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Restaurants used to use loyalty programs as a tool for promoting repeat visits; now restaurants are supplementing these programs by incorporating mobile options to keep people eating.  Loyalty apps like Front Flip and Belly are attractive to restaurants because these apps help them attract and retain customers.  Apps like Front Flip and Belly provide customers with a more interactive and individualized experience than traditional loyalty programs.  In the past month alone, over 30 similar mobile loyalty apps have launched.

Front Flip allows customers to use their smartphone to scan a QR code at a restaurant; this QR code will unlock a digital scratch off card that allows the customer to redeem a prize, usually a discounted menu item, on the spot.  Or customers can scan the code on the back of their receipt later so that they can continue trying to win.  Front Flip has over 2,000 participants nationwide and charges restaurants about $125 a month for the service.

One McDonald’s franchise owner is finding success with these types of apps because they appeal to younger customers who don’t cut coupons and it gives them a reason to keep coming back.  He says he has noticed a 10% to 25% increase in sales in menu items that have been promoted on Front Flip.

Belly, another Loyalty app, is used by more than 6,000 merchants and restaurants nationwide and charges $50 to $100 per month.  Participating restaurants receive an iPad which is usually placed near the register.  Customers scan a bar code from the restaurant’s iPad and can earn points that can be redeemed for merchandise or discounts later.

Registration in traditional loyalty programs, such as punch cards, is still much larger and continues to grow, but many customers are becoming bored with those programs and don’t want to keep up with the cards and/or want a more interactive and engaged experience.  In addition, app providers claim that they can help restaurants learn more about their customers and capture better data than traditional loyalty programs.

Discussion Questions:

1. What are the relative tradeoffs between loyalty apps vs. traditional punch-card loyalty programs?

2. Besides restaurants, what other retailers or businesses might benefit from loyalty apps? Explain.


SOURCE: Julie Jargon, Wall Street Journal, July 12, 2013