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Restaurants set out to reimagine their loyalty programs

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Rewarding loyal customers is nothing new, of course, but it has undeniably come a long way since the days when customers had wallets bursting with frequent-customer punch cards. Now, in part due to advances in mobile technology, brands can provide targeted rewards, tiered programs and other novel benefits to drive repeat traffic, all the while gathering valuable consumer data.

But for some chains, loyalty has been a “precision tool we’ve been using as a blunt instrument,” says Jodie Conrad, VP of marketing for Fazoli’s. The fast-casual pasta brand is changing its approach, though. It is instead focusing on personalization and customization, using audience segmentation to determine what sort of consumer behavior it wants to encourage in which groups of consumers. With frequency and occasion data, the chain plans to create messaging calendars to target specific consumer groups, Conrad says.

Like for so many other restaurant companies, Conrad’s mission is a work in progress. With more data and more potential means of outreach, there are more moving pieces to driving brand loyalty. Even what to reward has come into question.

Fast-casual sandwich chain Newk’s Eatery will focus this year on an “enhanced loyalty strategy,” says Michelle Spohnholz, VP of marketing. While the actual rewards have yet to be decided under the new program, the chain is looking at a variety of ways to make repeat customers feel valued and respected—perks that go beyond a free side dish or drink, Spohnholz says. “Our industry has typically viewed loyalty as, buy X, get X,” she says. “But there’s more finesse to brand loyalty than that. There’s engagement. There’s saving time. There’s that emotional piece.” With that in mind, rewards might include the ability to cut to the front of the line or other benefits that enhance convenience to make consumers feel valued.

Other operators are putting the loyalty programs into their customers’ hands even more, rolling out tiered rewards for all levels of consumers. In July, Starbucks announced a program to allow customers to save up their points (known as stars) for bigger rewards (including lunch, packaged coffee and branded merchandise), or use their stars sooner for less-expensive items. The coffee giant operates one of the industry’s most widely adopted rewards program, with some 15.3 million registered users as of late 2018, an increase of 15% year over year. What’s more, those loyal customers make up 40% of all money spent at the chain, according to Starbucks executives.

For Starbucks, the tiered rewards program was implemented in the midst of declining store traffic. It offers a different way for customers to engage with the company, providing Starbucks more data for future personalization while also incentivizing consumer spending there.

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