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Big Brands Are Launching Loyalty Programs In 2021: Here's Why

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Brooke Lynch
02/12/2021

rewards program

The pandemic has changed the way customers interact with brands; in all of our efforts to remain socially distanced, the world has quickly adopted a digital mindset. This trend is most evident in the restaurant industry, and more specifically, in quick service fast-casual chains.

In 2020, restaurants were forced to make hard decisions; they had to reevaluate the entire dining experience to create a safe environment for both customers and staff. As we continue into 2021, a lot of these restrictions are still in place and many quick-service chains have been forced to reconfigure what an excellent customer experience looks like. 

In doing so, many larger chains are adopting loyalty programs to advance their digital offerings, while rewarding customers for their everyday purchases. Since February began, both McDonald’s and Burger King have begun testing new loyalty programs in select cities across the US. 

The structures are similar; the MyMcdonald’s program will work to consolidate the brand’s current technology, to improve its app and digital menu boards, while simplifying digital payment options. It will also offer points for every dollar spent and it even allocates them to employees for successfully completing training procedures. Burger King’s “Royalty Perks'' offers its own version of points in its namesake, awarding “crowns” for each dollar spent, with a goal to expand features and markets in time. 

Although these new options may seem like a common, standard practice for established brands, these chains have held out and are actually somewhat behind in their implementation. Loyalty programs have been pivotal to brands in engaging long-term customers. This makes the sudden adoption interesting, putting forth the question -- why now? After all of the success brands like Starbucks and Chipotle have seen with these types of rewards, it’s surprising that these top players are just beginning to launch these lucrative programs.

To dive a bit deeper, here are a few reasons why loyalty programs may be coming to fruition in 2021:

 

Proven Industry Success 

In considering the prior successes of this type of program, it would be remiss to not mention Starbucks. The coffee chain still acts as a guide for a standout loyalty program; since its implementation in 2008, it has gained 22 million loyalty members. Starbucks rewards purchases also represented 47% of all US purchases from April through June 2020. 

In looking at these numbers, it’s evident that customers truly connect with the program. Starbucks Rewards gives customers a reason to make repeat purchases, and it has genuinely transformed customer relationships. The brand has established real value in its system, so much so, that customers feel excited to use the app when making purchases. And it actually pays off, since 2019 members have redeemed more than 175 million rewards using the system. 

Therefore, businesses that have struggled throughout the pandemic may be attempting to lean on the proven success of a loyalty program. By offering a familiar loyalty plan, companies can attract customers that are already used to building relationships through rewards.

 

Evolving Customer Behavior

The pandemic likely impacted in-person dining, retail, and entertainment for good in many ways. While safety restrictions initially prompted retail spaces to limit in-person access and reduce restaurant seating, customers have become used to life without these luxuries. Drive-thrus and mobile ordering have become standards in individuals day to day routines and they are unlikely to stray from these habits anytime soon.

Because of this, restaurants and retailers are continuing to adapt digital offerings to meet customers evolving expectations. This increasingly digital mindset makes 2021 the perfect time for companies to adopt loyalty programs. While in the past, restaurants’ apps may have been underutilized or underdeveloped, customers are now actively seeking new ways to seamlessly interact with brands through their phones. Businesses that promote loyalty programs now may see greater benefits. As customers spend more and more time on their phones and become increasingly used to mobile shopping and ordering, these virtual programs have the potential to become a regular part of customers’ routines.

 

Rewards As Excitement

With customers stuck at home, they may be more willing to participate in the ‘fun’ aspects of loyalty programs. One of the benefits of loyalty programs is their ability to essentially gamify purchasing. When looking at Starbucks’ stars reward program, there is something inherently exciting about gaining stars. Seeing the measurement bar edge closer to a new reward brings a new element of fun to the experience. And although it may be a small factor, some customers are seeking this sense of enjoyment in their routine.

This is also true in the personalization efforts linked to loyalty programs. McDonald’s noted that its members will now all be greeted by name, which is a nice touch for individuals who consistently come through the drive-thru each day. 

Additionally, it opens the opportunity to continue to develop new features to engage customers. In an example, Chipotle announced a new ‘Guac Mode’ feature after its loyalty program celebrated its one year anniversary. The feature offered free guacamole to customers whenever ‘Guac Mode’ randomly activated -- bringing customers in for an unexpected surprise. 

These ‘fun’ features may be more attractive to customers after a tough year and could prove to be a reason companies are choosing to implement programs like this now. They also work to keep these programs relevant and encourage customers to continue engaging with your brand. 



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