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Loyalty May Not Be in the Cards Anymore

Frequent diner and other participation incentive programs are migrating to new platforms and mutating along the way.

Those little punch cards that retailers have traditionally used to incent customers to come back are going the way of paper airline tickets, fold-up maps and CD music discs. Yeah, you can still find plenty of them, but they're quickly climbing up the technology dead pool rankings.

That's because loyalty programs, like many other aspects of daily life are migrating to the virtual world of portable electronic devices (PEDs) like smart phones. It's not hard to imagine B&I patrons logging loyalty credits on their PEDs instead of tucking them in their wallets, for instance.

The migration of loyalty programs to PEDs is being driven by location based social networking sites like Facebook Places, Gowalla and Foursquare, which track the physical locations of users in real time.

While traditional loyalty programs can only log customers when they specifically make a relevant purchase, these services potentially offer much broader information — about behavior, about preferences and about habits.

They do this through “check-ins,” a feature that essentially serves as a self-reporting locator. Typically on these sites, users “check in” at a particular location to alert those within their social network of their presence.

UPDATE: For a story on how one vendor now offers retailers the ability to check customers in to Facebook Places and to tie check-ins with POS data, go here.

The social network sites will sometimes offer various kinds of perks to users to encourage checking in as often as possible through arrangements with local businesses and services.

For example, on Foursquare, an individual can become “mayor” of a particular location by checking in there more often than anyone else, a status that earns privileges ranging from discounts to preferred treatment.

The potential advantages for retailers participating in these promotions are obvious. Specifically, they can offer frequent buyer incentives to encourage checking in at their location as often as possible.

But the social networking sites go much further than simply rewarding frequent patronage. With their accumulating records of user location data, they potentially offer information about habits that can be used to target incentives.

For example, the college student who routinely checks in at (or even near) a particular retail location at eight in the morning may be a prime candidate for a breakfast or coffee promo offer.

And as check-in data accumulates over time, it also promises to give marketers detailed information on traffic patterns — Is there an order to what locations are visited first and last at a particular multi-outlet venue? Where do customers tend to go just before and just after they visit a particular location? — and demographic data — Do males and females tend to visit a particular location at different times? What about visitors of different ages?

But even beyond that, social networking sites are potentially powerful stealth marketing tools, with users offering commentary, exchanging tips and creating buzz about their experiences with product and service vendors. Even K-12 students will comment about school lunches on their Facebook pages.

Major retailers and manufacturers have certainly noticed the potential power of sites like these. Starbucks, just as an example, offers Foursquare “badges” for visiting a certain number of its stores, and Disney recently signed a deal with Gowalla that lets users who check-in earn stamps at more than 100 locations at the company's resorts in Florida and California.


Some major vendors are launching their own PED based loyalty apps. CKE Restaurants introduced its Happy Star Rewards program for Android and iPhone smart phones at the end of 2010 that gives users reward points for checking in at the company's Hardee's and Carl's Jr. units.

“We know that teens prefer pornography magazines over the classics, but we don't give them copies of Playboy in literature class.”

— Kate Adamick, principal of school food reform consultancy organization Food Systems Solutions LLC, on the need for adults to hold the line on menu choice standards in K-12 lunchrooms even if the students object (from the Chicago Tribune, Feb. 20, 2011).

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