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Following Best-in-Class Loyalty Practitioners Can Pay Off for C-stores

What restaurants can teach convenience retailers about advanced loyalty programs.
10/27/2021

This is the third and final installment of a special Convenience Store News series on how loyalty programs can drive both sales and customer satisfaction, sponsored by Paytronix. In May, we looked at how to drive membership to your loyalty program. In September, the focus was on building sales by using data intelligently. In this final piece, we look at best-in-class examples of how companies are taking loyalty to an even higher level.

Stiff competition requires that companies constantly refine their loyalty programs to win the devotion and dollars of a choosy public. Restaurants have been doing this for years. Convenience stores serve those same consumers, and those shoppers don’t lower their expectations when moving from one type of business to another. That makes dining an excellent example for c-stores to reveal what’s happening in advanced loyalty programs — and where they are headed. 

A well-designed loyalty program offers “competitive differentiation to demonstrate and provide new proof points of relevance, and to give both parties — brand and consumer — a meaningful reason to re-engage,” said Aaron D. Allen, founder and CEO of Chicago restaurant consulting firm Aaron Allen & Associates.

They’re also associated with higher revenue and frequency. At Dallas’ 550-plus-unit Dickey’s Barbecue Pit, for example, the average guest comes two and a half times a month, but its highest loyalty guests visit once a week. For Scottsdale, Ariz.-based P.F. Chang’s, which operates more than 300 international locations, loyal guests visit more than three times as often as non-rewards members and typically have a higher spend per visit. 

STEPPING UP IN LOYALTY

Here are five ways restaurants are pushing forward to ensure their programs meet brand goals while providing a compelling experience for their loyalty members.

1. Pursuing Next-Level Personalization

Today’s loyalty programs are about understanding the individual customer journey and engaging that guest at every step along the way. Advanced restaurant loyalty programs go beyond segmentation to understand and serve individual preferences and build two-way relationships with their guests. As consumers engage and see personal results from that sharing of data, they feel comfortable sharing even more, deepening the insights that are gained.

“All of that guest data that they’re willing to share helps us so much to cater to what our guests really want, understanding their behavior, understanding what helps incentivize our guests to come back more often,” said Laura Rae Dickey, CEO of Dickey’s Barbecue Restaurants. 

“Today’s loyalty programs go beyond rewards,” said Tana Davila, chief marketing officer at P.F. Chang’s. “This is a gateway to better understanding our guests. When we can dig a little deeper than just the surface and look into the details of guests’ preferences, it allows us to deliver a better, more personalized experience, whether that’s dining in or carryout.”

2. Increasing Their Flexibility

One key lesson gleaned from personalization so far is that consumers want loyalty programs that cater to their individual preferences, from rewards to communication styles to preferred channels. A free coffee offer, for example, means nothing to a strict devotee of slushy drinks. Top loyalty programs are giving members more choice both in how they earn points or rewards (social media posts, answering a survey, etc.) as well as how they redeem them.

P.F. Chang’s Rewards, ranked third among casual dining programs in a 2021 Newsweek consumer survey, recently updated its earned points reward from a free entrée to a $15 credit that can be used across menu categories, excluding alcohol. 

“We surveyed our most active guests to understand how we could improve the program,” said 
Davila. “They told us flexibility of earned rewards was important.”

Surveys and data mining helped Dickey’s Barbecue Pit learn that its members didn’t just want food as a reward option; they also wanted upgraded experiences and exclusive merchandise.  

3. Extending Omnichannel Convenience

This might be one of the most important areas for convenience stores to focus upon. Consumers want to interact with brands seamlessly across channels, and avoid barriers such as reentering data or opening a new app. 

Top restaurant loyalty practitioners are closely integrating their programs with mobile ordering, pickup and delivery, and including lots of payment options, so they can streamline the interface and tailor those experiences to individual habits and preferences. They’re also closely tying the mobile app or website with the in-person experience.

An upcoming loyalty program update from Dickey’s Barbecue Pit, for example, will include full integration with the point-of-sale. Instead of scanning a QR code to link an in-person transaction to the loyalty program, Dickey’s customers will be able to access their memberships via the keypad. In addition to streamlining the loyalty experience, this also makes membership more appealing for non-smartphone users.

Boston-based Uno Restaurants, famous for its 100-plus Uno Pizzeria & Grills, replaced separate loyalty, ordering and app software with one solution. 

“We were paying a lot more because were paying three individual vendors for overlap,” said Regina Jerome, senior vice president of IT. “From a management perspective and being able to support it, it’s amazing. From the guest perspective, all the interfaces look the same. You sign in one place for your order and it automatically gives you the loyalty program as well. Before, they had to sign in twice.” 

4. Leveraging AI, Geofencing & Other Advanced Technologies 

Technologies such as artificial intelligence, machine learning and geofencing are essential enablers of personalized loyalty experiences, and advanced programs continue to refine their use.

Geofencing and other technologies to recognize guests as they near a location are becoming table stakes in loyalty programs. Panera Bread’s newest restaurant design, for example, will automatically recognize loyalty members in the drive-thru or as they enter the store to personalize the experience, according to published reports.  

At P.F. Chang’s, “all digital marketing is geo-targeted to a specific radius around each of its locations. “This approach absolutely helps drive efficiency in our marketing efforts and ensures guests are getting a localized approach to their dining experience,” said Davila.

“Geofencing can open a goldmine of geospatial analytical capabilities for the company while also greatly reducing unnecessary, redundant and cumbersome manual data entry for the loyal member,” added consultant Allen.

5. Taking Data Further  

Loyalty programs are an excellent way to collect data that restaurants and convenience stores can use to shape their offers. But they need ways to find meaning in it beyond simple reports. 

Top programs go farther by investing in resources such as data scientists, and ensuring loyalty data is accessible across the organization. They also maximize their ability to uncover new insights, and use those to drive deeper, two-way relationships with loyalty members.

Dickey’s Barbecue Pit, for example, discovered that younger guests were not as motivated by free ice cream as their longer-term, more nostalgic customers. Instead, they seek things like free Wi-Fi. 

But the restaurant chain can also go beyond that level of insight.

“We’re always looking at what our guests are willing to share and what they say vs. what their behavior is,” said Dickey. “It’s always an interesting dichotomy. [They say], ‘I like this idea,’ or ‘I would love to see that.’ But if there’s a delta between that ask or that share vs. what the purchase behavior is, we can actually ask the loyalty members those type of insightful questions, which has been really helpful.”

As Uno focused on ramping up member acquisition for its newly relaunched loyalty program, it discovered higher-than-expected numbers of new members who had not redeemed their free pizza sign-up reward before expiration. While the team’s first instinct was to extend the length of the offer, deeper analysis revealed many of those same members did redeem a follow-up reward.

“We turned to the data analytics to be able to show us, by the patterns, that that wasn’t the case, and that we shouldn’t do that; we should give the program time to take force,” Jerome said, noting that this was an important insight for the company.

LOYALTY AS TABLE STAKES

There is a reason Wendy’s, Yum Brands’ Taco Bell and Burger King unveiled new loyalty programs in 2020, and McDonald’s and Jack in the Box are set to join the many other restaurant brands already deep into loyalty programs: Restaurants report that loyalty members visit more and spend more, and provide them critical insights to drive strategy.

Convenience stores don’t just serve those same consumers; they also compete with restaurants for share of stomach. That makes understanding what restaurants are doing, and adapting the best ideas, a key to-do list item for c-store executives seeking to invest their dollars wisely. 

After all, according to Convenience Store News c-store shopper research, loyalty programs are currently the top motivator to visit a convenience store.

“A dollar not invested in a loyalty program feels like a dollar wasted for high-frequency and high-margin consumers,”  said Allen.

  • The Future of Loyalty Is Online

    A recent international survey from the business consultancy AlixPartners found that 50 percent of consumers say COVID-19 permanently changed their buying habits, with more of them opting to place orders online. The role of a convenience store has been evolving for some time, and simply having prime real estate on a busy street corner isn’t enough. Customers are looking for faster, easier, and now safer, ways of making purchases — and for many c stores, that has meant diving headfirst into providing an omnichannel customer experience.

    As the convenience landscape undergoes dramatic changes, loyalty programs must be able to adapt. Finding an online ordering provider that can seamlessly marry the digital experience with loyalty redemption has become paramount.

    Online ordering was the critical infrastructure behind most of 2020’s new trends, including curbside pickup and drive-thrus. NACS, the association for convenience and fuel retailing, found that 21 percent of c-store operators have added curbside pickup to their operations since March 2020, while 14 percent of operators said they were focused on adding a drive-thru.

    To enable curbside pickup and delivery — and to maximize drive-thru efficiency — c-stores are investing in online ordering platforms more than ever before. According to NACS, 38 percent of c-store operators intend to expand their app based ordering and payment capabilities, 32 percent will expand mobile ordering for in-store pickup, and 14 percent will offer more ordering options at the pump.

    With these investments come other operational challenges, not the least of which is encouraging customer adoption once the right ordering platform is in place. The same AlixPartners survey found that 36 percent of convenience customers identified loyalty programs as c-stores’ best means of driving online ordering frequency. That consumer demand is backed up by Paytronix data, which shows that integrating online ordering platforms with loyalty programs increases order frequency by up to 18 percent.

    In addition to boosting online orders, loyalty programs and the data they collect can pay big dividends in marketing strategy and overall customer retention. Identified as one of 2021’s prominent c-store trends, loyalty programs in the convenience industry are rapidly evolving into robust tools. As opposed to the basic punch cards of the past, these programs are sophisticated and more akin to those of Starbucks and Panera Bread.

    AlixPartners found that 50 percent of high-frequency c-store customers — those who visit three or more times per week — indicated that loyalty programs are “very” or “extremely” important. The features that make a program appealing to them include flexibility and achievable rewards.

    Alltown Fresh, an innovative convenience brand based in Massachusetts, provides a perfect example of a c-store that’s using tech savvy to wow its customers. The retailer recently launched an entirely new single-platform customer engagement solution through Paytronix. The online ordering solution, custom mobile app and loyalty programs communicate easily, allowing guests to place orders and earn and redeem points anywhere — in-store, online, and even at the pump.

    “The ability to custom-order your sandwich, smoothie or salad — and use the same app to fuel your car and pay without touching the PIN pad — is a game changer,” said Joanna Linder, vice president of marketing for Alltown parent company Global Partners LP. “Plus, guests earn points with every food and fuel purchase through our new Fresh with Benefits loyalty program, resulting in valuable rewards that fit our guests’ lifestyles.”

    As consumer expectations change, leading convenience stores are changing, too. They’re offering more ways to shop, more channels for brand-to-consumer communication, and more options for order fulfillment — whether that’s third-party delivery, curbside pickup, or a drive-thru.

    To make the most of loyalty moving forward, convenience retailers must be prepared to take it fully digital. That advancement should include enabling customers to earn and redeem points at every touchpoint.

    Kiera Blessing is a marketing specialist for Paytronix, a single-platform guest experience tool for convenience stores and restaurants. Before joining Paytronix, Blessing worked in the hospitality industry and for an industry-leading POS provider.

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