It’s time for the re-pledging of customer allegiance.
In the past few months several restaurant companies have revamped or expanded their loyalty programs to capitalize on better tracking technologies. While the new programs still are designed to boost repeat business, they also give operators better insight into their patrons’ spending habits and offer more sophisticated ways to motivate buying behaviors — all with the goal of lifting sales.
Panera Bread, the 1,453-unit bakery-cafe chain, has hit 4.5 million members with its new MyPanera loyalty program, which better tracks purchases and tailors rewards to guests’ buying patterns. And T.G.I. Friday’s, Red Robin Gourmet Burgers and Dunkin’ Donuts are among the growing number of chains recently seeking new or renewed vows from customers.
“No matter what industry you are in, the companies have the same endgame in mind,” said Roger L. Brooks, author of “The Power of Loyalty.” “With a loyalty program, that is to try to increase customer frequency, transaction size, basket size, all the things you can do once you are able to identify your customers and track their historical spending.”
The MyPanera program, which was rolled out nationwide in November 2010, was designed to “surprise and delight” members with unexpected and relevant rewards, the St. Louis-based company said early on. And it “becomes increasingly personalized as a member frequents Panera and spends more time in the program,” officials said, pointing to such rewards as exclusive invitations, opportunities to learn from Panera bakers and preview new menu items, and the more traditional free items.
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Bill W. Moreton, Panera’s chief executive and president, told securities analysts in March that the company had 4.5 million registered card members.
“We believe our loyalty program contributed approximately two-thirds of the transaction lift in the [fourth] quarter,” he said. “We expect to continue positive transaction lift from this program in 2011.”
He said instead of relying on select self-reported behavior, actual purchasing information is now available to the company, which will “get us as close to one-to-one marketing with them as possible.”
Moreton added that the company sees an opportunity to expand heavy users’ visitations, based on their buying patterns, to the bakery-cafe’s other dayparts. For instance, a regular breakfast customer will be given special incentives to try Panera at lunch, Moreton said.
“We very much intend to use a loyalty program to understand the customers, understand their behaviors and what happens to our menu when we make certain adjustments and shifts, and how we can put them into other dayparts,” he said.
For loyalty programs to be effective, however, author Brooks said systems, be they proprietary or purchased, must be in place to make them work.
“Once you have that in place, the whole idea is to gain knowledge based on the purchases of customers that are using the loyalty program,” Brooks said. “That’s why training of the staff, especially in restaurants, becomes very crucial to the success of the loyalty program. For example, if customers come in and have a card and are not asked to use it, you can’t gather the information.”
Brooks added, “The whole idea with any loyalty program, and to set yourself apart from others in your space, is not to be ordinary. You want to be extraordinary.”
T.G.I. Friday’s in late March introduced a revamped customer loyalty program at its 580 domestic locations, providing easier reward redemption levels and offering the program’s 3.7 million members more options.
“It gives guests more choice, control and flexibility in how they engage with our Give Me More Stripes program,” said Trey Hall, senior vice president and global chief marketing officer for the Carrollton, Texas-based casual-dining chain.
Friday’s originally introduced its Give Me More Stripes program April 1, 2008, supplanting a Gold Points loyalty promotion that it had operated with its parent company, Minneapolis-based Carlson, which owns the Radisson hotel chain.
The newest version of the program offers five reward levels, from 50 points to 150. Customers accrue one point for each dollar spent at a Friday’s.
“They have more reward levels to choose from, and then they can decide when they redeem their points … what works for them,” said Hall. “They can make choices. They have the flexibility to redeem for smaller items, such as desserts and sandwiches at lower point levels, and save up more points for bigger items such as steaks and things like that.”
For example, at 50 points they can get a free dessert and at 80 points a sandwich or burger. Previously, there was one reward at 100 points: an $8 coupon. That 100-point reward remains, but a chicken or seafood entrée has been added.
“At 150 points, it’s all about beef and steak and things like that,” Hall said.
Rewards also must be distinguished to make customers want to participate, said Brooks.
“What I like about Friday’s is they took an approach that is very aggressive in giving what I think is an extraordinary reward,” he said. “They are paying out 8 percent on a $100 spend with an $8 certificate. Typically in any rewards program you are in the 1- to 3-percent [range of giving] back to the customer. They really went far.”
Red Robin Gourmet Burgers, a 450-unit casual-dining chain based in Greenwood Village, Colo., introduced its new Red Royalty loyalty program in January. The program is designed to better track registered users to determine which incentives drive repeat business efficiently, according to officials.
Susan Lintonsmith, in an interview earlier this year with Nation’s Restaurant News, said the 45 Red Royalty test units reported a 2-percent increase in guest traffic.
“It’s not just about getting [guests] to come back more often, but also understanding their preferences so we can send them relevant messages,” she said. “Once we can segment this database, we can communicate with customers based on their past behavior.
“The messaging sometimes has nothing to do with an incentive,” Lintonsmith continued. “The free birthday burger is a big reason why people join our e-club and activate this program, but another big part [is] our surprise-and-delight offers. We may decide, ‘Hey, it’s Guacamole Day,’ and offer a free or discounted guacamole appetizer or burger with guacamole. That part is about having fun and celebrating some other tidbits of our brand.”
Brooks explained that people “are going to be a lot more responsive to a promotion — such as a text message or an e-mail — that’s for something they like or want, versus something that is generic.”
“The key is to capture as much of that data as you can as they shop,” he said. “You can do that initially through some questions you pose in the enrollment process to find out as much about the consumer as you can.”
In early April, Canton, Mass.-based Dunkin’ Donuts unveiled its first-ever national loyalty program, called DD Perks Rewards. The program gives customers Dunkin’ Dollar reward coupons for purchases made with a Dunkin’ Donuts card. The coupons can be redeemed for any menu item, offering patrons freedom of choice.
These loyalty programs make for a more valuable guest, Friday’s Hall said.
“If you look at the value of a GMMS member versus the value of a regular guest, it’s three to four times more valuable,” he said. “They come more often and spend more money, and they become our advocates.”
Contact Ron Ruggless at [email protected].