McDonald's efforts to reverse a downturn in business over the past several years has already met some success, but now the fast food giant is hoping for even better results with an upcoming loyalty program tied to its mobile app, as Nation's Restaurant News reports:
McDonald’s USA president Mike Andres said that the program could be a big sales driver for the Oak Brook, Ill.-based burger giant.
“We’re working on a customer-designed loyalty program that we think will be as good as there is out there in the marketplace,” Andres said.
McDonald’s released its app last year, which in many markets has a beverage loyalty offer that gives customers a free McCafé beverage after they’ve purchased five. The app has been downloaded 7.5 million times, Andres said, exceeding the company’s expectations.
Yet Andres said that McDonald’s new loyalty program would be “more robust,” and would be linked to consumer purchases, based perhaps on the number of visits customers make to the chain’s restaurants every month. Customers would likely have a limited time to take advantage of whatever deals the company offers through the program.
Such a move would be consistent with McDonald’s oft-stated belief in recent months that it needs to use technology to communicate more directly with customers.
Andres noted, for instance, that a loyalty program could entice customers to come in after they’ve been absent for a while. McDonald’s could use information it has on those customers’ buying habits to do the convincing.
The Limits of Loyalty
In a post on Computerworld, retail author Evan Schuman expresses serious doubts that McDonald's loyalty campaign will work as intended. That's because thanks to McDonald's must deal with three types of consumers: Ones who are already loyal customers, those who can't stand McDonald's food, and ones with a middling view of the chain.
Of those three groups, Group One (the loyal fans) are not going to be a big help. Incentives from a loyalty program — even with date restrictions — are more likely going to be saved to lower the cost of the next trip, rather than incentivizing an additional trip. Given that the goals are to boost revenue and increase the number of visits, Group One is probably maxed out.
Group Two (haters are going to hate) are a lost cause. Offering free fries just isn't going to sway them.
This leaves us with Group Three, the folk who are not fans but will visit when circumstances make it easy. This is the only group where CRM could make a difference, and I'm making the argument that it won't work here.
Loyalty Programs: The New Table Stakes
There's plenty more in Schuman's full post, which is well worth a read. Whatever the outcome of McDonald's loyalty program, the chain is beginning its journey at a time when the rules for creating ones have changed.
"Loyalty programs are good as long as the engagement doesn't get comprised," says Constellation Research VP and principal analyst Dr. Natalie Petouhoff. "The user interface on mobile has to work and being able to order is key, so we are really talking mobile commerce versus CRM. It's about relooking at your CRM strategy and realizing that your grandpa's CRM won't do any more."
Another crucial factor for loyalty programs is simple transparency, says Constellation Research VP and principal analyst Guy-Frederic Courtin. "What is it I'm getting? I belong to Best Buy's loyalty program, but I have no idea," Courtin says. "Starbucks has one too, but it's very clear."
A third imperative: Making the most of the data you collect from loyalty programs. Companies who approach this wisely can perform better segmentation, improve their inventory strategies, and find insights into product sales, particularly which ones are complementary to one another. "Let's say you and I are loyal McDonald's customers," Courtin says. "We both love Big Macs, but do we like french fries with it or chicken nuggets?"
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