Do you need to reinvigorate your brand, increase revenue, and improve profitability? Upgrading your rewards program may help. However, proceed with caution. Upgrade only when you know the new program will better align the program with corporate strategic goals and likely produce large financial benefits.
There is never a perfect time to change your program. When clear signs arise, give a program upgrade serious consideration. Look for any of these four signs:
1. Declining loyalty penetration and new member enrollment. If the share of checks associated with your loyalty program is declining, it could signify that tenured members are lapsing and that the program is no longer motivating them to come in. If new member enrollment is down, it could be because new guests are not interested in the program or that team members in the store have stopped promoting it.
Your program should achieve a minimum of 15 percent loyalty penetration. This means at least 15 percent of your checks should be associated with the loyalty program, and according to many top brands, their loyalty penetration numbers far exceed the 15 percent benchmark. For example, in an July 2016 earnings call, Panera president Drew Madsen said that 50 percent of company transactions were associated with the My Panera program. If you notice your loyalty penetration rate dropping, and particularly if it dips below 15 percent, it may be time for a change.
2. Evidence that customers are “gaming” the program to their advantage. Have customers figured out a loophole in your program that they use to their advantage? Is your visit-based program increasing the number of split checks, and slowing down operations? Are customers buying low-priced items to earn points, and then redeeming them for expensive items? […]
In case you missed it, there was a common theme among publicly held restaurant chains’ July earnings calls: Loyalty Programs. Multiple brand leaders spent a portion of their calls celebrating their loyalty programs, unequivocally stating that the programs are indeed impacting the value of the respective organizations, and that the programs are providing a competitive advantage.
Even Chipotle, a brand that has been a notorious, non-believer in loyalty programs, noted the value in the data they received from their short-term visit challenge promotion, Chiptopia. The promotion resembles the tip of the spear for a longer-term program. Below is a recap of the notable loyalty program mentions. But first, here’s an executive summary of the highlights:
Bloomin’ Brands expects a 1% – 2% lift in sales as a result of rolling out its rewards program system wide, per CEO Liz Smith.
Dominos on its loyalty program: “All of this outstanding brand momentum helped us grow diluted EPS by 21% over the prior year quarter. Our recently launched loyalty program contributed significantly to our traffic gains,” said CFO Jeff Lawrence
Starbucks’ Howard Shultz stated, “Our loyalty program is the cornerstone of our digital flywheel, noting that the program now has over 19 million Starbucks Reward members…”
Panera Bread’s president Andrew Madsen said, “Let’s talk about loyalty. Our MyPanera loyalty program now sits at 23 million members that represent nearly 50% of our transactions and the program is growing. In addition, MyPanera users are very loyal with double the visit frequency of our nonmember customers. We believe this is by far the largest loyalty program in the industry and a significant competitive advantage.”
Chipotle Mexican Grill is encouraged by the level of data being mined from the Chiptopia loyalty promotion and will use it to further understand the behavior of its most loyal guests before the promotion, during the promotion and post promotion.
Image Source: CNBC Interview with Ron Schaich
Bloomin’ Brands spoke about loyalty in its July 29, 2016 earnings call, praising the early success of its newly introduced Dine Rewards program. Bloomin’ Brands launched Dine Rewards as its first multi-brand loyalty program on July 19, and CEO Liz Smith spoke to the early success of the program, noting, “It has already received high marks for its simplicity and value relative to peer programs. Guests also appreciate the ability to enjoy the benefits across our portfolio of brands.”
Smith continued to say the program has been in test since 2013, proving to be an effective means to drive frequency and increase sales. “When it reaches maturity, we expect Dine Rewards to drive a 1% to 2% lift in sales consistent with what we have received in six test markets,” said Smith. “The program was just launched nationally 2 weeks ago and we now have over 800,000 members enrolled.” […]
Sandy Nelson to speak at PXUX: Unveiling how Duffy’s culture of loyalty drives 70% of all transactions through active loyalty members
As restaurants and convenience stores strive to establish a culture of loyalty, Duffy’s Sports Grill stands out as the premium model for success. A Paytronix customer since 2010, Duffy’s runs a highly successful MVP rewards program that has engaged nearly a half-million active members. The MVP program is a core element of the brand, and by using the Paytronix tools the Duffy’s team has been able to harness the power of their guest data to effectively drive business results and customer loyalty. The loyalty program drives more than 70% of all transactions across Duffy’s 33 casual-dining restaurants in Southern Florida.
Duffy’s Director of Marketing Sandy Nelson has agreed to share her insights as a featured speaker for this year’s Paytronix User Experience (PXUX 2016) on August 24th and 25th. Nelson will be speaking about the importance of creating a culture of loyalty, and why loyalty engagement needs to be every restaurant’s number one priority.
The Paytronix User Experience (PXUX) is only a few weeks away! This two-day, interactive conference will showcase highly impactful marketing programs as well as a roadmap for the future of Paytronix technology. Attendees should come ready to Amp It Up, because everyone will walk away from the event with new strategies to take their programs to the next level.
PXUX is an annual conference for Paytronix users in Boston on August 24th and 25th of 2016.
As an attendee, you will have access to:
Unlimited networking with fellow Paytronix employees and clients. Don’t miss this unique opportunity to come together with fellow PX users and the Paytronix team! You will have plenty of time to connect with one another during activities, meals, sessions, and more. Our special Wednesday evening event will be an especially fun time to network. We are so excited to announce the venue: The Museum of Science! It’s a short walk from the conference center and sits directly on the beautiful Charles River. You will explore the museum during a competitive scavenger hunt and then head outside for an amazing New England Cookout at the waterfront pavilion.
Stories from peers and client presentations. Discover what others in the industry are doing with the Paytronix tools. Hear first-hand from your peer’s stories of their biggest obstacles and how they were able to blow past and reach their goals.
A roadmap to what the future holds. Do you want to know what is in store for the future of the PX tools? Be sure to sit in on this sneak peek. You will see first-hand the innovative features we plan to roll out.