As food prices continue to climb so does the value of a restaurant loyalty program, for both the customer and the brand.
In listing out common dominators among restaurant brands, one of the first to pop to mind would be creating and maintaining a loyal customer.
That’s because loyal customers are gold for a brand when it comes to revenue and free marketing.
But building a loyal fan base, and growing that fan base, requires both strategy and the ability to adapt, be flexible, and, most importantly, understand a customer’s needs and wants.
The loyalty program strategy, as well as what has proven successful, was the topic of a panel talk, “Building an Appetite for Loyalty,” at the Fast Casual Executive Summit held last month in Indianapolis, Indiana. It’s one of several industry events organized by Networld Media Group, the parent company of Fastcasual, Pizza Marketplace and QSRweb.
The annual three-day Fast Casual Executive Summit event draws executives from leading brands around the world. The media company’s next event is the Restaurant Franchising & Innovation Summit being held March 20-23, 2023, in Coral Gables, Florida.
Participating in the panel, sponsored by Vericast, and moderated by Cherryh Cansler, VP of events and editor of Fastcasual.com for Networld Media Group, were Rob Crews, restaurant industry strategy director for new business and account management, restaurant brands at Vericast; Jeff Hemschoot, VP of marketing at Jersey Mike’s franchise systems and Doug Willmarth, president at Mooyah Burgers, Fries & Shakes.
The loyalty strategy
“When we talk about loyalty it’s about driving frequency and moving customers along that frequency continuum,” said Crews, kicking off the one-hour discussion.
“In starting one of these don’t try to boil the ocean. Just kind of get going. You don’t have to get it right off the bat,” he advised, adding that brands should start with something but know how they want to set it up (loyalty points or surprise and delight options). “Jump in, small test, there is a lot of test and learn.”
At Jersey Mike’s, today’s loyalty program and strategy are quite different than it was 14 years ago when customers held punch cards at the register. Hemschoot, who’s been in his marketing role since 2008 when the sandwich brand had between 230 to 240 locations, has seen big growth around loyalty and describes building up the loyalty program “as exciting and a good ride.”
The brand, which now has 2,300 stores, launched its initial loyalty app in 2012 with a very simple approach as it was all points based.
The app was homemade, as was the POS it integrated with, as the brand is bullish on investment spending.
“Something I’ll probably say five times today — keep everything as simple as possible. At the end of day all we want is for the consumer to quickly order and attach loyalty to that and drive that frequency and incremental visits,” said Hemschoot.
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 poised and caught some bit of luck along the way,” said Hemschoot.
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 bit different given the brand’s smaller size, explained Willmarth, who’s been in his role for about a year.
“As a smaller brand it’s important to leverage proven out-of-the-box technology and make sure you have partners that have a really robust platform you can tap into because we don’t have a team of six to seven to customize and implement,” said Willmarth.
The brand leverages Punchh technology which plugs into the POS that was also developed internally.
“The communication component is very very important,” said Willmarth. “With a loyalty program you have to give people a reason (to join) and ours is based on tried-and-true legacy option of earn points and get cash and we’re in the process of trying to rethink that so we’re at an interesting time in our program.”
Driving loyalty app downloads
Launching a loyalty app, however, is just the first important step. An app, after all, has no value if no one is using it so the strategy must include a winning approach to get customers engaged and becoming an app user.
At Jersey Mike’s the strategy is multi-pronged. The brand does quite a bit of marketing through its digital assets and communicates to guests through text and email blasts.
“We use all those channels to continue to push downloads and any kind of event marketing — anything outside of TV [such as] fundraising — anything where we can tell customers there is an easy way to download,” said Hemschoot.
“We do crew incentive programs as well and that engages the crew and they’re excited by it. There are no cash prizes but brand merch, headphones, gear.”
One valuable element in the brand’s loyalty approach is its points incentive and that’s why its app marketing includes offering double points, maybe once a month.
“Like clockwork, we see 15% increase in sales the next day [after the monthly double points offer]. We have a very simple strategy that the customer understands,” said Hemschoot.
At Mooyah Burger’s the approach to driving loyalty app downloads is tied to how it views its loyalty program overall.
“The app is an important part of the loyalty program but the loyalty program is not the app. What we’re looking to do is engage with people where they are to deepen the relationship and it works for us,” said Willmarth.
“We try to have a dedicated times of year where we are focused on [app] acquisition such as consumer facing contests — like free fries for downloading the app and then having a companion program that runs contest for the stores and team members, so they have a chance to win something too,” said Willmarth.
He used an analogy of a human relationship to describe his brand’s loyalty app and customer relationship.
“Acquisition, where the sole message is ‘hey would you like to download our app,’ is sort of like jumping straight to ‘hey we’re in a relationship’ before we’ve had our first date. We approach loyalty on two levels, team member loyalty and customer loyalty, and that’s critical as crew member retention is so important right now.”
The surprise and delight loyalty approach
Many brands adopt a common element in the loyalty strategy — informally coined as “surprise and delight,” in which the program offers up something unexpectedly in the quest to drive deeper loyalty and engagement and spur the customer to share the surprise/delight with friends and family and co-workers.
The “surprise and delight” at Jersey Mike’s isn’t a big strategy at this point, said Hemschoot, though the brand does a double points day.
“Beyond that some of the other things that we do is a tailgate tour where we went to 14 colleges throughout football season with a makeshift store, fun activities, quiz games,” he said, adding “we’ll be looking to a few different gamification things that’s close as we get to any kind of surprise and delight.”
For Mooyah Burgers the surprise/delight aspect is also not front and center and is viewed more as a layer to add onto a loyalty program, said Willmarth.
“I think it’s because we’re using loyalty first and foremost as a communication platform and I think that is something you need to be thinking about. In loyalty, your customers are giving you permission to talk to them about things that are important to you, and it becomes your cheapest way to get meaningful news out to your best customers.”
Offering double points or free fries or the opportunity to win something are aspects to be layered onto the loyalty program, Willmarth said.
“We’re trying to be more of a quality-based experiential brand so some of the things we have tried to tie into the app are more of things in the experiential area,” he said, noting the brand’s declaration of national French fry month and offering once in a lifetime experience such as staying at the Idaho Potato commission potato hotel.
“People loved it. It’s an example of how we’re using the platform to get brand information out there to people we know and who like us,” he said.
“If you don’t have a loyalty program today you have to determine what are your goals for the program and how are you going to achieve ROI because it is going to be a commitment. Once you’ve rolled out a loyalty program, they are very difficult to roll back. You really need to make sure you’ve got eyes wide open on what you need to see, what do you need to ensure this will be a good investment.”
Judy Mottl is 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 top media including AOL, InformationWeek and InternetNews.