Is McDonald’s Headed for a (Loyalty) Makeover?

May 2, 2013

When KFC’s Chinese market sales dropped 14% in the first quarter of 2013 due to the growing bird flu scare, few were surprised. But when the world’s largest fast food chain, McDonald’s, reported a 1% global same-store sales decrease and a 1.2% US sales drop, a ‘McFlurry’ of articles cropped up probing how the company can improve.

The QSR giant is considering a variety of options:

  • Healthier menu choices
  • Food delivery, tested in urban markets without drive-thru
  • All-day breakfast
  • Loyalty program creation

The first three bullets are no-brainers and make a lot of sense. But the fourth bullet, “loyalty program creation,” is vague. Is it possible McDonald’s isn’t sure how to further engage already loyal customers – the company’s most frequent patrons? Or have the company’s execs read the latest Technomic report, which found 64% of consumers are not restaurant loyalty members? It’s possible that McDonald’s fears the cost of loyalty implementation when few are interested.

Dismissive thinking aside, I think McDonald’s is in an excellent position to be truly innovative. Unlike KFC, the Golden Arches aren’t running out of golden nuggets. A 1% global sales decline is minimal and, compared to competitors, McDonald’s market share expanded and revenue grew 1%. This leaves the brand some wiggle room to explore new ideas.

Rather than thinking of loyalty as a separate idea, or as a fourth-bullet suggestion, McDonald’s should weave loyalty in throughout the dine-in and eat-out customer experience. Perhaps the company should consider:

  • Creating tiered loyalty programs – linked to engaging mobile apps – wherein loyal delivery and all-day breakfast patrons are rewarded for their repeat business.
  • The Happy Meal will soon turn 35. Why not use that kid-friendly classic to create a gamified marketing platform? FromQSR Giant McDonald build-your-own-virtual-burgers to posting customers’ in-restaurant presence on social media, levels of activity can easily be pegged to a rewards program.
  • Bring Canada’s “Our Food. Your Questions” campaign to the US. Here, too, the most commonly-asked questions (or perhaps even the funniest or most brutal) can be ranked and participants could be rewarded for their thoughtfulness.

Speaking of humor, rather than just rewarding lively customers’ questions, the brand should also try its hand at rib-tickling engagement. KFC’s “I ate the bones” commercials, part of an effort to promote the chain’s new boneless chicken option, are hysterical and very effective.

And that’s really what loyalty marketing is all about – genuine engagement and genuine experiences that make people smile, making them feel like, well, humans and not some proverbial hamburger meat.

That’s a recipe for success that Kobie helped BJ’s Restaurant and Brewhouse discover too. The chain added a social experience to its Premier Rewards loyalty program, allowing guests to share their onsite dining experiences through Facebook and Twitter. This feature helped BJ’s boost the frequency of patron visits as well as average spend per visit. And while it’s not stated explicitly in Technomics’ latest study, I would bet the US’s top 10 fastest-growing large restaurant chains of 2012 – including Dickey’s Barbecue Pit, with a 47% sales increase from 2011, and Firehouse Subs’ 34% sales surge – achieved those gains in part by finding new ways to connect with patrons.

Perhaps this tactic can also work for the biggest fast-food behemoth of all? What do you think about the possibility of McDonald’s implementing a loyalty program? I’d love to hear your thoughts and encourage you to share these with Kobie community in the comments section below.