Since loyalty programs were formed in the early 1900s, the playbook for success hasn’t changed much. Customers receive points in exchange for purchases and redeem them for discounts and rewards. It’s a proven model embraced by companies in all verticals that doesn’t necessitate much innovation to be effective. As modern markets embrace digital commerce, however, forward-thinking brands are identifying new opportunities at the intersection of traditional loyalty marketing and digital commerce.
The technical advents of user-level data storage, dynamic personalization and big data analytics have unlocked a world of scalable, customer-centric loyalty marketing possibilities. By developing infrastructure that catalogues and maintains records of individual behavior, retention marketers working in food & beverage have been able to build loyalty programs that resonate with customers at unprecedented levels.
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Custom gifts, product synergies, and gamified promotions have all helped marketers cultivate closer relationships with their customers through digital mediums that have traditionally felt sterile and impersonal. As a result, brands enjoy higher levels of engagement, which ultimately translate to stronger bottom lines.
Here are five examples of digital marketing initiatives that are pushing the envelope when it comes to customer loyalty.
Domino’s Pizza Points
Since reinventing its recipe in 2009, Domino’s Pizza has become one of the food & beverage industry’s most iconic comeback stories, and customer loyalty has played a big role. Launched alongside a revamped technical offering, the Domino’s Piece Of The Pie rewards program was part of the company’s new mandate of becoming an “e-commerce company that happens to sell pizza.” It allowed customers to accrue points against their personalized pizza profiles and exchange those points for free pizza, though initially only through their web and mobile channels.
In April 2018, Domino’s launched a multi-channel marketing campaign highlighting the fact that customers could now earn loyalty points through every available point of sale, including voice, Twitter, SMS, and in-store purchases. Included in the campaign was the release of a free mobile game through which users could earn points by signing in with their pizza profile credentials and completing in-game challenges. User-level analytics, disciplined A/B testing, and a mobile-first mentality have all contributed to making the Domino’s loyalty program one of the most successful of its kind. This relentless commitment to user experience has also earned Domino’s a spot on the Forbes list of Most Innovative Growth Companies and a stock price that went from an all-time low of $3.00 in 2008 to $250.00 in 2018.
Starbucks Rewards
Starbucks Rewards is another example of how investments in mobile loyalty marketing are paying dividends for a modern brand. The Seattle-born coffee giant launched its original loyalty program in 2009 with a three-tiered, card-based system which was extended to the mobile payment app at the time of its launch in January of 2011. The app processed 42 million payments within its first 16 months and now stores more than $1.2 billion in customer money — more than some banks hold in customer deposits. That same engagement allowed Starbucks to fuel the growth of its loyalty program.
Starbucks has rolled out multiple updates to the program over the intervening years, including birthday rewards, personalized gold cards, and monthly double-star days that allow customers to earn twice as many points towards free products. Recent updates have added gamified aspects to the app that reward customers for purchasing different products, allowing Starbucks to drive strategic engagement with new or underperforming SKUs. The coffee chain’s unique approach has earned them multiple spots on Fast Company’s annual rankings of most innovative companies, including appearances on the design list in 2014 and the food list in 2017.
Subway MyWay Rewards
In 2018, Subway announced a loyalty program that saw the company borrowing the best parts of leading programs, like Starbucks Rewards, while adding a few unique twists. Program participants earn four tokens for every dollar spent on Subway products and, after having hit 200 tokens, can redeem them for $2.00 off their purchases, equating to $1.00 in savings for every $25.00 dollars spent. Much like Starbucks, the program operates through a mobile app and registered members are eligible for free products on their birthdays.
Subway builds off the formula with the addition of what it calls “a completely personalized experience.” The sandwich chain’s web marketing materials explain that customers will be surprised by additional rewards that have been customized to their unique tastes, leveraging user-level data to track customer purchasing habits in order to tailor rewards accordingly. The introduction of “random” rewards provides the company with a new reengagement channel similar to those used by mobile games, while offering customers a uniquely exciting shopping experience.
My Panera
In 2012, fast casual restaurant and bakery chain Panera made a substantial investment in a suite of multi-channel service applications including a personalized digital loyalty program, and they’re still seeing returns today. Included in their $42 million dollar service environment is the My Panera rewards program, which not only allows customers to accrue points from their purchases, but also customize their menu based on their personal tastes. All told, the program has cut down order times and increased engagement for its 25 million members, simultaneously affording Panera’s marketing team informed access to a valuable market segment. Program members are eligible to receive offers to participate in new product launches and community events not available to non-members. All told, the company’s digital sales channels and integrated loyalty program now account for 26% of total company sales.
My Chili’s Rewards
Tex-mex titan Chili’s takes an aggressively generous approach to their loyalty program, offering members a free order of chips and salsa or non-alcoholic beverage with every purchase just for being a member. In order to receive their complimentary food and drink, customers are required to log in using a phone number when ordering online or in store, affording program manager’s valuable insight into customer spending behaviors. Unlike other rewards programs, Chili’s has also partnered with Plenti, a rewards program maintained by American Express to offer program members savings across a variety of brands. Members of the Chili’s My Rewards program can redeem points accrued at the restaurant at partnered brands including Exxon, Macy’s, Rite Aid and Nationwide. Chili’s has seen program membership triple since introducing the offer in March, 2018.
Ten years ago, the cost of developing a digital loyalty program would have been enough to dissuade some of the most progressive food & beverage marketers. Since then, risk-takers and innovators have all but proven the necessity of offering personalized, mobile-first loyalty experiences. Those who began as skeptics are now clambering to catch up as standards for customer retention grow increasingly sophisticated. Those hoping to stay ahead of the curve would be well served to keep a close eye on these industry leaders and the strategies they’re using to maintain long and profitable customer relationships.