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Which QSR is Executing the Best Loyalty Program?

This is the third in a series of short reviews covering a range of rewards programs in the quick serve restaurant industry (QSR). In Part 1, we reviewed MyPanera, the new program from Panera Bread launched during 2010. In Part 2, we took a look at Qdoba Rewards, the not-so-spicy offering from Qdoba. To wrap up this mini-series, we’ll cover the sandwich wars between Subway and Quiznos.

We originally looked in on each of these programs in a previous post and concluded that each program had its flaws but were reasonably good first steps to engaging customers and creating repeat visits for their sponsors.

To build on that original post, it occurred to us that Subway has been able to leverage its brand positioning (fresh, healthy, made to order) to bear some risk in its loyalty strategy. Subway took the step to incorporate a reloadable prepaid card as the exclusive tracking and payment device for its program, a tactic becoming more popular in the QSR category.

Both Starbucks and Dunkin’ Donuts are using the same approach and we believe that this is less designed to delight customers than it is to generate additional revenue through the prepaid card itself. Although Subway is a well-known brand, it is unclear if there is enough passion and advocacy behind the brand to overcome the requirement to use a prepaid card to participate in the program.

There is more on this battle of the sandwich brands in this DMNews article if you want to check it out.

To wrap up our series about which QSR is executing the best loyalty program, we’d like to leave you with these best practices for QSR rewards:

  1. Make Enrollment Easy: The initial enrollment process and ability to identify members when they visit the store through the Point-of-Sale (POS) system needs to be “QSR” – Quick/Simple/Rewarding. This category is all about convenience and time-savings. If the enrollment process is clumsy and requires multiple steps, customers will be less inclined to join. Likewise, if they can’t seamlessly link their transaction to their membership when purchasing in store or at the drive-thru, they will quickly disengage from the program.
  2. Communicate Value: The consumer value proposition must be clearly communicated – initially and through ongoing communications. This is especially important as the average purchase transaction size is on the smaller size, and it may be a challenge to get members excited about the rewards they can earn.
  3. Put Objectives Before Technology: Business objectives and the customer experience should be the anchors of the program strategy, not the technology. We understand the financial impact of prepaid cards, but if restricting payment method to earn rewards isn’t what customers want, the program will not work over the long term. It has been proven in retail that tender neutral payment options drive greater program enrollment and member engagement. The positioning of the prepaid card would be better as a points-earning accelerator rather than a core feature of the program.

Reward programs are proliferating in QSR and the level of sophistication is growing. We’ll continue to track progress in the category and invite you to send us your comments or suggest a prgoram to review in the future. See you in the drive-thru!

Author: Bram Hechtkopf

Bram leads the “marketing of Kobie Marketing.” He consults with current and prospective clients on new business opportunities, helping to develop customer retention and loyalty marketing strategies and solutions that drive increased retention and spend. Following in the footsteps of his father, Kobie’s founder, Bram is eager to continue Kobie’s vision of technology and data analytics as enablers of leading-edge marketing executions for world-class customer loyalty initiatives. Bram has consulted with a wide array of leading brands including AMC Entertainment, TGI Friday’s, BJ’s Restaurants, Verizon, Bank of America, RBC, Flagstar Bank, JPMC, Sagicor, Coca-Cola, Cox Enterprises, Ruby Tuesday, Hawaiian Airlines, and Royal Caribbean Cruise Lines. Prior to Kobie, Bram worked with the Human Capital Transaction Advisory Services practice for Ernst & Young, LLP, where he developed and presented analyses and recommendations on executive incentive and equity plan design and due diligence findings to senior management and the Board of Directors of Fortune 1000 clients. Prior to Ernst & Young, Bram worked with Towers Perrin in Manhattan as a consultant specializing in incentive plan design for executives and sales forces. Bram received his Bachelor of Business Administration degree with honors from the Goizueta Business School at Emory University with a concentration in Marketing and Information Technology.

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