement. But it doesn’t have to be. On the customer side, accrued rewards and progress should be seamlessly transitioned into the new program. On the operator side, the new loyalty vendor should handle the import of 100% of pre-existing customer data. If the loyalty partner you are considering is recommending that your brand start from scratch, that should raise a red flag.
3. What will the new experience be like when enrolling or earning progress for customers?
Loyalty programs are all show, no go if customers aren’t enrolling or engaging. The inherent value of loyalty programs for restaurant brands is their ability to capture and activate data at scale. To get that data, your new program should offer capabilities like automatic enrollment on digital orders and credit card linked loyalty technology to facilitate effortless engagement for the customer. In short, it should be as easy as possible for customers to partake in the new program otherwise you are back to square one.
4. How quickly will I be able to launch?
The only thing worse than not having guests engage with your new program is not getting that new program off the ground to begin with. Restaurant technology is notorious for being slow to launch with arduous onboarding and implementation processes. Ask loyalty vendors their shortest and longest launch periods, effects of your current tech stack on that timeline, and push for specific examples as well as primary delay drivers. Months if not years to launch a new program is time lost capturing data and driving the revenue you need from your loyalty program. Look to vendors who quote you weeks, not months.
5. What type of account support will be provided before, during, and after launch?
Waiting days for your account rep to get back to you is also time and money lost. Your providers account team should set your brand up for success with a detailed launch strategy, comprehensive training for you and your staff, and a commitment to responsiveness for even the smallest of tasks. Ask potential loyalty partners for average response times from support staff and if they offer any self-service capabilities within the dashboard. Loyalty vendors with features like live chat within the dashboard can give marketers a real edge when it comes to agility. Your time is your most valuable asset, so a loyalty vendor that gives time back to marketing teams – by offering end-user support for customer ticket items like login issues or rewards redemption questions – is a real difference maker.
A robust loyalty engine can ensure a successful transition, and the right company can help you measure success and how to prepare for an easy transition.
Emily Rugaber is the VP of marketing at Thanx. Emily has spent her entire career in the tech industry working across a variety of industries, consulting with large companies including Target, Nestle, Virgin America and SAP on business intelligence projects aimed and mining data for actionable insights As the VP of marketing at Thanx, Emily leads with a deep knowledge and understanding of loyalty trends, innovations, and best practices for enterprise restaurant brands. Emily is the author of Thanx’s Loyalty Disrupt newsletter.