Loyalty is top of mind for the restaurant industry as operators look to build a better mousetrap and bring customers back again and again, but as everyone gets a loyalty program, they start to look the same.
"Those programs become less effective if they all look the same," said Thanx founder and CEO Zach Goldstein. "Effectively, when it becomes table stakes and everyone has a buy X get Y program, they are no longer going to be able to build those deep one-to-one relationships because those look kind of the same as the next guy."
McDonald's, Wendy's and Burger King all have new loyalty programs, the third-party networks are building more capabilities and pushing their paid membership programs to keep customers engaged, and scores of small restaurants digitized their punch cards. That makes plugging customers into a loyalty program as much of a market share battle as getting them to come eat.
It's a battle for a key group of consumers too, according to a recent survey from PYMNTS, a data and analytics firm focused on the payments space. According to the survey, loyalty usage trends higher among Gen Z and millennials and skews toward the higher end of income brackets. Half of respondents who earned more than $100,000 used restaurant loyalty programs, compared with one-third of lower-income diners.
That's why Thanx is rolling out what it calls Loyalty 3.0, a new suite of tools that give brands nearly endless options to create a novel loyalty program that matches the novelty of the brand.
Goldstein said this is a natural continuation for the loyalty space. The goal for Loyalty 3.0 is "infinite permutations" of targeting, triggers and actions. For example, giving just the top 5 percent of customers access to a secret menu or early access to a seasonal LTO. Those kinds of options give customers deeper ways to connect with brands they love.
"What we're seeing, with the right exclusive invite to an event or a limited run of swag or secret menus, the change in loyalty is way higher and when you talk about driving a bigger increase in frequency and it costs you less because there are no discounts," said Goldstein. "What would certain McDonald's customers do for year-round access to the McRib? There is that kind of opportunity."
One shudders to think how far a McRib devotee would go, but Goldstein said offering customers a visit or sales challenge to get a certain reward opens up all sorts of possibilities that increase frequency without eating away at profit margins.
Another desire for modern loyalty programs is building customer lifetime value. "Buy five, get one" sort of deals work for the regulars, but they don't directly address bringing people back more frequently.
"There's is a very significant—as much as a four times difference—between a customer that comes twice and one that comes a third time," said Goldstein.