Loyalty 3.0: How Restaurant Loyalty Programs Can Operationalize Rewards
McDonald’s is dominating the industry with a loyalty program built on a finely tuned tech stack. Even if you haven't acquired your own AI tech company recently, any restaurant can take its loyalty program to the next level.
In recent years, McDonald’s has outpaced quick service restaurant (QSR) competitors in US app market share. This growth is driven by the restaurant's loyalty program, MyMcDonald’s Rewards.
The program's success shows the significance of moving to a more operations-based focus, putting in-person dining, drive-thru, and delivery experiences at the center of restaurant loyalty software.
Programs like MyMcDonald’s Rewards are successful precisely because they’re fully integrated with digital payments, actionable customer data, and faster pickup options.
Loyalty 3.0: Omni-channel Restaurant Rewards Programs
Welcome to the new world of operationalized omni-channel loyalty programs (we call it Loyalty 3.0) that is emerging in the restaurant industry. With Loyalty 3.0, rewards programs sit in a larger suite of a restaurant’s technology, aiming to improve the speed of service, share exclusive deals, and increase visits.
Customers have evolved their redemption goals and expect to be rewarded - quickly.
While McDonald’s has been brilliantly moving toward their 3.0 version of loyalty for years by acquiring AI and voice-recognition technology companies, smaller restaurants with fewer resources can still maintain a competitive edge with smarter tools of their own.
Setting the Table
We saw how the pandemic influenced customer expectations. Endless lines at the drive-thru, curbside chaos, “contactless” everything, and only the smallest window for servers to interact directly with customers.
Restaurants saw their branding efforts reduced to digital engagement.
Now, customers expect convenience and personalized digital engagement that is consistent with on-premise service.
Where Restaurant Rewards Programs Fit
All customer loyalty programs have a similar template: Reward customers for making purchases with discounts and freebies. A loyalty program may also incentivize a first-time purchase or a new product.
More commonly, businesses use their programs to increase repeat business and drive customer engagement. One Harvard study found that businesses can boost profits between 25 and 95% by increasing repeat customer numbers by just 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 experience.
Regardless of the reward or tier, the general rule of customer 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 restaurant loyalty apps that make it easier for customers to order ahead, track their orders, and track their points. In fact, nearly half of customers download restaurant apps to earn and track loyalty points.
What’s more, 46% say that earning loyalty rewards 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.
Roadblocks for Restaurant Loyalty Apps
Despite the recent demand for digital ordering and the many customer loyalty programs available, only 47% of restaurant customers are using at least one restaurant’s loyalty program.
Of those customers who have used at least one restaurant loyalty program, age demographics break down to:
- 63% of 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. Why bother with something that isn’t worth the hassle?
Restaurant loyalty programs must be operationalized to survive. Digital menu boards, QR codes, and on-premise kiosks can work only when convenient and easy to use. 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.
Making the process frictionless starts with instant customer arrival detection. When a customer arrives on-premise, 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.
Some solutions include facial or voice recognition, license plate number scans, or beacons. Each option has its own problems, including being expensive and difficult to scale.
This is where geofencing and Bluedot’s customer arrival suite can help businesses of any size. An easy implementation reduces dependency on dev resources or lengthy roadmaps. Using beacon-free, software-only technology also 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 loyalty app, whether it is active or running in the background.
For customers who do not have the restaurant’s app downloaded, using Bluedot’s Now Ready allows customers to simply visit a custom link and notify the restaurant about their status.
Both geofencing and Now Ready connect directly with Bluedot’s Hello Screens, which are intuitive in-store dashboards that notify staff when a customer is en route, their ETA, and the moment they arrive.
With the customer and location identified, the restaurant is ready to greet them by name with their loyalty points automatically updated. Alternatively, customers can receive personalized greetings via in-store kiosks or digital menu boards just by walking or driving up. Either way, the customer gets to earn points and the restaurant gets some repeat business.
The Future of Loyalty is Bright
Customer retention is more important than ever. Customers deserve fast, personalized, consistent service with great rewards no matter how they order or receive their meals. With the right loyalty program software, restaurants are poised to deliver this level of service without having to build a complex tech stack.