Build Customer Appreciation with a Well-executed Loyalty Program

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Last December, Toronto-based Second Cup unveiled a brand reinvention that aimed to win back consumers who had fallen out of love with the brand. The overhaul included a new name (Second Cup Coffee Co.), new products and a “café of the future” concept designed to deliver the “ultimate coffee experience.” Though it wasn’t announced at the time, the company was planning another key element to give customer engagement a jolt: a loyalty program.

“There’s no better way to deliver a rewarding experience than to make it more relevant,” says Vanda Provato, VP of Marketing at Second Cup Coffee Co. “A loyalty program allows us to more intimately know our customers and present them with more relevant communications and offers.”

Following a pilot in Calgary, Second Cup Coffee Co. launched its rewards program nationally this past spring. The program, simply called “Rewards,” allows users to earn 10 points for every dollar spent through either a mobile app or plastic card. Members can redeem 500 points for a free beverage, and 1,000 points earns them a bag of whole bean coffee to take home. Provato can’t disclose how many people have signed up, but just eight weeks into the program, Second Cup Coffee Co. was at 95 per cent of its target for the year.

“From the customers’ point of view, they get a better experience with Second Cup,” says Provato. “From a business point of view, having a loyalty program means we don’t have to take a one-size-fits-all approach with our offers and with our marketing investments. The rewards program and the insight that it provides really allows us to be more effective with our marketing dollars.”

While loyalty programs have long been used in the hotel, travel and retail sectors, an increasing number of foodservice companies are now getting into the loyalty game. With a well-designed and well-executed program, foodservice companies can drive repeat traffic to stores, increase sales, build engagement, and perhaps most importantly, get to know their customers better.

“Loyalty programs are very powerful in the foodservice segment,” says Fiona Lake Waslander, general manager of Vicinity, a Toronto-based rewards program provider focused on small- and medium-sized businesses. “Often customers are just paying in cash and [foodservice operators] don’t necessarily know who they are. When you bring loyalty into play, it actually turns that quick transaction into a long-term relationship.”

For Denny’s Canada, repeat business from loyal customers has been a big payoff for its rewards program, MyDenny’s, which launched in 2013. MyDenny’s members earn one point for every dollar spent, and points can be redeemed for $5- and $10-off coupons. With the MyDenny’s app, users can invite friends to join them at a Denny’s restaurant, transfer points to other members and peruse limited-time and feature menu items. Denny’s has the ability to notify guests of promotional offers, news and discounts, which they can then share with their social networks.

“We were able to push our loyal customers from 3.8 visits a month to 4.3, which is a big move for us,” says Salim Kassam, VP of Marketing at Denny’s Canada, which is owned by Vancouver-based Northland Properties Corp. “With loyalty programs, you either want more spend or more visits…. We didn’t see the tickets within a sale move that much, but we found that [loyalty members] ate more regularly.”

MyDenny’s also serves as a consumer research tool for the company. By conducting votes and polls through the app, Denny’s garners valuable guest feedback on aspects such as menu development. For example, Denny’s recently polled members on what new items they’d like to see, and one suggestion was a sustainable fish option.

“We didn’t think [that option] was as important as the customer told us it was,” says Kassam. “So that was great feedback to get.” Denny’s is currently working on developing a sustainable fish option and this past July the company also launched poutine based on member feedback. For participating in polls and votes, MyDenny’s members earn additional points, so it’s a win-win. “It gives us a lot of really good insight and they get incentivized for giving us that intimate knowledge of their needs,” says Kassam.

KNOW THY CUSTOMER
The vast amount of data on customer behaviour generated by a loyalty program presents a huge opportunity for foodservice companies: getting to know their guests.

“Many brands view their businesses from a dollars and transactions’ perspective, but have a hard time putting their finger on exactly who is making purchases, who comes in more often than others; and what are the demographic profiles,” explains Scott Robinson, senior director, Loyalty and Consulting Services at Bond Brand Loyalty, a Mississauga, Ont.-based loyalty agency. “And that’s important to brands because once they identify different segments of their customers by value, they can invest appropriately in each of those segments.”

Alex Green, VP of Marketing at Mississauga, Ont.-based Boston Pizza International, concurs that the biggest advantage to its loyalty program, MyBP, is the ability to better understand its guests. “[We have] the ability to understand how they engage with us, how they respond to different communications and offers and what we can do to add more value to that experience based on the learning that comes through that data,” says Green, who notes that loyalty providers take care of the analytics work for their clients.

MyBP, which launched in August 2014, isn’t a points-based system, but rather focuses on creating better customer experiences. When members sign up, they receive perks such as a free appetizer on their first in-restaurant order and discounts on online orders. Throughout the year, they receive relevant communications around new menu items, promotions and contests. Through the MyBP mobile app, members also get the benefits of faster and easier online ordering, including the ability to save favourites and repeat their order.

“We focused our efforts around improving the food and the service experience versus just being focused on an earn-and-burn, points-based loyalty program,” says Green. “The main features for our loyalty program revolve around improvements to all of our guests’ digital touchpoints.”
In just under a year, MyBP signed up around 250,000 members and Green estimates that customer engagement with its communications is up by about 50 per cent.

“We’re still [in the] early days … but our initial results — in particular around takeout, delivery and online ordering — show that our ability to effectively manage the timing and the type of communications is directly translating into increased visitation and ordering,” says Green.

GO BEYOND POINTS
Savvy brands in the foodservice space are getting a critical factor for success right.While discounts can drive repeat business, loyalty programs should be used to engage with consumers on a deeper level, which Robinson believes is key to creating genuine brand loyalty.

“Brands that focus on discounts and points often find that their members are more loyal to the discount than they are to the brand itself,” says Robinson.

In fact, in a recent Bond Brand Loyalty survey, 34 per cent of customers said they would not be loyal to the brand if it weren’t for the brand’s loyalty program. “The program must really endeavour to drive loyalty to the brand,” says Robinson. “Programs that [do so] are, in the long run, better programs.” According to Robinson, just offering discounts doesn’t drive loyalty to the brand itself — people just like the discounts. He says companies should use loyalty programs to improve the customer experience overall.

For example, Robinson suggests that restaurants can improve the overall customer experience for guests with children by providing perks such as having a child’s meal at the table within five minutes of sitting down. This cuts down on fidgety children and allows parents to relax with a pre-dinner drink.

“Through a mobile app, if I could declare ahead of time that I’m coming to the restaurant with my son and to have his chicken fingers and fries ready, that makes my experience all the more enjoyable,” says Robinson.

Written By: Rebecca Harris 

Volume 48, Number six

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