Loyalty in the digital age

September 16, 2016

Loyalty in the digital age

The way to a millennial’s stomach is through his smartphone.

Today’s consumers are tethered to their world through their mobile devices, using them not only for communication but also for photography, as an alternative to cash and credit cards, and increasingly, as a replacement for the humble loyalty card.

For millennials in particular, who have grown up with information and entertainment at their fingertips, mobile loyalty programs can be a powerful lure. Successful loyalty programs that target this demographic provide convenience, entertainment and rewards.

Mobile apps are already the preferred method for tracking and redeeming restaurant loyalty program rewards among millennials, according to a 2015 survey by Software Advice, a division of technology research firm Gartner. Forty percent of millennials polled in the survey said they preferred smartphone or tablet apps for their frequent dining program memberships, compared with 38 percent who preferred to use loyalty cards.

The survey found that millennial consumers are lured to sign up for loyalty programs primarily by how quickly their rewards accrue — 51 percent said that was the main attraction, with another 38 percent citing the variety of rewards offered.

For noncommercial foodservice operators, mobile loyalty programs offer the opportunity to drive increased customer satisfaction and retain sales volume on site. Operators can leverage these programs to target communications around promotions and events, and to analyze data about their customers for faster and more informed decision making.  

A handful of noncommercial operators have begun dipping their toes into the world of mobile loyalty programs, hoping to replicate the success enjoyed by many of the largest commercial chains.

Eurest, a foodservice provider with a range of business and industry (B&I) locations around the world, last year rolled out eDine, a mobile loyalty app that offers several key features that appeal to millennials, including gaming and frequency rewards.

“We learned that customers enjoy a loyalty-based app,” says Tatianna Emerson, regional marketing manager at Eurest. “No longer do they have to carry around the paper punch cards.

“Customers enjoy the fact that their rewards are right at their fingertips,” she says. “They also enjoy the gaming aspect of the app, which allows them to earn additional lifetime reward points.”

C.J. Recher, director of marketing at Chattanooga, Tenn.-based Five Star Food Service, which operates B&I foodservice and vending accounts across the South, says his company is considering adding a mobile loyalty program that would reach across its lines of business.

“People are interacting with pretty much everything through their smartphones these days,” he says.

Recher says he envisions offering rewards based on spending to encourage frequency. Customers who buy six bottles of water in a vending machine might get the seventh free, for example, or diners in a corporate cafeteria might get a percentage discount after reaching a certain level of spending.

Commercial success

Noncommercial operators can look to the commercial restaurant segment for examples of successful mobile loyalty program rollouts.

Riverside, Calif.-based Farmer Boys® restaurants, which describes itself as a farm-to-table burger chain, found that its customers were highly receptive to a mobile loyalty app. Larry Rusinko, chief marketing officer, says the chain has successfully used the VIF (Very Important Farmer) loyalty program to drive increased frequency and spending by double-digit percentages.

“Our customer base was overwhelmingly supportive of the app-based program,” Rusinko said in a webinar earlier this year discussing Farmer Boys’ partnership with loyalty program provider Punchh.

Customers were given the option of signing up online or downloading an app, and they showed surprisingly strong support for the mobile option, he said during the webinar.

The mobile app offers several advantages for Farmer Boys, including the ability to analyze customer data and to personalize communications.

“We’re able to speak to customers in real time through push notifications, and we are able to run targeted, focused and effective campaigns,” said Rusinko.

Communication via the app works both ways. Farmer Boys incorporated a feature that allows customers to rate their experience using emoticons, which has greatly increased the amount of feedback received and has had a positive impact on customer service, he said.

One of the key things learned from offering a mobile loyalty program has been to make sure the incentive being offered “is big enough to change behavior,” said Rusinko, noting that a free burger or burger combo has been an effective lure for Farmer Boys’ customers.

VIF program members earn a point for every dollar spent, and each 60 points can then be redeemed for a $5 coupon.  In addition, new members get $5 just for signing up. Some campaigns have also included high value offers such as free entrées.

In fact, the Software Advice survey found that the top reason customers quit restaurant loyalty programs is that the rewards are not valuable enough.

Another key finding that Rusinko cited is the need to train front-line staff how to encourage the use of the program.

Emerson of Eurest agrees that training customer-facing employees has been key to the rollout of eDine. “It’s important to educate our managers and cashiers so that they can engage with our customers,” she says.

The number of customers using the app has been “growing every day,” Emerson adds, noting that word of mouth has been the most effective form of marketing for the app.

The eDine app also allows managers at individual locations to track customer frequency and spending and to push out customized messages.

For diners, Emerson says the app is convenient and helps to spur loyalty.

“Checking in is simple and customers can easily keep track of their rewards once they’re ready to redeem them,” she says. “In some accounts, the loyalty rewards change quarterly, which allows our loyal eDine users to experience different promotions throughout the café.”

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