McDonald's Canada and old school loyalty

McDonald's Restaurants of Canada Ltd is doing an interesting thing in Kitchener-Waterloo, Ontario and some other locations with its McCafĂ© Coffee Loyalty Program.  I'm not sure if it's a test, a pilot, a powerful franchisee with a penchant for old-school tactics, but they have an 'on cup' loyalty program that must have taken some significant effort to implement. It's in Edmonton,AB, KW/Cambridge/Guelph, and Atlantic Canada.

One side of the cup has a fancy sticker (pretty sure all sizes have the stickers) and the other side of the double walled cup has a 'pull-out' perforated oblong loyalty card.  As per the picture above, you simply take the sticker, stick it, and collect 7 for a  free medium hot drink.

And now the real question---  Why ?

This kind of program is elaborate from a production standpoint, having to make special McCafe Loyalty cups with extra steps for stickers, perforations, etc.  They could have done a separate card and done the stickers like their monopoly execution, but they've gone this route.  Ok. Fine.

What about the financials?  If I'm a McDonalds coffee drinker, it's likely because of price and convenience, not a loyalty to either the coffee itself OR McDonalds. I like the coffee because it's close to my work and cheap-- it's also pretty good, but that isn't my deciding factor. So why reward with a free beverage? On a side note: Tangible Goods are one of the oldest forms of loyalty, though they still work.  They are one of the least 'sticky' and most expensive ways to deliver a reward to a customer, --but they do work.

But then we have the real clincher when it comes to Loyalty and brand engagement, especially in this day and age, and especially for the largest and most sophisticated QSR in the country--- DATA.

They get absolutely no data from a program like this.  They don't know who the customer is. How much she buys, how often, with what other products, during what times of day, etc---   Sure they can get most of that from their own POS analytics, but they can't tie that to the customer.  They can't reward ad hoc, develop any kind of 1:1 communications with the customer either to promote or simply to solicit feedback for the operations of the business, or build engagement outside of the restaurant.

For all they know, homeless guys are picking stickers off discarded cups and coming in for free coffees. I shudder to think...

So, if this is a pilot, and they are attempting to learn from it, here's what I would do:  

Determine what data we can get from these kinds of interactions, beyond just coffee.  Issue cards, fobs, mini-fobs (or partner with a solution provider that does something else like SMS codes or apps) to every customer that wants one.  Start to tie the purchase behaviour of every customer to a unique identifier.  Make sure that there's a reason to show the card (like every 7th coffee is free) but also make sure that the incentive to present is widely appealing.  You don't want to ignore a segment and lose out on valuable intel, but you need to balance that with starting to segment into customer value groups.

Learn about your customers.  Give them an incentive to share VPI (Volunteered Personal Information) as far as interests and preferences, but also allow them to connect other data sources like Facebook's Opengraph API that can enrich the data with even more usable intel. All this links up with the purchase and frequency data from the POS (to the product level...) to create an amazing picture of what's happening in store.  Another side note-- this analytical power can also help store operations in numerous other ways beyond marketing.  Marketing is just the tip of the sword.

Develop communication channels and preferences. This is not new, but it's about tailoring the conversation. If Customer A likes getting an email once a week, then do that.  If Customer B is fine with getting a mobile alert with a great deal with a 1-hour countdown-- do that.  Make sure everything is tailored to the customer and don't feel like you have to blast everything to everyone.  Not everyone needs a coupon, so don't waste money on them. When those coupons come in the mail, how much are we really learning from their redemption.  (...and don't ask the folks at Canada Post...)

Gamify the experience for the customer. This could put a new spin on a QSR loyalty program.  Since you know what restaurants the customer visits, when, what they buy and in some cases who their friends are--- use that to motivate them and change their behaviour with game mechanics.  Imagine if I get a free Big Mac when I visit 5 different McDonalds over the course of a month?  Or if a family is always buying Happy Meals (again, you know from the data) then reward them with virtual rewards (online gaming credits, Club Penguin credits, fun desktop backgrounds, etc) when they complete a challenge. Gamification can include mechanics that are Behavioural (Status, Exploration, Discovery, Lottery, Free Stuff, etc) or Progression (Achievement, Levels, Points, Movement) or Feedback (Bonuses, Comboes, Challenges, Countdown timers, etc).  Not everything has to be a free coffee.

Don't forget about the employees.  McDonalds is known for being a great place to work with excellent training, employee engagement and management training programs.  Employees can be an amazing asset to any loyalty or engagement program that faces customers, because they control so much of the customer's experience and first impressions.

So--- Million dollar advice I'm sure.   What would you do if you were McDonald's Restaurants of Canada and you were looking to enhance customer experience and drive SSS revenue YoY?