Welcome to the second issue of the Loyalty Disrupt newsletter. This week we are talking about subscriptions, the role of loyalty in defending against third-party delivery, and sparking your creativity with six novel ideas for non-discount rewards.
Subscriptions. Worthy of the hype or over-blown?
Taco Bell and Sweetgreen just announced subscription offerings and it’s all anyone is talking about. The Taco Bell program is particularly interesting because it combines one of the hottest ideas in loyalty, the “secret menu” with a paid subscription. After buying the pass on their mobile app, a secret category unlocks within the app menu, allowing customers to choose a taco and redeem it in the restaurant.
All of the industry buzz around subscriptions raises an obvious question – do subscription programs work and if so, what do they accomplish?
While the jury is still out for Taco Bell and Sweetgreen, both will likely see what’s called “the overspend effect,” or incremental revenue generated because when customers have a reward to redeem, they’re more likely to spend during that visit. Taco Bell’s $10 per month subscription pass offers just one free taco per day which means that hungry customers are likely to buy additional items with each visit. Sweetgreen’s approach is similarly smart. The customer is net positive on the 4th visit, so it’s a win-win for Sweetgreen if they can drive adoption in the program (without spending a fortune). They make money if subscribers come in less than three times per month and if guests come in four times, well then it’s industry-leading frequency for the salad concept and one less meal served up by competitors.
Domino’s Supports Local?
Domino’s recently surprised customers with $100,000 in gift cards from local restaurants, supporting these small businesses by encouraging direct orders. They also created a national campaign touting the move. Domino’s, of course, has a strong incentive to demonize the third-party delivery companies. With 90% of their business coming through delivery, 3PD dramatically increases the options available to consumers and puts Domino’s strongest channel at risk.
And if a mega-chain like Domino’s can feel the heat from 3PD threats, any sized restaurant has cause for alarm. These delivery aggregators want a transaction, and they don’t care if it’s from you restaurant or somewhere else. If a customer visits a third-party delivery app looking for their favorite local pizza joint but that business isn’t a customer, you better believe that Uber and DoorDash are going to do their damndest to keep that user on the app by suggesting an alternative.
The reality is that your customers are shopping for you on a variety of channels and while you need to be there to avoid losing their business, you also need to create a compelling reason for them to order from you directly. For most brands, we recommend raising prices on third-party sites and promoting low-price guarantees, exclusive offers, early and exclusive access, and other non-discount loyalty benefits as tools to keep customers coming back on your owned channels.
Six Ideas for Distinct, Non-Discount Loyalty Program Rewards
If you are looking for ways to differentiate your digital offerings and loyalty program, here are a few ideas:
#1. Secret menus
While some secret menus are “not-so-secret” – think In-N-Out’s animal style – limiting access to items for a select group of customers is a no-brainer marketing tactic to create buzz and drive interest.
#2. Early access
Giving your VIPs the first chance to try new and LTO menu items is a fantastic way to make your best customers feel special without extending discounts or freebies.
#3. Exclusive events
For every type of restaurant format and concept, an on-brand event, such as a tasting dinner, happy hour, or chef meet-and-greets, creates a memorable experience and feeling of exclusivity when relevant and offered to the right segments of customers.
#4. Members-only merchandise
Push the envelope by creating unique exclusive merch items to catch customers’ eyes and win their loyalty.
#5. Special passes
Tickets offering “skip the line,” preferred seating, and members-only parking create a first-class experience for your loyal members while showing them you value their time and patronage.
#6. Mega rewards and ultimate experiences
Offering an over-the-top reward or the chance to win a high-value prize is a great way to generate press and media attention while also saying “thanx” to top-tier guests.
For detailed examples, check out “Six Non-Discount Reward Ideas to Make Your Loyalty Program Stand Out.”
Have a question you would like to submit to one of our loyalty experts? Looking for a brainstorming companion for your loyalty program design session?
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“Non-discount” Reward of the Week
Chipotle is celebrating the launch of the brand’s latest veggie-powered protein, plant-based Chorizo, by making the new menu item, featured in three new Lifestyle Bowls, available exclusively to loyalty members through Chipotle digital channels.
Have a unique “non-discount” reward that you would like to share?
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