Restaurant Loyalty Programs: stagnant??

Ten years ago, when I first ventured into the loyalty space as Chief Revenue officer of PAR Punchh , innovations we developed were:

• White labeled mobile apps
• CRM?
• Segmentation
• Online ordering integration
• Coupons and offers
• Receipt scanning

Personalization and omnichannel earning and redeeming of rewards were cutting-edge. Fast forward a decade, and brands are still announcing "Cutting Edge Loyalty Programs" with the same exact same features we introduced nearly a decade ago. These are now table stakes features!

In the restaurant industry, loyalty/CRM companies typically serve as custodians of customer records, points calculators, POS integrators, offer engines, and provide basic CRM functions with messaging capabilities like email, push notifications, and texts.?

This feature set has seen little evolution over the past decade. While some companies try to differentiate themselves with features like credit card rebates, easier registration processes, and access to secret menus, these “innovations” are more about posturing than true technological advancement. They shift the conversation and give the appearance of a new approach, but they serve more to help close deals rather than actually enhance the consumer experience and drive ROI. Despite the endless number of new entrants in the space, most offer little more than feature parity to existing solutions.

Traditional loyalty programs benchmark against themselves, typically looking at a customer's engagement from the first day they join the loyalty program or comparing loyalty customers to anonymous customers. This is a narrow view.?

Why aren't they measuring all visits, including transactions prior to joining the loyalty program, as a loyalty member, third-party delivery visits, and transactions where the customer doesn't identify themselves as a loyalty member??

There should also be some measure of friction. Should a transaction be attributed to loyalty just because a person has a credit card linked to the program but takes no incremental action??

I'd consider that passive earning, similar to card-linked offers that banks have been running for over a decade. In this scenario, a consumer often doesn't even realize they are getting anything and/or aren’t expecting anything. Are you giving away revenue from a passive visit?

This stagnation in innovation has paved the way for horizontal platforms to enter the restaurant space, bringing advanced segmentation, improved messaging capabilities, and CDPs to the forefront. My view is that these platforms are merely filling the void left by the shortcomings of many legacy platforms. If they are able to offer significant value, why haven't loyalty platforms themselves evolved??

All while most loyalty providers are billing at rates two to three times higher than ten years ago, with minimal technological advancements (or more importantly, increased performance) for their brand partners. The lack of innovation has also led to a spike in brands hiring consultants to try and squeeze some sort of additional revenue from these large investments. We also seen an increase in niche partners that offer things like middle service layers and offers engines. Many of these are truly important but generally serve as bandaid to hold the legacy platforms together.

While we are finally beginning to see some disruption in the loyalty space, it largely stems from consolidation and feature expansion rather than true technological advancement. There is undoubtedly a SaaS arms race in our industry. Companies that once partnered are now both partnering and competing, hedging on each deal. They can choose to either integrate with others or provide comprehensive solutions themselves. This creates a challenging environment for buyers, as many best-in-class providers struggle in their new endeavors. We’re seeing loyalty companies acquire ordering companies and vice versa. The market is limited, and everyone is vying for the largest slice of the pie. Some of this behavior is definitely driven by the pressures of many of these companies now being publicly traded, as they need to continue to show growth to investors to justify their lofty valuation multiples.?

Will we see enterprise brands make the shift back to all-in-one solutions from best-in-class?

Many companies focus heavily on data, but where is the emphasis on engagement and personalization to drive consumers into the program or encourage more frequent transactions? Why is there such a lack of focus on social media integration or gamification? Personalization often means creating a segment of customers who exhibit similar behaviors as a subset of the overall customer base and offering the same deal to all, hoping they all take action because they happened to have something in common. This is why reward redemption rates are historically low for most loyalty programs. Why not give each person an offer optimized for being most likely to lead to a transaction and actual value in the future for the brand?

There’s a significant emphasis on controlling credit card processing/tokenization to "unlock" a new level of data; but even with that, how do you truly engage and maintain a consumer’s finite attention? It's not about simplistic schemes like spend X, get Y, or earn 100 points and get $10 off. The truly successful programs today focus on utility and convenience rather than discounts and offers due to the lack of genuine personalization.

Here is just a few days of my Spam inbox (note: I did not mark them as spam, this is just where they are landing). Programs all blend together because many are essentially the exact same and speak to an audience vs an individual. Programs aren't even personalized for the brand let alone the consumer.

The future of the industry is not Traditional Loyalty/CRM. It is CXM and its experiential for the consumer and encapsulates all the table stakes features of traditional CRM + CDP + AI for true personalization.