No more punch cards for some brands, who turn to mobile
At Planet Smoothie/Tasti D-Lite, a digital loyalty program is a “powerful” tool.
Moe’s Southwest Grill is among franchisors turning to digital loyalty programs to reward their best customers, and gain a rich database of visitors in return. Here are tips to make yours work.
This year when Moe’s Southwest Grill opens 90 new restaurants, they will be equipped with a digital loyalty program that allows the chain to engage with customers on their mobile devices.
The Atlanta-based chain in January 2014 adopted a digital loyalty program it has been outsourcing to PlumReward as a standard program for new sites. The move comes after some franchisees have used the digital system for more than four years, says Moe’s Chief Marketing Officer Paul Macaluso.
He says the system’s strengths include allowing Moe’s to send customers deals and reminders about special programs and promotions and track and reward them for their loyalty. Moe’s had 540 restaurants as of April.
Macaluso says the chain has more than 350,000 guests in its digital loyalty program database and that number continues to grow. “It’s a great way for new restaurants to establish a database of their visitors and provide incentives for them to return.”
Multiple digital loyalty programs have been popping up in the last two years to allow franchisees and other businesses to offer low-cost programs that reward frequent patrons for purchases. Generally, chains outsource their digital loyalty programs to firms like GetOneRewards, PlumReward and Level Up. The strategy allows brands to customize loyalty programs to their precise needs.
The growing trend comes as industry insiders contend mobile devise usage by consumers is already reaching banner levels. A January 2014 survey of 1,100 adults shows 57 percent of millennials ages 25 to 34 with annual household incomes of $75,000 or more preferred to use a mobile app for everything in a “rewards program,” versus 35 percent of the total population from ages 25 to 65 with similar incomes, reports Loyalogy, an Asheville, North Carolina-based loyalty program analytics and consulting firm.
Randy McCoy, CEO of GetOneRewards, an Atlanta-based digital loyalty and marketing services firm, says there’s been a trend the last six months of franchisors and franchises outsourcing digital loyalty marketing programs. GetOne now provides those services to about 27 franchises covering over 500 locations, up from 12 brands with some 200 locations a year ago. Its clients include NAPA Auto Parts, Curves, Ben & Jerry’s, Yogli Mogli and Paul Mitchell Schools.
McCoy says his firm helps franchises reach customers they were not engaging with before. For instance, the system gives consumers a digital punch card app on their smartphone from the franchisee, allowing consumers to always know how close they are to rewards.
Franchisees can send coupon offers to customers’ mobile phones over an app or email, giving them discounts for events like a birthday. In the same app, franchisees can offer discounts to new customers willing to join their loyalty program and visit their location for the first time.
Overtaking punch cards
McCoy contends the traditional paper punch card still today remains the No. 1 loyalty program used. But he says a growing number of retailers and franchises are shifting to digital loyalty programs because they offer many more marketing options to get to know and reach customers. Businesses are shifting from the cards because transactions are not easy to track and tend to cause fraud problems.
For Joe and Cheryl Robinson, the GetOne digital loyalty program has been ideal. The couple owns 34 Super Cuts locations in the Southern California area. They started the program at five of their shops in June 2013 and have since expanded to another eight shops because they have been pleased with the results.
Robinson says the program has allowed his business to create a database of over 12,000 customers it can communicate and market to directly via smartphones and other mobile devices. The business also plans to utilize a birthday club. The program has helped boost redemption rates with loyalty customers, reducing marketing costs on such items as printing coupons.
“This program is very easy to implement and has caused no stress to our shop level employees,” Robinson says. “They see it as an incredible asset and it is very easy to implement and very well received by customers of all ages.”
For PlumReward, the Windermere, Florida-based firm has increased the number of franchises for whom it operates digital loyalty programs to more than 1,000 in 2013, up from 800 in 2012. Most of its franchise clients are in the fast-casual restaurant, sweets and treats and beauty salon categories where the average transaction by a loyalty customer is between $8 and $20.
PlumReward Founder and CEO Jonathan Goodyear says franchises interested in outsourcing customer loyalty and mobile marketing programs have between 50 and 500 locations.
He says this “magic range” includes franchises that typically have the resources to create a unified branding experience, but are too small to make it economically viable to have an in-house IT staff to produce their own smartphone apps, mobile websites and other essentials to build solid customer loyalty and mobile marketing programs.
Goodyear says the program’s main goal should be to create a deeper and more meaningful relationship between merchants and customers. “Personalized experiences and service are becoming more and more the norm and digital loyalty programs are a great on-ramp to enable those capabilities.”
For Jason Mann, a Planet Smoothie/Tasti D-Lite franchisee and area representative in Orlando who counsels franchisees in 27 locations in Central Florida, the Plum Reward digital loyalty program is effective. It allows businesses to send promotions to customers depending upon how frequently they visit a location. He says the tool not only allows franchisees to communicate with loyal customers but also to reactivate lost customers as well.
The digital loyalty program franchisees have been using for several years eliminates the cost of using physical loyalty punch cards. He says that program gives the franchises the ability to better communicate with customers and allow patrons to redeem free smoothie promos by punching a code into a counter-based iPad. Mann says it’s not unusual for his franchise to get 50 to 70 redemptions for any promotion it sends on a given day.
“It’s a very powerful marketing tool,” Mann says.
Expanding the reach
Birmingham, Alabama-based Yogurt Mountain, with 28 franchise and 15 corporate locations in 14 states as of April, has been using the PlumReward system for three years. Yogurt Mountain customers get the benefit of a frequency program without the annoying punch card that inevitably gets lost or left at home, says Julie Wade, vice president of product and marketing.
“It has definitely helped us communicate with current customers and provides us the ability to opt-in customers remotely, therefore expanding our reach,” she says. “Our redemption rate is consistent with national averages when we push out a strong offer.”