From tiers to subscriptions, restaurant and delivery apps provide insights into designing innovative strategies for loyalty programs.
Apps are only one facet of a loyalty program—but they’re rife with opportunities for engagement by rewarding a brand’s most loyal users.
For restaurants in particular, apps have become crucial to how they can execute their loyalty programs. While the typical consumer might have two or three apps total for their bank and credit cards, there are a seemingly endless amount of dining options that offer loyalty programs. People have to decide which restaurants they’re most loyal to and which of those deserve space on their phone.
A related industry, food delivery, isn’t as crowded a field, but a few major contenders, including Grubhub, DoorDash, Uber Eats and Postmates, have risen to the top and are battling it out for domination. This has forced them to get innovative with their loyalty programs, including the move to a subscription model that eliminates per-delivery fees in favor of a monthly or yearly flat rate.
All of this adds up to an interesting testing ground for loyalty apps overall.
If your brand is looking to launch a loyalty program app, make sure there’s ease of entry for the customer, advises Tim Thomas, vice president of technology, specializing in loyalty program design, at Epsilon. The signup mechanisms and benefits must be worthwhile to gain consumer adoption. “But you also have to ensure that you’re collecting enough data to get value out of the loyalty program for your brand,” he says. “It’s a fine balance.”
In the inaugural issue of CORE Content, we looked at three apps in the restaurant and food delivery industries and asked Thomas to weigh in on whether their features can help you design an effective loyalty program.
The food delivery service
Many food delivery apps now offer subscriptions. For $9.99 a month, Grubhub+ gives customers unlimited free delivery at participating restaurants, designated by a yellow badge.
Thomas’ take: Waiving delivery fees is a benefit that’s rich enough that people will want to pay for it. With food delivery on the rise, especially because of COVID-19, it’s a prime opportunity to follow Amazon’s model of a delivery subscription. From a business perspective, it’s clear that these brands are looking for a more continuous revenue stream as opposed to simply episodic transactions.
Customers can donate their change to a community relief fund, and Grubhub will match the amount, cent for cent.
Thomas’ take: This is a great idea. People want to give to a good cause, and it builds confidence that the brand cares for the community. Community service and responsibility initiatives are so important for brands and consumers. People want to spend with brands that are giving back, and this opportunity with Grubhub is a simple, convenient way to do that.
Showing proof of a competing subscription service gets members one month free.
Thomas’ take: This is a way to fight for acquisition in the marketplace. I’m not sure how effective it will be. Many people join multiple programs, and this could be used to fraud the system and get a discount for a limited time.
Members get 10% cash back for every $100 spent and access to “elite care” customer service.
Thomas’ take: Customer service should be table stakes for a business. It’s not something people should be paying for. But customer service—and how it’s executed or needed in an app format—varies greatly from brand to brand. If we look at Chick-fil-A (the next example), customer service is all about the in-store experience when customers are actually picking up their food, not just the app experience. For Grubhub, the app is the interaction with the brand, so access to top-notch customer service is critical in that environment.
The fast food chain
Customers rise through three tiers of membership, earning more and more points per dollar. Those who spend $100 earn 1,000 points, moving them up from Member to the second tier, Silver. The third and most lucrative tier is Red.
Thomas’ take: Tiers work well to show how you can rank yourself against others and provide a gamification aspect. They’re a best practice in most cases, but tiers don’t always have to be tied to points. A trend we’re seeing is companies not wanting to carry points’ liabilities. As a simpler alternative, businesses can run tiered programs in which members reach a milestone more quickly.
By earning 5,000 points, members reach the top tier, Red, and receive a badge that can be shared on social.
Thomas’ take: Encouraging social sharing increases customer engagement, and it’s essentially free advertising for the brand from its most loyal customers.
Rewards, aside from free food items, include birthday awards.
Thomas' take: Birthday rewards are common and a best practice, especially in the case of a family-oriented and personable brand like Chick-fil-A. Bonus: They also allow you to gather some demographic data on age.
Rewards also include sneak peeks at new menu items.
Thomas' take: This tactic creates excitement around new menu items and awareness of upcoming release dates. And so many quick service restaurants focus on their limited-time offers—they build campaigns around specific menu pushes for a certain period of time to drive sales of that item—this is a great way for Chick-fil-A to get its most loyal customer excited about these opportunities.
Rewards also include the ability to gift rewards to others.
Thomas' take: This can help with new customer acquisition. But beware: It’s also a frequent fraud mechanism, with people opening another account, transferring the points and then draining them.
The restaurant group
This Chicago-headquartered, national restaurant group’s Frequent Diner Club has its own loyalty program mobile app. Members can view their account history and rewards, find nearby Lettuce-owned restaurants, see menus, make reservations and purchase e-gift cards.
Thomas’ take: The best practice is to integrate your loyalty program within your existing applications to avoid app overload. You don’t want to drive a user away from your website, either. Grouping all your restaurant brands into one app helps promote customer awareness and understanding that you offer other valued businesses as part of your group.
Taking a cue from social channels, Lettuce invites diners to check into its restaurants through the app.
Thomas’ take: It’s a good way in which a user can be identified as being in certain locations to learn where they frequent and what they’re purchasing. Ideally, the brand can tie that to purchases to really bring the data together. It’s a multistep process, so you need to make it less intrusive for the user—like a quick scan of a QR code.
The three-tier rewards program earns diners points for every dollar spent. The higher the tier, the more points received per dollar spent. Members also receive $10 in dining rewards for every 150 points that can be redeemed for future meals (just not on certain weekend nights and holidays or at some locations).
Thomas’ take: Setting limits may be a miss. If you take a well-known example of the travel industry—not being able to book certain flights or hotel dates in blackout periods—that really puts a bad taste in people’s mouths and makes the program not as valuable. Consumers think, why be as loyal if you can’t get the good days and the good seats?
In summer 2019, Lettuce offered a game where members could choose a coupon to “scratch off” to receive bonus rewards.
Thomas’ take: We see a lot of gamification going on across industries. It’s a quick way to not only give rewards but also acquire new users, gaining additional data points about the member along the way. The other aspect to consider is: Can you tie it to badging, awards or tier progression? And keep in mind: Contests don’t always have to award something that costs your company money. Some people will play just to earn respect within the loyalty community.
Epsilon was the only company named a leader in both the Forrester Loyalty Technology Platforms and Loyalty Service Providers Wave.
Image credit: VPanteon/Getty Images