The Arms Race for Restaurant Loyalty Heats Up | Franchise News

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Loyalty is a priority for the restaurant industry as operators look to build a better mousetrap and keep customers coming back again and again, but as everyone benefits from a loyalty program they are starting to look alike. .

“These programs become less effective if they all look the same,” said Thanx founder and CEO Zach Goldstein. “Effectively, when it becomes table stakes and everyone has a buy X, get Y program, they won’t be able to build those deep one-on-one relationships anymore because they kind of look like the next one. .”

McDonald’s, Wendy’s and Burger King all have new loyalty programs, third-party networks are building more capacity and pushing their paid membership programs to keep customers engaged, and dozens of smaller restaurants have digitized their punch cards. This makes hooking customers into a loyalty program as much of a battle for market share as it is getting them to come and eat.

It’s also a battle for a key group of consumers, according to a recent survey by PYMNTS, a data and analytics firm focused on the payments space. According to the survey, loyalty usage tends to be higher among Gen Z and Millennials and moving towards higher income brackets. Half of respondents who earned more than $100,000 used restaurant loyalty programs, compared to one-third of low-income diners.

That’s why Thanx is rolling out what it’s calling Loyalty 3.0, a new suite of tools that gives brands nearly endless options to create a new loyalty program that matches brand newness.

Goldstein said it was a natural continuation for the loyalty space. The goal of Loyalty 3.0 is “infinite permutations” of targeting, triggers, and actions. For example, giving only the top 5% of customers access to a secret menu or early access to a seasonal OLT. These types of options give customers deeper ways to connect with the brands they love.

“What we’re seeing, with the right exclusive event invite or limited run of swag or secret menus, the shift in loyalty is way higher and when you’re talking about generating a bigger boost in frequency and that’s costing you less because there are no discounts,” Goldstein said. “What would some McDonald’s customers do to have year-round access to the McRib? There’s that kind of opportunity.”

One shudders to think how far a follower of McRib would go, but Goldstein said offering customers a visit or sales challenge to earn a certain reward opens up all sorts of possibilities that increase frequency without eroding profit margins.

Another desire of modern loyalty programs is the creation of lifetime value for customers. Offers like “Buy five, get one” work for regulars, but they don’t directly address bringing people back more frequently.

“There is a very significant difference – up to four times – between a customer who comes twice and one who comes a third time,” Goldstein said.

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