Loyalty 3.0: How Restaurants Can Operationalize Rewards Programs
McDonald’s is dominating the industry with a loyalty program that sits within a finely tuned tech stack.
Haven’t acquired your own AI tech company recently? Here’s how any restaurant or QSR can take their loyalty programs to the next level of efficiency.
For the past year, McDonald’s has out-paced quick service restaurant (QSR) competitors in US app market share. They're expected to grow substantially this quarter thanks to the recent launch of their first-ever loyalty program.
This growth shows the significance of “digital” moving beyond messaging to a more operations-based focus on-premise dining, drive-thru, and delivery experiences.
Loyalty programs like MyMcDonald’s Rewards, which are a part of the company's larger MyMcDonald’s platform, sit at the heart of restaurant success precisely because they’re fully integrated with digital payments, actionable customer data, and faster pickup options.
Not to mention, it’s easier to redeem rewards across a myriad of channels that have nothing to do with mobile, from digital drive-thru menu boards to in-store kiosks.
Loyalty 3.0: Operationalized & Omnichannel
Welcome to the new world of operationalized omnichannel loyalty (we call it Loyalty 3.0) that is now emerging in the restaurant industry. With Loyalty 3.0, rewards programs sit in a larger suite of a restaurant’s technology, all aiming to improve the speed of service just as much as (if not more than) messaging exclusive deals or increasing visits.
Customers have evolved their redemption goals and expect to be rewarded - quickly.
While McDonald’s may have been brilliantly moving toward their 3.0 version of loyalty for years by acquiring AI and voice-recognition technology companies, smaller restaurants with far fewer resources can maintain a competitive edge with smarter tools of their own.
Setting the Table
We’ve seen how the pandemic in 2020 has influenced customer expectations in 2021. Endless lines at the drive-thru, curbside chaos, “contactless” everything, and only the smallest window for servers to interact directly with customers (albeit with masks). Restaurants saw their only branding efforts reduced to digital engagement, which skyrocketed for better...and sometimes for worse.
With easing COVID-19 restrictions, customers want convenience and personalized digital engagement that is consistent with on-premise service.
In fact, they expect digital to complement their on-premise service as they return to indoor dining.
Where Loyalty Fits
All loyalty programs have a similar template. Reward customers for making purchases with discounts and freebies. A loyalty program may incentivize a first-time purchase or a new product. 19% of consumers say that loyalty programs are enough for them to try a new QSR.
More commonly, businesses use their programs to increase repeat business. One Harvard study said that businesses can boost profits between 25 and 95% by increasing repeat customer numbers by as little as 5%.
Not only do restaurants get repeat customers, they learn a little about the customer each time they visit. This helps them to provide better experiences and modify the menu accordingly.
With more data, businesses can provide repeat customers with personalized offers, and ideally, a highly personalized omnichannel, VIP experience. According to Bond’s 2021 Loyalty Report, 3 out of 5 loyalty members do prefer enhanced tiers, but doing so requires the right data.
Regardless of the reward or tier, the general rule of loyalty is to build more data in a robust CRM. This translates to better customer service, and better service means more revenue from happy customers. Win-win!
The same is true for mobile apps that make it easier for customers to order ahead, track their orders, and track their loyalty points. In fact, nearly half of customers download restaurant apps to earn and track loyalty points.
What’s more, is that 46% say that earning loyalty points is what keeps them using these apps. In return, businesses use their apps to gain the insights needed to serve personalized, consistent brand experiences for customers.
Despite the recent demand for digital ordering and the many loyalty programs available, only 47% of all restaurant customers are using at least one restaurant’s loyalty program.
Of those customers who have used at least one restaurant’s loyalty program age demographics break down to:
- 63% are millennial and bridge millennials
- 52% of Generation X
- 52% of Generation Z
- 30% of Baby Boomers
Baby Boomers’ low loyalty usage is due to difficulty in using the restaurant's website and app. They are 8.1X more likely to use a loyalty program if its website makes it easy to participate, and 6.1X more likely if the program’s mobile app is easy to participate in. Why bother with something that isn’t worth the hassle?
Simply knowing the program exists is another key roadblock for busy people. 56% of married couples and 55% of married parents do not use table-service restaurant loyalty programs because they do not believe that they are available.
This is why loyalty programs must be operationalized to survive. Digital menu boards, QR codes, and on-premise kiosks can work only when activated. Expecting customers to pull out their rewards cards, fumble with their phones, or wait in line to speak to a server increases order time significantly.
Instant customer arrival detection is a critical tool in making this process frictionless. When a customer arrives on-premise - whether t's in-store, at the drive-thru or curbside - the restaurant immediately detects who they are and awards loyalty points as they order or pick up their meal.
Expensive solutions include facial or voice recognition, license plate number scans, or beacons. Each solution has its own problems associated with them in addition to being difficult to scale.
This is where geofencing and Bluedot’s customer arrival suite can help both small-to-large-sized businesses. An easy implementation reduces dependency on dev resources or lengthy roadmaps. While being beacon-free gives restaurants the ability to scale globally without investing in expensive hardware.
Immediate Detection, Instant Engagement
With location software, precise geofences can immediately detect when a customer has arrived and pair it with their loyalty and order information. Geofences are triggered by the customer’s mobile app which doesn’t need to even be out to work.
For instances where a customer does not have the restaurant’s app downloaded, using Bluedot’s Now Ready enhancement, customers can simply visit the restaurant's website and let them know that they’re on their way with a single click.
Both geofencing and Now Ready connect directly with Bluedot’s Hello Screens, an intuitive in-store dashboard that notifies staff when a customer is en route, their estimated time of arrival (ETA), and the moment they arrive.
With the customer and location identified, the restaurant can now greet them by name with their loyalty points automatically updated. Or, customers can receive personalized greetings via in-store kiosks or digital menu boards just by walking or driving up.
The Future of Loyalty is Bright...and Available Today
Customers deserve faster, more personalized, consistent service with great rewards no matter how they order or receive their meals. With the right technology, restaurants are poised to deliver this level of service without having to build a complex tech stack.