Loyalty and subscription services helped companies retain current customers and attract new ones, even as the pandemic upended many business models.
“Loyalty programs are popular right now for several reasons,” Jacob Borgeson, director of product marketing at digital marketing firm Wyng, told The Food Institute. “First, people want to be more connected to their communities after years of forced isolation. A loyalty program incentivizes repeat visits to a place – and that increases the likelihood of creating a new relationship with an employee, owner, or other diners.
“Second, people are looking for deals in this time of inflation.”
SUCCESSFUL MODELS
Starbucks has the most successful loyalty program among restaurants, Shopify noted in a blog post, while Blue Apron takes the crown among food subscription services, Good Housekeeping reported (Jan. 5).
Experts told The Food Institute that all successful loyalty and subscription services have one thing in common: a personalized experience for the consumer, be it coupons and other rewards, games, quizzes or specialty items.
“The most successful loyalty programs for big chains – McDonald’s, Starbucks, Papa Johns, Dominos, Chipotle – focus on financial rewards for repeat customers. They also immediately state the rewards for joining right up front,” Borgeson said.
“People want to participate, they just need the relationship to be totally clear in terms of what the communications, expectations and rewards will be. Local restaurants can enhance this by making the loyalty program feel like more of a community that comes with connection to real people.”
Panera Bread has doubled down on the subscription concept. During the pandemic, the chain debuted its Coffee Club, which allowed subscribers unlimited coffee or tea for $8.99 a month and had attracted 600,000 participants by the end of 2021, Forbes reported (May 4). Now the company is expanding the concept to cover soft drinks, its Unlimited Sip Club, for $10.99 a month, with Coffee Club members grandfathered in at the lower rate.
LOSS LEADERS
Panera also is hoping to attract new business with its new spicy chicken sandwiches. Eat This, Not That (April 16) quoted a Panera spokesperson as saying the company sold more than 1 million in just nine days despite the $10.99 price tag.
CEO Niren Chaudhary told Forbes Panera considers itself a disrupter in the coffee sector, rejecting the notion premium coffee has to be expensive. He said customers are not taking advantage of the service – just getting the free coffee and not buying anything else – because “Panera has never been known for coffee.” Rather, he said, customers have been coming in more often and buying more items to go with the coffee.
“A subscription model streamlines workflows and saves companies time and money,” Guy Marion, founder of subscription management platform Brightback, a Chargebee company, told The Food Institute.
The experts said the key to successful loyalty/subscription programs is the ability to personalize the benefits and to make consumers feel like they’ve “won” something. Chick-fil-a’s program was cited for its flexibility, offering rewards to everyone, no matter whether they order on-site or online, eat in or take out.
“Loyal customers are extremely valuable to both retailers and brands,” said Benjamin Marston of retail data science firm 84.51°. “At Kroger, a loyal customer’s omnichannel spend is 10 times higher than a non-loyal customer. Retaining these households is key to long-term growth.”
