Even as US airline programs are devaluing their points and restructuring the (relatively small) portion of earning that derives from flights, loyalty programs are expanding.
Loyalty marketing is increasing in importance as companies are better able to:
- Track consumer behavior through technology
- Communicate effectively with consumers electronically
The crux of loyalty programs is that consumer behavior can be driven through recognition and reward.
Not every purchase decision is made from scratch, and consumers can be led towards a long view loyalty relationship where they choose a brand by default and make purchases in spite of the value proposition in any single instance in favor of an overall value proposition across time.
Loyalty programs allow brands to communicate with their customers on a permission basis, identify their best customers, and target promotions to drive the needle on individual behavior. It’s important to a company to know who their power customers are, and who their most malleable customers are.
So it’s no surprise to see McDonald’s launching a loyalty program.
According to Nation’s Restaurant News, McDonald’s USA president Mike Andres says it will rival the leading loyalty programs, dialing into individual consumer preferences based on past buying habits. For example, if a customer hasn’t stopped in at a restaurant in a while, it could push an offer that would give a favorite sandwich for free if he returned.
Well, if the offers are lucrative then that’ll be too easily gameable. In fact it could drive people not to visit McDonald’s in hopes of lucrative offers. The program needs to reward repeat visits, not just lapsed visitors.
McDonald’s at the Abu Dhabi airport
Remember that loyalty program members spend more than non-members. Only one in six members Starbucks customers are members of Starbucks Rewards, which goes revenue-based next month. However those members spend three times as much as non-members.
At Starwood 2% of guests deliver 30% of profit and this is driven by the chain’s loyalty marketing program.
It will be late 2016 or early 2017 before we see the McDonald’s program. But loyalty programs aren’t going anywhere.