As food prices continue to climb, the value of a restaurant loyalty program increases, for both the customer and the brand.
When listing the common dominants among restaurant brands, one of the first that comes to mind would be to create and maintain a loyal customer.
Indeed, loyal customers are gold for a brand in terms of revenue and free marketing.
But building a loyal fanbase and growing that fanbase requires both strategy and the ability to adapt, be flexible, and most importantly, understand a customer’s needs and wants.
Loyalty program strategy, along with what works, was the subject of a panel discussion titled “Creating an Appetite for Loyalty” at the Fast Casual Executive Summit held last month in Indianapolis, Indiana. It is one of many industry events organized by Networld Media Group, the parent company of Fastcasual, Pizza Marketplace and QSRweb.
The annual three-day Fast Casual Executive Summit attracts top brand executives from around the world. The media company’s next event is the Restaurant Franchising & Innovation Summit to be held March 20-23, 2023 in Coral Gables, Florida.
Participating in the panel, sponsored by Vericast and moderated by Cherryh Cansler, Vice President of Events and Editor-in-Chief of Fastcasual.com for Networld Media Group, included Rob Crews, Director of Restaurant Industry Strategy for New Business and account management, restaurant brands at Vericast; Jeff Hemschoot, Vice President of Marketing for Jersey Mike’s Franchise Systems and Doug Willmarth, President of Mooyah Burgers, Fries & Shakes.
The loyalty strategy
“When we talk about loyalty, it’s about increasing frequency and moving customers along that frequency continuum,” Crews said, kicking off the hour-long discussion.
“When starting one of these, don’t try to boil the ocean. Just sort of go for it. You don’t have to do it from the start,” he advised, adding that brands should start with something but know how they want to implement it (loyalty points or surprise and delight options). “Come on, little test, there’s a lot of testing and learning.”
At Jersey Mike’s, today’s loyalty program and strategy is very different from what it was 14 years ago, when customers held punch cards at checkout. Hemschoot, who has been in his marketing role since 2008 when the sandwich brand had between 230 and 240 locations, has seen strong growth around loyalty and describes building the loyalty program as “exciting and enjoyable”.
The brand, which now has 2,300 stores, launched its first loyalty app in 2012 with a very simple approach as everything was points-based.
The app was in-house, as was the POS it was integrated into, as the brand is bullish on capital spending.
“Something I’ll probably say five times today – keep everything as simple as possible. At the end of the day, all we want is for the consumer to order quickly and stick with it, and increase that frequency and those extra visits,” Hemschoot said.
Six years later, the app was updated, and just as COVID-19 hit, it was enhanced in early 2020 to provide delivery service capability.
“So we were ready and had a bit of luck along the way,” Hemschoot said.
The brand’s app has 22 million app downloads and 24 million subscribers to its points account.
“It’s a testament to our crew members and our owners,” he added.
At Mooyah Burgers, the loyalty strategy is a little different given the small size of the brand, explained Willmarth, who has been in the role for about a year.
“As a small brand, it’s important to leverage proven, out-of-the-box technology and make sure you have partners who have a really robust platform that you can draw on, because we don’t have a team of six to seven people to customize and implement,” Willmarth said.
The brand relies on Punchh technology which connects to the point of sale also developed in-house.
“The communication component is very, very important,” Willmarth said. “With a loyalty program you have to give people a reason (to join) and ours is based on a proven legacy option of earning points and getting money and we’re trying to rethinking that, so we’re at an interesting point in our program.”
Boost loyalty app downloads
However, launching a loyalty app is only the first important step. An app, after all, has no value if no one uses it. The strategy must therefore include a winning approach to engage customers and become a user of the application.
At Jersey Mike’s, the strategy is multi-pronged. The brand does a lot of marketing through its digital assets and communicates with its customers through SMS and emails.
“We use all of these channels to continue to push downloads and any kind of event marketing – everything outside of TV [such as] fundraiser – anything we can tell customers there’s an easy way to download,” Hemschoot said.
“We also run incentive programs for the crews and that engages the crew and they’re excited about it. There’s no cash prizes, just branded merchandise, headphones, gear.”
A valuable element in the brand’s loyalty approach is its points incentive and that’s why its app marketing includes offering double points, perhaps once a month.
“Like clockwork, we see a 15% increase in sales the next day [after the monthly double points offer]. We have a very simple strategy that the client understands,” Hemschoot said.
At Mooyah Burger, the approach to driving loyalty app downloads is tied to how it views its loyalty program as a whole.
“The app is an important part of the loyalty program, but the loyalty program is not the app. What we seek to do is engage with people where they are to deepen the relationship and it works for us,” Willmarth said.
“We try to have dedicated times of the year where we focus on [app] such as consumer-facing contests – like free fries for downloading the app and then having a companion program that runs contests for stores and team members, so they also have a chance to win something said Willmarth.
He used a human relationship analogy to describe his brand’s loyalty app and customer relationship.
“Acquiring, where the only message is ‘hey, would you like to download our app’, is kind of like jumping straight to ‘hey, we’re a couple’ before we’ve had our first date. We We’re looking at loyalty on two levels, team member loyalty and customer loyalty, and that’s critical because crew member retention is so important right now.”
The surprise and delight loyalty approach
Many brands are embracing a common element in loyalty strategy – informally called “surprise and delight”, in which the program offers something unexpected in the quest for deeper loyalty and engagement and entices the customer to share the surprise/delight with friends and family and co-workers.
“Surprise and delight” at Jersey Mike’s isn’t a big strategy at this point, Hemschoot said, although the brand is doubling its points.
“Beyond that, some of the other things we do are a tailgate tour where we went to 14 colleges throughout the football season with a fortune shop, fun activities, quiz games,” he said, adding “we’ll be looking at a few different gamification things that come closer as we get to any kind of surprise and fun.”
For Mooyah Burgers, the surprise/delight aspect is also not the focus and is seen more as a layer to add to a loyalty program, Willmarth said.
“I think it’s because we use loyalty primarily as a communication platform and I think that’s something you need to think about. In loyalty, your customers are giving you permission to tell them about things that are important to you, and it becomes your cheapest way to get important information out to your best customers.”
Offering double points or free fries or the chance to win something are aspects to incorporate into the loyalty program, Willmarth said.
“We’re trying to be more of an experiential brand based on quality, so some of the things that we’ve tried to tie into the app are more things in the experiential realm,” he said, noting the statement from National French Fry Month brand. and offering a once-in-a-lifetime experience like a stay at the Idaho Potato Commission’s Potato Hotel.
“People loved it. It’s an example of how we’re using the platform to deliver brand information to people we know and love us,” he said.
“If you don’t have a loyalty program today, you need to figure out what your goals are for the program and how are you going to achieve ROI because it’s going to be a commitment. Once you’ve deployed a loyalty program, they are very hard to roll back, you really need to make sure you have your eyes wide open on what you need to see, what do you need to make sure it will be a good investment.
Judy Mottl is the editor of Retail Customer Experience and Food Truck Operator. She has decades of experience as a reporter, writer and editor covering technology and business for major media outlets including AOL, InformationWeek and InternetNews.