Coffee Chains Caffeinate Reward Programs With Digital Offerings

Coffee chains are brewing up a battle over customer loyalty: After news surfaced that Starbucks was updating its rewards offering, Dunkin’ is revamping its own rewards program with a pilot multi-tender system. The company is testing a DD Perks program that lets diners earn points at over 1,000 stores, regardless of how they pay. Previously, members of the chain’s DD Perks program could only earn points by paying with a gift card enrolled in the offering. Now, customers can earn points even if they pay with credit, debit or cash at pilot locations.

Dunkin’ U.S. Vice President of Digital and Loyalty Marketing Stephanie Meltzer-Paul said in an announcement, “Since launching DD Perks five years ago, we have consistently enhanced our members’ experience and worked to meet their needs through innovative new features, like On-the-Go Mobile Ordering, driving it to become one of the fastest-growing loyalty programs in the industry. With this pilot, we have the opportunity to bring more guests than ever into DD Perks by opening new options to translate any purchase into points.”

To earn credit with the offering, diners can scan a new physical loyalty card or their DD Perks® loyalty ID quick-response (QR) code in a mobile app at participating restaurants. The customer’s point balance, along with the points she earned on the purchase, would be included on a printed receipt.

The chain first experimented with the multi-tender program at certain stores in Pennsylvania and California earlier this year. Now, it will test the program at locations in Miami, Fort Lauderdale and Syracuse, New York, among other markets. The company said in the announcement it “will evaluate plans for a possible expansion of the program based on feedback from both its guests and franchisees.”

Clarus Commerce CEO Tom Caporaso said of the move, “The new DD Perks loyalty program is a smart move by Dunkin’, because it doesn’t alienate customers who don’t have a bank or mobile phone. Today, consumers want loyalty programs that seamlessly fit their current lifestyle and habits, so it’s important for brands to understand their customers and build their program accordingly.” He continued, “Dunkin’ clearly recognized an opportunity to expand payment options, and by being more inclusive to all customers, Dunkin’ is set up to drive loyalty across its entire customer base.”

According to the company, Dunkin’ counts over 10 million members in its DD Perks program. Through the offering, diners can accumulate five points for each dollar they spent on qualifying purchases. After customers reach the 200-point threshold, they receive a coupon for a free beverage reward to use at “participating” locations. The program also lets DD Perks members order ahead and skip the line via On-the-Go Mobile Ordering.

The Coffee Loyalty Landscape

Nearly half – or 47.5 percent – of QSR managers see loyalty programs as a feature that is important to a restaurant’s future success, per the PYMNTS Restaurant Readiness Index. At the same time, almost eight in 10 – or 79.5 percent – of QSR customers have the same view. And the approximate share of customers and managers who have a positive view of loyalty programs is 80 percent.

Beyond Dunkin’s multi-tender offering, Starbucks was set to launch new redemption options starting in the middle of April. With the changes, diners can redeem 25 stars for a dairy substitute, additional flavor or espresso shot. They can also use 50 stars for a brewed hot coffee, hot tea or bakery item, or 150 stars for a hot breakfast, parfait or handcrafted drink. In addition, they can use 200 stars for a protein box, salad or lunch sandwich, and will be able to get select merchandise or at-home coffee for 400 stars.

Diners who link their Starbucks Rewards Visa credit card or loyalty membership to a prepaid card will not have to fret about points. Previously, gold points expire six months following the calendar month in which they were earned. The green and gold tiers will be removed with the new offering. According to reports earlier this month, the move is an effort to attract new members.

From Starbucks to Dunkin’, quick-service coffee chains are revamping their reward offerings with the help of digital technology to boost customer loyalty.