Restaurant loyalty programs are gaining traction with consumers, and Millennials in particular. According to a 2017 survey by AlixPartners, 19% of consumers say loyalty programs are “very” or “extremely” influential, a 35%t increase over last year. Meanwhile, 26% of Millennials say loyalty programs are “very” influential when they decide where to eat out.
Loyalty programs are especially important to restaurants as consumers say they plan to cut back on eating out. The same 2017 survey by AlixPartners of 1,000 U.S. consumers found that diners who patronize fast-food and fast-casual establishments at least twice a week intend to cut back their visits by 8% and 13%, respectively, over the next 12 months.
Millennials want to be rewarded for their patronage, but the reward needs to have a perceived value for them to participate. Millennials rank points per dollar as the number one loyalty mechanism, according to a survey by Epsilon Marketing.
Most Millennials are motivated by fairly straightforward rewards rather than member perks such as reserved parking, secret menus, or free entertainment downloads, the survey found:
- 81% of millennials prefer free/discount food for their loyalty
- 63% of millennials prefer a free/discount beverage
- 31% find a speed line attractive in driving loyalty
When loyalty programs are difficult to use or don’t provide rewards with a perceived value, Millennials are quick to drop out.
Here are the top seven reasons Millennials quit loyalty programs, according to Software Advice:
- 59% rewards aren’t valuable enough
- 57% discounts aren’t high enough
- 50% rewards took too long to accrue
- 32% not enough reward variety
- 27% program is too complicated
- 24% received too many messages about program
- 14% the program didn’t offer a smartphone/tablet app
For years, Starbucks has been the gold standard for customer loyalty programs because customers could choose their reward and when to use it. The program works with a smartphone app, allowing customers to combine everyday use with payment. Not surprisingly, most millennials prefer to use an app on their smartphone or tablet to earn, track and redeem loyalty rewards.
Here’s the breakdown, according to Software Advice:
- 40% prefer using a smartphone or tablet app
- 38% prefer a loyalty card
- 16% prefer providing an ID at checkout
- 2% prefer using a disposable punch card
Newer restaurant reward programs take this into account. Here’s a look at some of the newer programs that have rolled out, and how they appealed to Millennials.
— Firehouse Subs (@FirehouseSubs) July 5, 2017
Participants can track and redeem Firehouse Rewards using a mobile app. They receive a reward — a free large drink — just for downloading the app. Points can be redeemed for meal upgrades and free subs. The loyalty app allows user to:
- Order ahead of time using the app
- Play an online game to earn bonus points
- Receive a free sub on your birthday or within six days of your birthday.
In addition to tracking and redeeming rewards with a mobile app, participants can use the app to redeem special weekly deals, such as free fries with any purchase. The app also tracks McCafe purchases, allowing users to earn a free beverage for every five purchased. The loyalty app also allows users to order ahead of time, and participate in a weekly photo challenge using camera filters created by McDonald’s.
Participants in Burger King Rewards receive $30 in discounts and buy-one-get-one options when they download the app. In addition to allowing participants to order ahead of time, they can pay using their smartphone.
Once exclusively a reward card, this fast-service restaurant rolled out an app last year. Now participants in the MyPanera program can order ahead of time and schedule their pick up time. Participants are rewarded for the number of times they visit Panera locations, although the amount of visits required for a reward varies, and the rewards, such a free bagel or coffee, differ every time.
Marketers who want to create loyalty programs that appeal to Millennials need to focus on ease of use and create a program that includes a mobile component and provides rewards with a perceived value.