McDonald's is rolling out their Rewards program, so as part of our Loyalty Program Examples series I wanted to take a quick look at how it compares to other fast food programs, in this case Chick-Fil-A One. McDonald's is usually not the first, but rather takes the time to learn from competitors, coming in later in to outflank them with an informed strategy.
Program Review
At first look, the return on spend for the McDonald's program compares favorably, providing 7.4% vs 6.2% for Chick-Fil-A. Digging in a bit deeper though, McDonald's appears to be focusing members on a relatively few rewards items -- a typical menu engineering approach.
The McDonald's program offers 100 pts per dollar of spend, with awards starting at 1,500 points. The lowest level of rewards is 7.3%, but in a unique twist, the program offers only 4 rewards options at each level. Chick-Fil-A offers 10+ options at each of their 5 rewards levels.
Most interesting is the 4,500 point level for McDonalds, which provides the highest return at up to 8.4%. However, the rewards options are telling: Filet-O-Fish, Large Fries, Large Frappe, or McMuffin -- mostly items that would not displace other sales. Further, redemptions would require additional purchases which would offset the cost of the award partially or completely, boosting the ROI significantly.
Chick-Fil-A members can earn higher status levels that increase their earning rate, making the program more lucrative for their best customers. No such recognition for best customers has been announced for McDonald's yet.
LoyaltyLevers Take
The MyMcDonald's Rewards program provides a solid ROI, and makes premier items like the Big Mac available at the highest level. Moving forward, they will likely need to expand the award selection, optimally making personalized awards available to each individual to stimulate trial of new menu items or visit during different day parts. Additionally, Chick-Fil-A offers each location options to run individual promotions, and it will be interesting to see how McDonald's responds given the high value they place on consistency.
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