How to build a winning loyalty program in QSR and Retail

There are two ways that QSRs and retailers make money: acquiring new customers, and bringing existing customers back again and again to spend more with each transaction. Historically, reward-based loyalty programs have been the mechanism by which these brands have engaged with customers, relying on monetary incentives to get them to come back and spend more. But with new technologies and ordering channels emerging due to COVID-19, QSRs and retailers are rethinking their loyalty programs in 2021.

As Harvard Business Review points out, "Today's mobile-enabled consumers are constantly evaluating and re-evaluating their purchasing decisions. They will choose the brands most relevant to them at an increasingly rapid pace." The article's thesis is that a loyalty program cannot be built in isolation of the core customer experience. In a world where price incentives have been commoditized and consumers are conditioned to expect rewards based on spend, personalization and relevance have become the real drivers of a winning loyalty program.

The framework below shows the evolution of loyalty programs from the 1960s to today.

With personalization and relevance as the cornerstone of a winning loyalty program, we’ve put together a framework to help QSRs and retailers evaluate their technology strategy. The framework evaluates organizations based on these 4 dimensions:

• Technology enabler - does the organization see building a world-class native mobile app as a key differentiator?
• Performance indicators - does the organization care about the velocity of application updates, app-store ratings, social sentiment, growth of organic installs, does the organization see market cap growth connected to digital KPIs?
• Market approach - do they offer optionality with new channels beyond in-store and e-comm which include: order-ahead, curbside, drive-thru, and delivery?
• Management focus - is their leadership investing in product/engineering/design & tooling to digitize new order-ahead channels?

Below, we examine two leaders in retail and QSR to see the framework in action:

American Eagle

Read the customer story.

Starbucks

One of the most exciting aspects of the relevance-led loyalty program is how loyalty has evolved organizationally from the marketing department to a cross-functional effort executed by engineering, product, and design teams. With native mobile apps as a technology enabler and velocity of iteration as a key performance indicator, it’s clear that QSRs and retailers are quickly becoming technology companies with loyalty programs core to their differentiation.

If you're responsible for building and executing a new loyalty program, take a look at some of our Solution Partners who have designed and built some of the most successful mobile applications and loyalty programs, or reach out to our team directly. We’d love to hear from you.