Retail, restaurants drive big business with loyalty programs

At this week's Fast Casual Executive Summit 2012, the panel discussion "Consumer Loyalty: Driving Big Business" looked at ways to drive loyalty and advocacy, not just frequency of visits. And while the discussion was focused on fast casual restaurants, one panelist's Apple example shows that the ideas also are just as applicable to the retail space. 

Megan Flynn, the senior vice president of marketing and business development for RewardsNetwork, moderated the panel made up of Jon Jameson, a founding partner in Bellwether Food Group; Stacey Kane, vice president of marketing for California Tortilla; and Andy Mantis, senior vice president for MasterCard Advisors.

To start, Flynn talked about the "customer engagement ecosystem," ranging from pre-visit to visit activities on the part of Fast Casual Concepts, and how important they are to creating loyalty.

"Driving loyalty does not start when they're seated in the concept," she said.

Loyalty programs also provide valuable information on how to better reach those customers and increase their loyalty, and their spending.

"Actionable insights is what we're focused on," she said, noting that the raw data is not important unless it is translated into information that can be used.


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Among the panelists, Jameson led off by focusing at first on the difference between frequency and loyalty, saying that the most important driver of loyalty, not just frequency, is the experience – and the experience is driven by a one-size-fits-one approach to marketing and relationship building.

He started by asking the audience what was the difference between two concepts, one with a national footprint that everyone recognized and another, copied from the first, that doesn't and that few people knew.

If the two concepts were doing things the same as far as design and menu, since the second was copied from the first, "what went awry?" he asked. One built loyalty, and one didn't.

Jameson also used Apple as an exemplar of how to build loyalty through the ideals or Apple brand architecture pyramidvalues with which a company brands itself. Yes, Apple provides sleek, highly-functional devices, but it is in its appeal to the aspirations and self-images of its customers that it truly stands out and builds a fanatically loyal customer base.

Then he took the audience through what he called the "loyalty loop" and talked about how the emotional connection can be made that transforms a possibly frequent visitor into a loyal one.

Kane took the audience through the successes and failures of her chain's "Burrito Elito" loyalty program. She stressed that one of the hallmarks of California Tortilla's approach was communications with the loyalty members that weren't always just about the restaurant or the food, but about a variety of topics from politics to culture. According to Kane, 33 percent of the concept's checks are loyalty customers.

What made it successful, she said, was using the right voice, (not always selling or promoting the brand); finding the right loyalty partners (they changed loyalty partners in mid-stream to great success); franchisee buy-in (they got a great deal of that by giving them the loyalty cards instead of selling them to them); and annual or semi-annual promotions that encouraged registration (such as a "Burrito Elito"-only sweepstakes, she said).

Going forward, California Tortilla is looking to make registration easier, perhaps with kiosks or mobile applications in-store; and is focusing on better social integration, with studies showing that loyalty members who are also Facebook fans spend 70 percent more at a concept.

Lastly, Mantis said his company, he called it the "professional services arm of MasterCard," has taken years of transaction records for roughly 1.8 billion cards, anonymized with any personal information removed, to provide actionable data for companies. Using as a case study a project MCA did with a restaurant, he said, "It's a way of understanding customer loyalty, quantifying it and applying it in a targeted and intelligent way."

During the Q and A session, Jameson used his personal experience at his local Panera Bread location to illustrate how a very successful loyalty program can work. He usually goes to Panera for breakfast, and rarely buys a beverage, he said, so on recent visits he received a coupon for a discounted lunch and a coupon for a free beverage, as ways of incentivizing him to try other products and dayparts.

"They consistently and constantly monitor the individual because, again, one size fits all just doesn't work anymore," he said.

Read more about retail loyalty programs.

This article originally ran on fastcasual.com.

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