Why fast-food chains and big brands love loyalty programs

As prices have soared due to inflation and shoppers have tightened their belts, fast-food chains have been competing against each other to tempt them back with the best value meals. McDonald’s, KFC, and Burger King all rolled out $5 combo deals, for example.

“Loyalty programs are among the most effective ways businesses can cultivate customer engagement and repeat business,” Kevin Shahnazari, cofounder of FinlyWealth, a personalized credit card recommendation service, said.

Restaurants and stores that offer points-earning apps can drive consumers to opt to buy there over shopping at competitors and they would likely continue making their purchases somewhere where they can win rewards, he said.

The power lies in the perks

However, a good loyalty program should be about more than just the points.

Financial incentives are still important, but there’s a growing appreciation for rewards programs that align with the customer’s values and include personalized experiences, Zsuzsa Kecsmar, chief strategy officer of Antavo Enterprise Loyalty Cloud, an AI-powered customer loyalty platform, said.

H&M is one of the retailers that offers exclusive event invites to its members, while Nike provides a customization service for its app users.

For Zarina Stanford, CMO at software development firm Bazaarvoice, today’s customer wants to feel recognized, and programs that achieve this can create a powerful cycle of prolonged engagement.

“In a marketplace where choices are endless, a strong loyalty program doesn’t just retain customers, it also builds a relationship that feels personal and valuable,” she said.

It also provides companies with valuable data to understand customers better and tailor marketing.

For the future of rewards systems, Kecsmar said technology will likely play a crucial role in further adapting to the personalized needs of customers.

“This might include leveraging AI and advanced analytics to create more intuitive and responsive loyalty ecosystems that adapt to individual customer preferences and behaviors,” she added.