Loyalty Trends 2024: Next-Gen Loyalty Programs

Key Takeaway: Guests want loyalty programs with flexible rewards. Look at your loyalty program and make sure it is improving: 

• Visit frequency 

• Average-order grow 

• Higher customer lifetime value (CLV)

Changing behaviors are impacting restaurant and convenience store (c-store) loyalty programs. While 57% of restaurants and 66% of convenience stores offer loyalty programs, yours needs to stand out. 

Previous blog articles in this series highlighted the importance of data expertise and personalization. But program design and reward flexibility are also important: 

• 85% of adults want dining discounts during off-peak days (National Restaurant Association) 
• 60% rate rewards like early access to products and brand experiences as important (Deloitte) 
• 68% want personal offers or discounts based on purchase history (eMarketer) 

Tech is opening the doors for advancements in loyalty. 

Improving Your Loyalty Program 

The first step is to see how your current program is doing. Look at things like:

• Penetration 

• Growth rate

• Discount levels

• Overall goals  

Questions to ask include:

• What % of sales come from loyalty members? 
• What is the program's net membership growth? 
• Are you giving away too many rewards? 
• Do members' visit patterns and spending meet your goals? 

Knowing your program’s strengths and weaknesses can help you create better offers. 

Is it time to check your loyalty program? 

>> Download our revamp guide <<

Peet’s Coffee is a good example. For a long time, a lack of data made their loyalty offers a guessing game. When the company set up Peetnik Rewards on our platform, it was able to test things to find what worked. Within six months, membership went up by 350% and loyalty check penetration up by 47%. 

People Want Flexible Rewards  

We've found that people want flexible rewards. 

Basic programs rewarding guests with discounts based on visits no longer work. Now operators are offering choices and incentives to qualify for higher membership levels. Why? Because it creates engagement. 

PYMNTS found 51% of restaurant guests belonged to a program, up from 45% in 2022. That means now is a great time for brands to improve their programs.

The National Restaurant Association’s 2024 State of the Restaurant Industry report says the average consumer belongs to 3.6 restaurant loyalty programs.

Convenience store loyalty is similar to restaurants. A 2024 Realities of the Aisle study says 50% of guests report being in a loyalty program when offered. But happiness with c-store loyalty programs dropped six points: “Less-than-satisfied loyalty program members feel rewards are not valuable to them and too many purchases are required to obtain rewards.” 

All of this means that operators are making changes to their loyalty programs. PYMNTS noted that in 2022, Chipotle grew its loyalty program membership 20% to 31.6 million by using smarter data. 

We've done similar programs for convenience store chain Break Time. By partnering with Paytronix Data Insights, Break Time changed MyTime Rewards into a leveled program, with members checked monthly. 

Break Time’s new structure increased loyalty penetration to 42%  and increased customer spending by 25.6% 

MyTime Rewards automatically triggers personal messages to members when they’re close to a new level. And when members move up levels, they are sent info on the new benefits. 

All these changes led to impressive results: 

• 12,000 guests in “Big Time,” the top rewards tier 
• 42% of all transactions completed with MyTime Rewards 
• 2% increase in gas gallons pumped, directly attributable to the program 
• 25.6% increase in customer spend 

As these examples show, implementing a thoughtfully designed, data-driven loyalty program with compelling rewards can pay substantial dividends for restaurants and convenience stores. 

Designing Loyalty to Drive Engagement 

Forward-thinking operators are leveraging their loyalty programs as powerful sources of customer insights. By capturing first-party transactional and behavioral data from program members—enriched with third-party data from reliable sources—brands gain a comprehensive view into their most valuable guest segments. This deep understanding allows them to continuously optimize engagement strategies as members move through the loyalty lifecycle. 

At Paytronix, we recommend segmenting loyalty members into four core groups based on lifecycle stages: 

1. New members 
2. Potential loyalists 
3. Core/pro loyalists 
4. Lapsing members 

Operators can then build even more granular segments, tailoring specific offers, campaigns, and tactics to elevate performance within each specific cohort. This data-driven approach requires continuous testing and learning, exemplified by Peet's Coffee's use of control groups to validate program enhancements: 

The most effective loyalty programs are designed from the ground up to foster insights into guest behavior, preferences, and core motivations. Armed with these insights, marketers can segment customers based on their current brand relationship, designing personalized campaigns that cultivate deeper loyalty, more frequent visits, and higher spend per visit. 

HuHot Mongolian Grill’s BOGO Grill Pass is a good example. For $9.99/month, guests get a free grill meal with the purchase of one meal. This offer boosted customer lifetime value. This was a high-value discount. But because it increased visits, it was worth it.  

While the subscription loyalty program worked well for HuHot, every restaurant is different. It depends on your:

• Concept

• Service model

• Customers

• Goals 

You need to look at the data and ask questions, including: 

• Which rewards get people excited?  
• What best matches your brand?  
• Which program ideas can actually be added by your staff? 
• What strategies best match your financial goals? 

Next-gen programs are using:

• Subscriptions 

• Reward levels  

• Social impact

• Special menus

• Experiences

• Games

These are based on the idea that people love: 

• Achievement

• Social recognition 

• Competition

• The fear of missing out (FOMO)

Gamification is a good option. PYMNTS says that Denny's used this in the summer of 2023 with a program that offered "challenges" to different guest groups. 

Other brands using gamification include:

• Jimmy John's 

• Just Salad 

• Sweetgreen 

• Great Harvest Bread Co.®

• Original ChopShop

Great Harvest saw 35% increases in:

• Visits

• Frequency 

• Spend
  

“Before Paytronix, we struggled with slow seasons,” says CEO Mike Ferretti. “By leveraging 1:1 campaigns, we engaged customers on a personal level and increased sales in ways we hadn't thought were possible. More campaigns and opportunities like this will only help grow our business and the future of our guest engagement strategy.” 

Using the Power of Next-Generation Loyalty 

Loyalty programs have changed. To stay competitive, operators must use personalized loyalty benefits. You can do this with the help of:

• AI

• Grouping  

• Subscriptions

• Games 

• Testing

That helps you design loyalty programs that improve:

• Engagement 

• Visits 

• CLV

Getting loyalty right can make you more money. McKinsey says that companies that are good at personalization make 40% more revenue. 

Loyalty modernization worked for Dutch Bros., a Paytronix client. After replacing an old punch-card system with a digital loyalty program on the Paytronix platform, the brand gained 1.4 million members.

In its program, Dutch Bros. used:  

• Personalization 

• Audience groups

• Games 

Using the tips from this article, restaurants and c-stores can improve their brands. With a loyalty platform, you can use:  

• Reward structures

• Customer grouping

• Engaging experiences 

To learn how Paytronix can help you create a loyalty program, download our free loyalty guides for restaurants or convenience stores. Contact us now.