Chains get aggressive in pushing their loyalty programs

Chains get aggressive in pushing their loyalty programs

Domino’s will give a free two-topping pizza between now and February to customers who order online. | Photo courtesy of Domino’s.Domino’s really wants people on its newly upgraded loyalty program.The Ann Arbor, Mich.-based pizza chain on Monday announced that it is giving away medium pizzas to any customer who orders one online between now and Feb. 11. The caveats: The customer must spend at least $7.99. They have to redeem the order within 30 days, and they must be a member of the chain’s “Domino’s Rewards” loyalty program. To the company, the idea behind the offer is to give customers an option for a quick and easy meal when some sort of event thwarts dinner plans. “Perhaps you burned dinner, the power went out or maybe your in-laws just dropped in without notice,” Domino’s Chief Brand Officer Kate Trumbull said in a statement. “Whatever your emergency situation, Domino’s believes a free pizza can make anything better.”Yet Domino’s is also hoping to get more customers to sign up to its loyalty program, providing the latest evidence of the lengths to which companies will go these days to boost membership in such programs.Loyalty has become a key component in chains’ marketing strategies and for good reason. Loyalty customers tend to come into restaurants more frequently and they spend more when they do. Companies get more information on their loyalty members and can market to them more directly. The programs also serve as the foundation for digital sales, which is where much of the fast-food restaurant business wants to go, given that digital sales generally tend to be more profitable because workers aren’t taking the order. As such, companies have pushed a lot more of their offers into loyalty, arguing that such deals represent investments. McDonald’s has used its MyMcDonald’s Rewards program as the base for many of its promotions over the past two years, for instance, and many of its value offers are confined to that program. The same is true for chains such as Wendy’s and Burger King.Yet this aggressiveness can run into resistance from franchisees who end up with lower revenue when more customers opt to get these discounts. Subway, for instance, has heavily advertised an offer giving customers half-price footlong subs if they order another full-price subs. Many franchisees, frustrated at the discount, do not accept them—to the point that the company is now planning to start requiring operators take the deal. Subway recently announced upgrades to its loyalty program, in its case adding tiers based on level of spending. The sandwich giant views digital sales as a key element in its turnaround strategy, and loyalty is a key component of those digital sales. Domino’s announced its upgraded loyalty program last month, giving customers the ability to earn points on lower spending and to redeem fewer points for menu items. The emergency pizza offer is not specifically tied to its loyalty program, but it is designed in a way that only people on the program can redeem their free pizzas. Thus, the company is hoping to build traffic and sales with an incentive that also boosts membership in that rewards program, or spurs action from existing rewards members. The pizza chain has seen sales turn sluggish in the past two years amid a series of post-pandemic challenges. It has taken several steps to build more sales, such as joining the aggregator marketplace Uber Eats. The chain has also taken other steps, such as giving customers $3 if they order carryout. It has also reinstituted “boost weeks” providing 50% off pizzas ordered online. Now it is giving away entirely free, two-topping pizzas—so long as customers join that loyalty program within a week of earning that pizza. Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.
Restaurant Business Editor-in-Chief Jonathan Maze is a longtime industry journalist who writes about restaurant finance, mergers and acquisitions and the economy, with a particular focus on quick-service restaurants.
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