CHICAGO — Loyalty innovation is speeding up as inflation erodes the strength of consumer dollars, pushing some diners to trade down. At the National Restaurant Association Show this weekend, brands highlighted a variety of schemes to improve their rewards programs – from digital tokens to palm-scanning payment tools – and strengthen customer retention.
“Every major QSR has rolled out loyalty programs in the last three years,” Nathan Casey, IHOP’s VP of digital marketing, engagement and experiences, said during an NRA education session. “It all just kind of happened at once, after years and decades of being resistant to loyalty programs. Because the restaurant industry is finally going through the same digital disruption that every other industry has gone through.”
The allure of traditional points-for-dollars models is fading as menu prices climb, increasing the discounts offered by such programs. Starbucks, Dunkin’ and TGI Fridays are among chains that recently raised the cost of redemption on core menu items to protect margins from overdiscounting, but such changes risk damaging relationships with customers who have grown accustomed to existing rewards.
At the show, experts and operators across the industry discussed this tightrope walk and how loyalty is changing to meet modern customer demands.
Tiers and NFTs
Wow Bao has introduced a superfan tier to its Bao Bucks loyalty program called the Hot Buns Club, priced at $99 dollars annually. In contrast to other loyalty tiers, Wow Bao’s comes with an NFT as a signifier of membership.
Casey said such digital tokens could be valuable for brands with audiences that are already interested in NFTs, or for brands that are looking to gamify their loyalty programs or add collectibles. Still, it’s unclear how many consumers would be willing to pay for what amounts to a digital trading card.
Given the negative publicity associated with NFTs — which are sometimes speculative assets used to defraud consumers, according to the Manhattan District Attorney’s Office — Wow Bao is calling its digital tokens “CollectaBaos,” CEO Geoff Alexander said.
“We're staying away from the NFT title. The crypto space and NFTs have taken a negative connotation in the last 12 months,” Alexander said. “We like focusing on making a collectible, we want it to be something that you own.”
The token is a unique digital membership card for the loyalty program. CollectaBaos grant holders 10% off WowBao.com orders, 10% off merchandise, double Bao Bucks points and free meals, among other perks, according to a press release announcing the launch of the program emailed to Restaurant Dive.
For Wow Bao, CollectaBaos are a way to engage with diners and explore NFT technology ahead of some competitors.
“It's allowing us to help shape and define that space,” Alexander said. “And if you fast forward 24 months or 36 months, when other people start getting into the space, we're going to be lightyears ahead of them.”
The future of NFTs, or similar digital collectibles, is far from settled, Casey said in response to Restaurant Dive’s question at his education session. Starbucks has also offered NFTs, which it calls stamps, to some loyalty customers, entitling them to perks. An early issue of 2,000 such stamps, priced at $100, sold out in about 20 minutes in March, CoinDesk reported.
“It's not going to be relevant for everybody,” Casey said. “Putting in technology for the sake of technology doesn't accomplish anything... I haven't seen fantastic use cases for NFTs yet,” Casey said.
Palm scanning to access rewards and pay
Biometric payment is becoming another technological addition to loyalty programs, Jason Templeman, director at Amazon Web Services, and George Hanson, Panera’s chief digital officer, said at an education session.
The technology is faster than other payment and loyalty identification methods, and more reliably identifies customers, Templeman said, since a palm cannot be lost or misplaced like a phone or credit card.
Panera and Amazon One recently partnered to bring Amazon One’s palm screening technology to some Panera cafes, integrating with Panera’s 52-million-member loyalty program.
Customers can use their palms to pay and access their loyalty rewards, eliminating the possibility that customers or employees could enter an incorrect phone number to pull up a customer’s loyalty information.
“You take the stress away from the associate, take the stress away from the guest, and it's just easy,” Hanson said. Panera deployed the palm scanners at two cafes in March, and the company has been pleased with the results.
The key performance indicators, Hanson said, are usage, registration for Amazon One, new MyPanera registrations, and speed, among others. The palm scanner, Hanson said, has made it easier for customers to register.
“It's shortening up the time of order. It's increasing the accuracy of that loyalty identification, and it's confidently enabling the associate to deliver a personalized experience to that guest,” Hanson said.
Modernized rewards offerings may help foster loyalty in an increasingly digital landscape, but a personal touch, whether through technology or hospitality, is still key.
“I don't think most people care that much about a $5 off certificate,” Danny Meyer, chairman of Union Square Hospitality Group, said during the NRA keynote. Meyer said customers are less interested in transactional relationships, like points for dollars, than they are in hospitality.
Loyalty, Casey said, is a reciprocal relationship between customer and restaurant. That relationship becomes stronger as a result of personalization, experts said. Technology can help with that personalization by tailoring benefits to specific customers, Hanson said.
“It could be offering them a very fast way to reorder their favorites,” Hanson said. “Or it could just be a personalized recommendation based on their past orders.”
To that end, Panera updated its loyalty program in September to offer guests more personalized options when redeeming rewards, striking a balance between the “surprise and delight” model, and the points-for-dollars model.
Focus on staff and customer interactions, rather than specific features in a loyalty program, could also deepen relationships with diners, according to Jesse Li, general manager at Qing Xiang Yuan Dumplings.
Li has found that customers appreciate the simple things most, like when servers remember their names, previous orders or how long it’s been since they last came to the restaurant. The most important part of building a community of customers, Li said, is to treat them like friends.