Publishers Clearing House (PCH) has published a new report, Attracting New Customers and Creating Greater Loyalty. The report, which deals with consumer preferences in regard to quick-serve restaurants (QSR), is based on a survey of more than 2,600 registered members of PCH’s online community.
The report posits that incentives matter more than ever, that QSRs need to compete tirelessly in their rewards offerings. It states that “for QSRs the ability to attract and retain customers has become as much about providing the right level and type of incentive as it is delivering a quality product.”
For instance, when asked which features they most like to see in their favorite restaurant’s app, 50 percent of female respondents and 45 percent of male respondents indicated that they are most interested in “coupons and savings.” Meanwhile, only two percent of both male and female respondents wanted “social sharing.”
Matthew Kates, Chief Marketing Office at Prizelogic, says, “Incentives are not only valuable marketing tools to drive purchase but also can be used to drive customers online to establish and grow direct relationships. This is particularly important for QSRs where customers are often anonymous.”
As for acquiring new diners, incentives work. 50 percent of female respondents and 44 percent of male respondents stated that “receiving coupons” would make them want to try a new restaurant. This goes to show that having a quality product, though undoubtedly essential, is not enough to compete in the QSR space. Today’s consumer needs extra motivation to give a new QSR a whirl.
Loyalty also requires incentives in the QSR space.
Jeff Sopko, President of Baesman Insights & Marketing, says, “QSR competition is high and many restaurants are finding it difficult to differentiate themselves from the competitive set. Incentives can help nudge customers in their direction and bring in first-time diners.”
However, he also adds that incentives alone can’t solve deeper challenges. “Incentives can drive behavior, but they can’t drive a mental shift in loyalty. Only experience and product can do that. A good question QSRs can ask themselves is, Would my customers come back if the incentives dried up? The core challenge becomes whether customers are more loyal to your product or their dollar.”
According to the report, “Coupons and savings, loyalty options, and the ability to participate in and win contests keep consumers coming back. That is also why the competition is employing these tactics liberally to lure customers away.” Consumers who frequent a given QSR are likely to also frequent a competitor. Of consumers who identified as McDonald’s customers, 45 percent said they also go to Burger King, and 39 percent said they also go to Wendy’s.
Daniel Kahan, Consultant for W. Capra Consulting, says, “When QSRs like Chipotle first entered the market, they carved out their niche by offering quality ingredients at fast food-level prices. Now that so many QSRs have caught onto that model, the results of this report highlight a reaction to the ready availability of high-quality, competitively-priced consumer experiences. Quality has become the minimum viable product for today’s consumers, and they are looking for those extra cost incentives to influence their lunchtime decisions.”
The report has broad implications for competitive QSRs. The main takeaway is that incentives work. If your brand isn’t using them to its advantage, your competitors have a leg up.