Loyalty Programs Should Maximize Customer Value Not Discounts

Groupon has it wrong. Or at least partially. Taking a deep dive
into customer data and analytics, Zach Goldstein, CEO &
Founder of Thanx, a loyalty, CRM, and guest engagement platform
shares his insight on what it means to build customer loyalty
with host Barbara Castiglia.


Our understanding of what loyalty is, is wrong. While the Groupon
model of offering discounts will get customers in the door, it
won’t make them come back. This model of offering discounts is
outdated and ineffective. According to Goldstein, loyalty should
mean something else.


Goldstein explained, “Loyalty means maximizing customer lifetime
value. Loyalty means building relationship with your best
customers and it starts with knowing who those people are.
Discounts can be one tool but they can’t be the only tool or you
are stuck in a rote rewards program which really is not
maximizing loyalty.”


The way customers engage with restaurants today has changed over
the last three to four years, accelerated by the pandemic. Now,
customers are ordering online and dining off site, with some
portion of that revenue going to third party delivery.


When a similar situation began happening in a different industry,
brands came up with a solution. Goldstein said, “The only way
those brands fought back…by having a loyalty program and
encouraging consumers to book directly or in the case of
restaurants, purchase directly.”


There is a reason airlines have loyalty programs and why hotel
chains have stuck around for so long: loyalty programs that
provides the correct incentives and recognizes the customer. The
system should be the same for restaurants. Loyalty programs with
incentives specific to the customer are no longer niceties, but
necessities.


Using guest engagement technology, Goldstein is able to “talk” to
customers without them being in the restaurant. Incentivizing
consumer behavior can help bring customers into the restaurant
AND have them spend more money while there. Goldstein said this
is key.