Loyalty Trends 2024: 3 Tips

Key Takeaway: Customers belong to more loyalty programs than ever. To stand out, brands must create emotional experiences that drive engagement.

 

Restaurant and convenience store loyalty programs are changing. They’ve gone from punch cards to digital platforms that offer personal rewards. 

While many operators wish to move away from discounting, transactional benefits remain important. According to Deloitte, 86% of restaurant loyalty members say earning discounts and rewards keeps them participating. 

Operators know that they need to update their loyalty programs. While discounts motivate, you also need to provide: 

• Special experiences

• Gamification

• Personalized touches

The National Restaurant Association (NRA) reports that guests belong to an average of 3.6 restaurant loyalty programs. Gen Z adults belong to 4.4. Deloitte found that 47% of restaurant loyalty members use it several times a month. 32% do so several times a week.

The importance of loyalty programs is in keeping current customers. Invesp says that new customer acquisition costs five times more than retention. A 5% increase in customer retention can boost profits 25-95%. 

Regular guests create 80% of your future revenue, according to McKinsey & Co. Make sure you win their hearts with a loyalty program that builds your brand. 

Understanding Loyalty Program Health  

As loyalty programs continue to stay popular, they also need to stay attractive. Checking performance is essential:

1. Enrollment 
2. Engagement 
3. Attrition 

By getting guest data, operators can spot problem areas and make a change. 6 Campaigns to Drive Guest Engagement with Advanced Segmentation describes ways improve.

 Here are a few highlights: 

• “Almost there" reminders drove a 5.5% visit lift for one quick-serve restaurant (QSR)
• A spend challenge promo created a 14% lift in check sizes 
• An outreach to lapsed loyalty members created 23% incremental spend 

Getting Members Through the Loyalty Lifecycle  

True success is based on moving members into more valuable categories. If guests sign up for a loyalty program but don't take part, the initial sign-up reward is wasted.

Some new members may become loyalists right away. Others may linger for an extended period. Maintaining interest is the goal for these guests. They are often motivated by excellent benefits, including: 

• Surprise rewards 
• Exclusive access to limited-time items 
• Tier progression 
• Gamification

Operators must spot at-risk guests and deploy 1:1 win-back strategies. Three techniques include: 

1. Rewards based on the reason for lapsing 
2. Reminders of loyalty program benefits 
3. Limited-time offers for reactivation 

3 Loyalty Engagement Experiences 

Checking the loyalty lifecycle is a must for loyalty programs. Today's guests expect operators to be creative.  

Brands must change their loyalty rewards to include personal experiences, like:

• Custom rewards 

• Values-based initiatives 

• Gamification

• Surprise-and-delight moments 

These have become essential for building loyalty. 

1. Prioritizing Guest Preferences 

Today's guests want personal rewards. Tiered rewards, memberships, and subscriptions create this. 

Technology has helped brands create programs to meet guest expectations in real time. This keeps loyalty initiatives relevant for diverse customers. 

When convenience store brand Break Time came to us for help, we updated their loyalty program with a new tier structure. The program sent personal messages when members got close to new tiers. Soon after launch, 12,000 guests got to top-tier status.

We also helped Smashburger reach a 20% increase in spend and a 16% lift in visits using AI tools.

Restaurants and convenience stores must have flexible loyalty programs to continue guest loyalty and growth. 

2. Changing to Emotional Loyalty 

Traditional loyalty programs focus on rewards like discounts. But modern guests also seek experiences and emotional benefits. This considers: 

• Quality 

• Uniqueness 

• Experience 

• Customer service 

• Community

As Nation's Restaurant News highlights, an ongoing industry debate is raging. It is between operators who favor discounting versus those who prefer everyday value by emphasizing:

• Food quality 

• Service speed 

• Menu items 

• Experience 

• Price 

Operators who’ve been taking a break from discounts argue that it improves revenue. Those who’ve been leaning into discount promotions say they increase traffic. But the key to success is about the right balance between “enticing customers with deals while making sure revenue still grows.” 

The successful loyalty programs blend both approaches. Deloitte points out that emotional benefits help operators earn greater “share of heart,” which can boost customer lifetime value (CLV). 

Three examples are: 

• Peet’s Coffee’s Peet’s After Dark, an exclusive event featuring food and beverage influencer Olivia Noceda  
• Dutch Bros’ limited-edition mystery sticker 
• Jimmy John’s offering The Ciao Down silk scarf, a limited-edition item to promote its Italian heritage

The goal is to connect with loyalty members on such a deep level that they rely on your brand to make their lives:

• Easier 

• More fulfilling

• More complete

Here are four of the ways operators are making these connections: 

1. Affinity programs tap into guest passions by linking brands to relevant causes. 
2. Early and exclusive access to new offerings, influencer collaborations, and feedback opportunities help make members feel special. Deloitte says that 60% of consumers rate early access to new products and experiences as “important” or “very important.” 
3. Upgraded service, via priority seating, carryout lines, or dedicated service channels for loyalty members. In the same Deloitte survey, two-thirds said they value this type of treatment.
4. Partner programs create engagement with multiple brands. Two loyalty giants, Delta SkyMiles and Starbucks Rewards, joined forces in 2022 so members of both programs can earn one mile per $1 spent at Starbucks and double Stars on days they travel on Delta. 

By creating loyalty around emotions, operators can make lasting bonds with their most valuable guests. 

3. Gamifying   

People love recognition. That is why gamification is a powerful tool for restaurant and c-store marketers. By understanding guest behavior using loyalty data, brands can create more excitement with:

• Challenge rewards 

• Surprise and delight programs

• Digital "treasure hunts"

A coffee chain could award a special badge to members who check in for a drink five days in a row, then offer a surprise free drink. 

A casual dining restaurant may run a game where members get put into a prize drawing by trying limited-time menu items. The possibilities are endless.

These three examples show why gamification is successful: 

• Original ChopShop’s “Four Visits Fast” challenge helped turn new loyalty members into frequent visitors.

• Great Harvest Bread Co. drove 35% increases in visits, frequency, and spend with 1:1 "Visit Challenges." 

• Dutch Bros used earned in-app stickers for special offers and gained 1.4 million members in its loyalty app in the first month.

A gamified experience changes loyalty programs into entertaining journeys. 

Sparking Loyalty Engagement Today 

Loyalty programs with transactional benefits alone are outdated. Today's loyalty programs must focus on creating emotional connections. 

Engagement is a must for loyalty programs. By using these tips, operators can get all the benefits of these programs.

To learn how Paytronix can help, download our loyalty guides for restaurants or convenience stores today. Or contact us to talk about your needs.