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How QSR customer loyalty programs are transforming into digital experiences

360 Magazine 
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How QSR customer loyalty programs are transforming into digital experiences

QSR loyalty program CX

A quick service restaurant chain specializing in chicken and waffles might seem particularly vulnerable to the disruptions caused by a pandemic, but Chick’nCone is acting as though COVID-19 was merely a blip on its path to growth.

The Florida-based company already operates 31 locations across the United States and expects to reach 50 by the end of this year. As other chains have shuttered restaurants permanently or pivoted to drive thru only, it has a total of 58 in development.

That adds up to a lot of chicken and waffles being prepared — which means Jonathan Almanzar is particularly interested in making sure Chick’nCone not only welcomes back existing customers but wins over hoards of new die-hard fans.

“The tech world has understood the power of stickiness, building it into every app and every social media platform,” Almanzar, Chick’nCone’s CEO, told 360 Magazine. “We definitely need to do the same, and what better way than rewarding people for their loyalty?”

Chick’nCone’s approach to loyalty goes well beyond opportunities to earn points towards a free meal, however. The company is using the cryptocurrency exchange Ethereum to sell non-fungible tokens (NFTs) called Chick’nCoins. Token holders will receive 50% of the initial franchise fee for any new units to open in that area. In addition, they will also earn 2% royalty on sales at all locations in the territory, paid monthly, for six years. The revenue will be divided equally among token holders for the region.

Loyalty As Alternative Currency

While NFTs may not be common in the quick service restaurant (QSR) sector yet, the idea of loyalty as currency is becoming more accessible. Markham, Ont.-based EngagePeople has developed a platform designed to help companies set up loyalty programs that tap into a network of commercial partners. That means a QSR could not only offer points towards its own food and beverages but a wide variety of benefits.

According to Len Covello, EngagePeople’s CTO, using loyalty points in this way increases customers’ purchasing power while providing a seamless check-out experience for the QSR.

“It’s actually the most stable alternative currency out there. It’s fully backed,” he said. “A common misconception is that the program operator doesn’t want them to be used, but they actually like when you redeem them, because it shows the fact that you’re engaged with the program and that you’ll earn more.”

This concept comes as little surprise to Rajesh Midha, the CEO of Bottle Rocket and president for North America of Ogilvy Experience. Research conducted by his firm — which works which QSRs including Chick-fil-A and Pizza Hut — shows four types of bonds help businesses build a long-lasting relationship with customers. These include emotional, social, financial, and structural bonds.

“The financial bond should not be overlooked,” he said. “The days of closed-looped loyalty currency are over, with consumers having an expectation of point liquidity and wider redemption options. Loyalty points will likely become just one of several currencies in a digital wallet, and QSRs need to think about how they can incorporate these new payment options to keep up with the market and the competition.”

What A Seamless Digital And Mobile Experience Should Look Like

QSRs also need to ensure they are investing into technology and processes that will weave in loyalty programs more naturally into the customer experience than, say, handing someone a piece of cardboard with a stamp on it. Zhong Xu, CEO and co-Founder of order management platform provider Deliverect, said QSR apps need to focus on offering secure transactions, seamless guest identification and faster ordering speed.

“They should also make it easy to share and collaborate with peers, whether it’s taking a picture of what they ordered, or what they were able to redeem, allowing for more organic marketing,” he said. “Many QSR apps also gather data once customers opt in, which can also help improve the overall customer experience.”

The one risk, of course, is that customers won’t want to download apps from every QSR they’re likely to visit, even if they offer a compelling loyalty program. Alex Campbell, co-Founder and chief innovation officer at Vibes, suggested the mobile wallets it provides can become a dynamic channel that extends beyond a mobile app. It can also give them a single view to their view their points balance and available rewards, pay for purchases and earn points through a transaction.

QSRs can also send personalized alerts and lockscreen notifications via mobile wallet that are timely, personalized and relevant, Campbell added.

“Driving downloads of permanent mobile wallet loyalty passes will expand the brand’s reach and supplement their apps with an easily accessible and convenient loyalty program,” he said.

Connecting EX With CX In The QSR Loyalty Space

QSRs can also use the same kind of incentive strategies that inform most loyalty programs to drive employee engagement. San Francisco-based SparkPlug, for example, has developed a platform that allows frontline workers such as those running the point of sale (POS) to earn commissions from selling short-running specials and higher cost-per-plate items.

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Andrew Duffy, SparkPlug’s co-founder and CEO, said rewarding QSR staff its particularly important as many chains attempt to staff up following the pandemic. Giving them reasons to promote and encourage the use of loyalty programs by offering tangible rewards could be key to retention.

“The core of loyalty as a concept has to start in the physical environment, and really with the employee that engages with the customer that walks into the store,” he said. “Customer loyalty from a purchasing perspective is significantly higher for physical retail environments than for digital environment. And that’s because there is that really engaged, personal aspect to it.”

The QSR Quest To Balance Data Collection And Positive CX

Having a digital-first approach to their operations has proven successful for some of the leading players in the QSR space, Midha said. Chipotle, for instance, has seen sales grow by 177 percent in one year. In addition, nearly half of their sales are coming from digital channels.

At the same time, QSRs building more digitally-driven loyalty programs have to strike the right balance between collecting and managing customer data responsibly with personalizing reward offers.

“Customers today understand that loyalty is no more than a progressive disclosure — meaning that consumers are generally willing to surrender a tremendous amount of data if they can receive something valuable in return, be it an experience, or an incentive,” Midha said. Think about how you can offer loyalty as a mechanism to give customers access to your brand in a way that they have never had access to a brand before.”

If you are thinking of demoing a new menu item, for instance, Midha suggested QSRs don’t have to roll it out to every unit. Instead, they can try speaking with those customers who are most likely to buy that menu item, based on their transactional data. “Your customers will feel “in the know” and special, and your brand will effectively complete an operational challenge on large scale,” he said.

Chick’nCone’s Almanzar said he also recognizes the franchise needs to couple more traditional approaches to loyalty with a holistic customer experience.

“I believe loyalty programs should be creative and focus on other rewards besides the monetary side of things. Everyone loves being treated like a VIP, but that only works if the majority of people aren’t,” he said. “Creating the ability to earn unbelievable levels of service or opportunities, creating events and experiences, being in the know sooner, being a taster, accessing certain privileges are all areas where loyalty programs could offer more than just a monetary reward.”

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