The Impact of Mobile Loyalty Programs on Customer Retention

The Impact of Mobile Loyalty Programs on Customer Retention

Understanding Mobile Loyalty Programs in the Digital Age

As a marketing strategist, one of the biggest challenges is identifying the different market segments that exist, setting prices and promotions, and determining how to leverage mass media communications to maximize sales and profitability for a brand. One of the ways that brands do this is through loyalty programs, especially in the quick-service restaurant industry. 

Of course, in the digital age, the role of mass media and one-size fits all marketing strategies have become obsolete. In order to make any type of lasting impact, one must find a way to engage with customers directly and get to know them better. With marketing strategies leaning more towards a tailored approach and with QSR technology at the forefront, it is only fair that we explore how mobile loyalty programs affect the customer experience and, more importantly, customer retention.

The Benefits of Mobile Loyalty Programs

There are many benefits of using Mobile loyalty programs. The goal of these programs is no longer to increase revenue but to increase customer loyalty. The objective for many businesses in the quick service restaurant industry is not to generate leads and convert them but to build lasting relationships with their existing customers and claim a greater share of their spending.

Technology, no matter how advanced, is merely a tool, and the end game remains to cultivate customers. Any successful business in this day and age is looking to maximize customer lifetime value because customers and businesses have never before interacted on such a personal level before.

How Is the Customer Journey Affected by Loyalty Programs?

Mobile loyalty programs

While online shopping is a cornerstone of modern life, it lacks the personal touch many seek. For most of us, it was the allure of freeing up our afternoons to go to the mall. Having the sales rep bring you their top picks and having good terms with the floor staff, they would let you browse all the good stuff that they keep in the back.

How does online shopping compare?

Can it ever come close?

With loyalty programs, it can.

Shoppers looking for that extra little push can easily be swept away by technology that not only reflects what they like but can also pleasantly surprise them with what they should buy next. What loyalty programs do is make shopping online less ‘lonely’. This takes away the cold edge off of online shopping and reflects the old-fashioned charm of shopping at a boutique, if only for a little while.

And it makes all the difference.

Why Is Customer Retention Important for the Quick Service Restaurant Industry?

Mobile loyalty programs

Customer retention refers to the ways in which a business turns customers into loyal buyers. A successful business must sustain its first-time customers and ensure that they return. Customer retention requires maximizing the lifetime value (LTV) of customers. Studies show that increasing customer retention rates by only 5% can increase the profitability of a business from 25-95%. 

This is especially true in the case of saturated markets. Customer retention is more important to the quick-service restaurant industry than any other, which is why so many successful food chains have their own mobile applications and mobile loyalty programs.

Learning more about your customers through loyalty programs

From the perspective of a business owner, there is little else that can mine data like loyalty programs. A detailed run-through of what customers are buying, what they are interested in, and the circumstances under which they are buying makes the perfect anecdote for customer retention. Tesco, a UK-based retailer, used its Clubcard program, which offers targeted coupons, to track what customers were buying, and what stores they were frequenting to provide customized merchandise to cater to local demand. According to the study, Rethinking Marketing,” HBR January–February 2010, new fathers (determined by the fact that they were buying a lot of diapers) were also buying a lot of beer (something that the study attributed to the fact that they couldn’t go out to drink as much with a new baby at home). They used this data to advertise ‘flash sales’ and found that the Clubcard coupon had an astonishing redemption value.

Aside from the fact that loyalty programs have to be invested in, which compels customers to utilize a certain app to its fullest potential. The fact that loyalty programs mine customer data over long periods of time and use it to provide customers with more value than they could otherwise inspire “loyalty” to a brand.

Loyalty programs collect information such as age, gender, marital status, dependents, address, income, interests, lifestyle, and even buying behavior. The sheer amount of data they collect can put a brand ahead of its competition. Loyalty programs can help businesses collect and analyze a significant amount of data, but they also provide corporations with a sample to test their marketing strategies on.

It really is a win-win!

What Can We Learn from This?

We live in a time where personalized treatment and rewards are like catnip to customers. We are all guilty of giving into the charm of coupons and gift cards, but when you add the convenience of QSR technology, with personalized offers, discounts, and an aesthetic interface, customer retention can soar. 

But this is not just a fad.

Customer retention is crucial to the success of businesses and always has been. The aggressive marketing trends fueled by rapid digitization and the introduction of cheap and accessible technologies have only emphasized the hollow nature of traditional marketing endeavors that aim only to collect customers, not to keep them.

At CitrusBits, we understand the importance of mobile loyalty programs and QSR technology, taking us back to the core principles of business, i.e., better understanding your customers’ needs and fulfilling them. 

Book a free consultation today to find out more.