Are we past the days when a single-customer strategy could sustain a quick-service restaurant brand? As Steve Bagdasarian, the GM of Publishers Clearing House’s Media division puts it, “[Quick-serves] are in a constant battle for customer acquisition and retention.”
It’s a vicious cycle, he adds. Because, unlike other industries, as soon as one restaurant stops offering an incentive, another is ready to fill its place.
“[Quick-serves] need to focus their efforts on attracting new customers and then making it more attractive for them to stay than to try out the competition,” Bagdasarian said in a release.
PCH unveiled a new study January 16 on customer behavior as it relates to dining at quick-service establishments. It dove into how customer behavior is heavily influenced by how restaurants implement incentive-based programs to reward guests. It came away with this key point: Customer loyalty often extends only as far as the next incentive or reward.
That notion—that brand loyalty is fleeting for millennials and Gen Z, if it exists at all—has been an undercurrent for some time in the industry. The response from many restaurants has been to leverage technology, apps, and loyalty programs in particular, to keep guests engaged and to offer a vehicle for brands to deliver continuous promotions and value to customers. And to pulse these promotions where today’s consumer lives—in the mobile and handheld arena.
Before exploring some of the finer points, PCH’s overarching results showed that loyalty simply couldn't be taken for granted anymore. Data proved that customers were willing to try new brands when they received a compelling offer, making it a constant game of one-upmanship among quick-serves to bring the most attractive incentives to market. The ability to attract and retain customers has become as much about providing the right level and type of incentive as it is delivering a quality product, PCH said.
For this study, more than 2,600 members of PCH’s online community were surveyed.
PCH’s research showed the receiving coupons and savings was the No. 1 driver for both women (50 percent) and men (45 percent) to use an app. Loyalty rewards was next with a nearly identical mark of 30 percent of both men and women. Contests and sweepstakes, and the ability to pay through the app ranked third and fourth, respectively.
“This tells us that if [quick-serves] make it easy for their customers and incentivize them along the way, they are more likely to retain them as loyal customers,” the report said.
Features desired in favorite restaurant’s app
Ability to pay
Contest and sweepstakes
Coupons and savings
Loyalty and rewards
Counting the incentives
The study notes that the incentive of a coupon remains the leading driver for consumers to try new restaurants. Fifty percent of women and 44 percent of men indicated that they would be willing to eat someplace new if a financial reward was offered.
Proving the power of loyalty programs, 19 percent of men and women said a loyalty program would be an incentive for them to try a new restaurant. Contests ranked third with 11 percent of women and 15 percent of men. “These findings confirm that savings, incentives and the ability to win are the clear drivers in attracting new customers,” the study said.
Promotions and TV ads finished well back in fourth and fifth, respectively. Simply: incentives and rewards hold more weight than advertisements.
Drivers of trying a new restaurant
Is consumer loyalty really dead?
There’s no easy answer. PCH’s data showed that consumers have a willingness to be loyal, but they need to incentivized for that loyalty to stick. Coupons and saving, loyalty options, and the ability to participate in and win contests keep consumers coming back. “That is also why the competition is employing these tactics liberally to lure customers away,” PCH said.
Essentially, guests have brand preference if conditions are meant, but are not shy about trying other quick-service options.
Here’s a look at McDonald’s as one example.
McDonald’s eaters other quick-service choices
Let’s look at Domino’s, and where its loyal customers are willing to go.
Who’s eating where, and when, and how often
PCH’s data said nearly half of men surveyed (49 percent) eat at a quick-serve at least one per week. Almost 20 percent go several times a week and slightly more than 5 percent said it’s a daily occurrence.
About 25 percent of men and women said they eat at a quick-serve less than once per month. “These are big numbers and represent a substantial revenue stream. Creating programs that appeal to this audience and incentivize them to increase their frequency of visits is the next big thing for [quick-service] marketing. Whoever gets there first will have a significant advantage,” PCH said.
How often do you eat at a quick-serve?
Several times a week
Once a week
Couple of times each month
Less than once a month
Summing things up
With all of these data points at stake, it comes down to a two-part equation, PCH explained. How to capture a greater percentage of market share while keeping customers loyal to the brand.
To achieve that goal, quick-serves are investing heavily in programs such as incentives, apps, loyalty programs, and more to attract news customers and make sure they keep returning. That battle is only getting more competitive, and it’s extending well beyond the dining experience. Customers want a commitment from the chain (incentives, deals, contests) in return for their business.
“Today’s model of frequent touch points and direct access with customers, and having a good product is only half the battle. You also need to be providing the incentives consumers are hungry for,” PCH said.
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