The Future of Loyalty
HT caught up with Zach Goldstein, Founder and CEO of Thanx, to talk about loyalty and where the industry is headed.
HT: Where does Thanx see the future of loyalty headed?
Zach Goldstein, Founder and CEO of Thanx: The future of loyalty has the following core components: differentiated programs, non discount rewards, and ease of use.
To earn share of wallet from today’s (and tomorrow’s) customers, restaurants need truly differentiated loyalty programs, distinct to the brand - from the touchpoints and messaging to the program architecture. While any restaurant can offer generic coupons and rote rewards, future-looking brands should look to use non-discount rewards to drive customer loyalty with experiences, exclusivity, and special access. Modern loyalty platforms must provide optimal data capture and ease of use in activating that data, so that restaurant teams of any size can execute on sophisticated personalized marketing without overly-complex tools or data scientists.
HT: Where does that proprietary integration with credit card networks fit in?
Goldstein: Robust data is a product of ease-of-use on behalf of the customer as well. Thanx’s proprietary integration with credit card networks eliminates data breakage by making loyalty program engagement completely frictionless for the customer. There is no need to scan a QR code, download an app, or share a phone number for customers to identify themselves as a loyalty member to the restaurant. With Thanx, customers can enroll into a loyalty program or gain rewards progress by simply placing an online order or swiping a credit card in-store, massively accelerating program adoption and engagement. Customers’ dining options are increasing by the day, so it must be as easy as possible to not only order from restaurant’s owned channels, but to engage with their loyalty program as well.
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These are essential components of the next phase of loyalty because restaurants are no longer competing with just the brand next store geographically. They are competing against an entire digital ecosystem and any brand that can appear on a 3PD app to your customers. Often that means brands must compete with themselves to win on direct ordering for better profit margins and invaluable customer data.
HT: How important are exclusive offers in terms of building loyalty?
Goldstein: Offering exclusivity in place of discounts should be a primary objective for restaurant marketers when designing their loyalty program architecture. Traditional discounts are not only expensive but they risk devaluing your brand and training customers to wait for these types of offers. Instead, incentivizing customers with exclusivity in rewards like hidden menus, special events, or LTO merchandise for example, builds lasting emotional connections to the brand – ultimately driving customer lifetime value, the most important metric in measuring loyalty program success.
What, in your opinion, is the best practice for this? To reward the most frequent visitors? The biggest spenders or ?
Goldstein: Non-discount or experiential rewards typically have the most traction with an already engaged audience. For example, a first time customer might not necessarily be invested enough to desire access to special events or merchandise. This is still good news, however, because another critical metric in loyalty program success has little to do with customer acquisition at the top of the funnel. It is converting 2nd time purchasers to a third purchase. According to data, customers who make a third purchase are 10 times more likely to come back again versus one-time purchasers. And now brands have the power the incentivize this behavior with more than just coupons or freebies.
Another best practice for leveraging exclusive offers in your loyalty program is to test and see which offers to make available to which guests, and through which channel delivers the best results. Brands can A/B test numerous variables to learn what campaigns yield the most ROI. In a few clicks, marketers can test which exclusive offer performs best, such as an invitation to a VIP dinner or the chance to win limited edition merchandise. Brands can also test messaging to see what visuals, content, or copy resonates most with guests, as well as which messaging channel, such as email vs SMS, is preferred. This type of data-driven marketing can be leveraged to drive more value from any customer segment – whether that be biggest spenders or those at risk for churn.