As restaurants look to take their loyalty programs into the future, they are increasingly finding that earn-and-burn loyalty programs are not enough to stand out in today’s ever more competitive market.
To drive engagement, McDonald’s is providing in-app concert streams, Chipotle is offering badges and other gamified achievement awards, and other major brands are stepping up their loyalty programs with similarly unique features and offers.
Fast-casual chain Sweetgreen, for one, announced at the end of last month the launch of a pilot test of a loyalty program, Rewards and Challenges, whereby members complete tasks (e.g., spending $20 or adding a side item) to redeem offers (e.g., receiving a $4 credit or a free beverage).
Read more: Restaurants Roll out Gamified Rewards in Search of Loyalty Sweet Spot
Chief Digital Officer Daniel Shlossman explained in an interview with PYMNTS that customizing the loyalty experience to each user is key to the program’s future success.
“It’s really bringing a personalized approach through this Rewards and Challenges feature to where we can gamify that experience,” he said. “As we are releasing these different features, we’re testing, we’re iterating, we’re talking to customers, we’re understanding how they’re interacting with them, and we believe that will ultimately be able to bring them together into something … that’s built for each individual customer rather than something that maybe was just so cookie cutter like our old program.”
In the first quarter of 2021, the brand ended its early, earn-and-burn program, citing the difficulties of the pandemic as one of the reasons in the FAQ section on the company website. This new iteration, Shlossman said, will be “better for Sweetgreen’s bottom line” because the brand is “investing in the right areas and the right customers.”
To Each Their Own
Many consumers now engage with restaurant rewards programs each month, according to data from the March/April edition of PYMNTS’ Digital Divide series, “The Digital Divide: Regional Variations in U.S. Food Ordering Trends and Digital Adoption,” created in collaboration with Software-as-a-Service (SaaS) customer experience management solutions provider Paytronix. The study, which drew from a survey of more than 2,500 United States adults in February, found that about one in three restaurant customers had used a loyalty program in the previous 30 days.
Shlossman said “cookie cutter” programs are becoming all too common because it is “actually not that difficult, depending on your tech stack” to integrate earn-and-burn offers into a restaurant’s app. As such, simply having a loyalty program is no longer much of a competitive advantage.
Conversely, he stated, “the best restaurant and retail companies who really understand who their customers are” are looking to create a program that offers “more of a personalized approach.”
This current iteration is meant to get smarter about each individual over time. With the initial launch of the program, all users see the same offers, but over time, the brand intends to start “cohorting app users” so that it can “target a specific offer” to each person “based on the type of customer that they are,” Shlossman said.
Subscription Commerce
At the start of the year, Sweetgreen launched a test of a subscription program, Sweetpass, which offered one $3 credit back for each purchase (no more than one a day) for 30 days for a one-time $10 fee.
Subscriptions can go a long way toward driving loyalty. PYMNTS research found that restaurant subscribers are more brand loyal than non-subscribers, according to data from the February/March edition of the PYMNTS/Paytronix Digital Divide study, “Digital Divide: Restaurant Subscribers and Loyalty Programs.”
Read more: Four in 10 Consumers Open to Restaurant Subscription Services
The report noted that eight in 10 subscribers are “very” or “extremely” loyal to their favorite restaurants, while only about half of those who are indifferent to restaurant subscriptions said the same. Additionally, 17% of consumers who are currently not subscribed to restaurant programs reported being “very” or “extremely” interested in being provided a restaurant subscription service.
Shlossman said the subscription model is especially effective for a restaurant like Sweetgreen, which, rather than operating in the indulgence space, offers meals that “you can eat every day.”
He noted that the offering not only boosted the loyalty of customers who already purchased frequently but also of those who had not been active in a while and of new customers.
“We saw that, no matter what type of customer you were, you came back more often in that period,” he said.
The Restaurant of the Future
These digital upgrades are also affecting the restaurants’ physical stores. Shlossman noted that two-thirds of the brand’s sales are digital, and the chain is “making investments on the physical side to reinforce these digital investments,” including the upcoming opening of a digital-order-only location and a store with an order-ahead drive-thru line.
“It’s not just about building digital to enhance physical,” he asserted. “You have to build the physical as well to make that digital experience work.”
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More