Why Loyalty is Crucial for Restaurants Navigating a Recession During tough times

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Customers must be given reasons to stay engaged.

With inflation, ongoing supply chain issues and the threat of a full recession, consumers are already cutting their spending. What can quick-service restaurants do to prepare for an economic downturn and successfully come out the other side? Staying closely connected to customers is key. A strong loyalty strategy that keeps valuable customers engaged with the brand will help them continue to purchase during an economic downturn and help nurture them back to pre-downturn spending with their trusted quick-service restaurant brands when the economy rebounds.

Now is the time for quick-service restaurants to fine-tune loyalty programs to take advantage of one of their greatest benefits—connections to customers. Here’s how:

Use data to understand customers’ changing want and needs

Analyze customer data before a recession hits as it’s imperative to know their motivations, pain points and preferences. That way, restaurants are ready to meet customers with the content and benefits they’ll value most if the economy declines. First consider how psychographics—a person’s interests, values, and opinions—impact customers during a recession. Then consider the overall value proposition and how minor tweaks—or major changes—could improve customer engagement and satisfaction during a recession. Customer data drives ongoing, meaningful interactions with brands. It’s essential to keep consumer data and preferences current, and then use insights gleaned from it to continuously fine-tune the customer loyalty proposition. 

Nurture emotional connections with customers to build lasting loyalty 

During financially challenging times, it’s critical to maintain emotional connections with customers and remind them that brand loyalty is rewarded. Leading with empathy and grace in messaging and policies is a great way to remind customers of social and emotional connections to a specific brand. Acknowledging difficult times can even strengthen connections with customers. Small demonstrations of care can solidify emotional bonds with customers and build lasting loyalty. A few examples include extending expiration dates on earned rewards, allowing members to maintain status levels an extra year, and surprising members with unexpected perks such as bonus points, special events or personalized experiences.

Provide loyalty rewards that offer both emotional and financial benefits

Give members a reason to stay engaged and remind them to redeem their accrued points and rewards. After all, reward points are another form of currency when discretionary income is tight. Redeeming points helps members treat themselves to little luxuries they may otherwise forego. And that can provide an emotional lift while maintaining positive engagement. According to a McKinsey study, members who redeem rewards spend 25 percent more than enrolled but inactive members. Currency or point redemption accelerates the loyalty loop as customers are incentivized to earn more rewards or benefits.

For example, Dunkin’ Rewards introduced Boosted Status as part of their program redesign, a new loyalty tier to recognize and incent their high value members to remain loyal to the brand. Members visit 12 times in a calendar month to reach Boosted Status and unlock even more points and benefits for the following three months. Members can continue their status without being downgraded by visiting Dunkin’ 12 times each calendar month.

Invest in the most valuable customers

A successful loyalty strategy aligns with a brand’s financial objectives. If loyalty budgets are impacted by recessionary cutbacks, look for ways to focus content and prioritize spending on high-value members—the 10 percent of members who statistically account for 50 percent of loyalty program revenues. 

Assess economic models and budgets per tier to identify opportunities where dollars could be shifted to add value to a program’s top tiers when and if financial circumstances warrant the move. Retaining a customer is far less costly than acquiring one, so reward and incentivize highest-value customers to remain engaged.

Treat loyalty as an omni channel experience

Throughout the customer journey, loyalty is an omni channel experience that can enhance members’ connection to a brand. That’s why it’s important to ensure a seamless experience across all channels from online to in-restaurant interactions. 

Quick-service restaurants have leaned into technology to provide a seamless experience for customers and ensure loyalty members feel special at every turn.  Some brands have great mobile experiences, but it’s hard for loyalty members to find special offers, and members give up or don’t feel special because they’re getting the same treatment as everyone else. At drive-thru, pick-up, or in-store make sure loyalty is directly in line with the technology to create ease of use and a smooth user experience.

Now is the time to evaluate loyalty programs to ensure they offer the right blend of emotional connection, relevant experiences, and rational benefits to keep customers close during tough times and create long-lasting customer loyalty that will pay dividends for years to come.

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