Dunkin's Rewards Platform Test Multi-Tender Participation
While Starbucks, rightfully so, dominates much of the rewards discussion in the coffee arena, Dunkin’s DD Perks platform is no slouch. Last quarter, the program represented about 12 percent of Dunkin’s visits, with 3 percent on-the-go mobile. It hit 10 million members in 2019, roughly five years from inception. Dunkin’ has added about 500,000 members per quarter.
CMO Tony Weisman said in February that Dunkin’ shifted gears from simply growing the base to fine-tuning it. “What we are doing now is focusing the program more on personalization and customization,” he said.
To that point, Dunkin’s Perks platform looked at loyalty as follows: x amount of purchases equals Y level of redemption, regardless of a customer’s individual behavior.
“What we’re evolving to is a far more typical loyalty-type program,” Weisman said, “where the incentives will be personalized and customized based on driving more incremental traffic.”
An example is Dunkin’s highly publicized espresso launch. What the brand did was offer three different tiers of points to Perks members based on their current and potential usage of espresso beverages. Weisman said Dunkin’ saw “terrific results,” with the higher level of points going to those guests the brand thought needed a greater incentive to try the new drink. “And our follow-up showed that they had a retrial rate greater than the average customer,” Weisman said.
This strategy opens the door for Dunkin’s marketing efforts. It can craft daypart customization, personal customization, and build offers designed to drive personal, incremental business.
“I think that will be the core to the next level of growth,” he said.
Dunkin’ found that the single greatest barrier to broader participation in its Perks program, however, was a construct that required pre-loading a credit card in order to participate and use on-the-go mobile. This wasn’t just a user experience concern, either. Given the issues around data security, Dunkin’ saw potential in trying a multi-tender offer that allows customers to pay as they choose. The brand suffered a data breach just this past October when one of Dunkin’s security vendors found that a third party tried to access the data of DD Perks members accounts.
“We are very optimistic. All of our research indicates that it will be a huge unlock for those who have wanted to participate in the program, but have felt that that barrier was just something they weren’t willing to overcome,” Weisman said.
That day has arrived.
On Tuesday, Dunkin’ announced the pilot of its multi-tender participation in its Perks platform at more than 1,000 locations across the country. As Weisman hinted, it’s the first time guests have been able to earn points regardless of how they pay.
Previously, Perks members could only earn points toward free beverages by paying via an enrolled Dunkin’ gift card. The test allows customers to garner points whether they pay by cash, credit, debit or a Dunkin’ gift card. Guests accumulate points with every purchase by scanning a DD Perks loyalty ID QR code in the Dunkin’ mobile app or with a new physical loyalty card, which is available at participating restaurants, before payment. The points earned, as well as a customer’s points balance, shows up on a printed receipt.
Dunkin’ first tested multi-tender participation for Perks members at California and Pennsylvania locations. The extended pilot adds stores in Hartford and New Haven, Connecticut; Fort Lauderdale, Florida; Syracuse, New York; and Springfield, Massachusetts. Dunkin’ said it would evaluate plans for a possible expansion of the program based on feedback from guests and franchises. Here’s a look at participating restaurants.
“Since launching DD Perks five years ago, we have consistently enhanced our members’ experience and worked to meet their needs through innovative new features, like on-the-go mobile ordering, driving it to become one of the fastest-growing loyalty programs in the industry,” Stephanie Meltzer-Paul, vice president, digital and loyalty marketing for Dunkin’ U.S., said in a statement. “With this pilot, we have the opportunity to bring more guests than ever into DD Perks by opening new options to translate any purchase into points.”
Dunkin’s Perks platform offers five points for every dollar spent on qualifying purchases. Once a member accrues 200 points, they receive a coupon for a free beverage reward. Perks members can also place a mobile order up to 24 hours in advance, select their desired location, and then confirm via the app when they are ready to pick up their order inside the restaurant or at the drive thru.
Dunkin’s 130 or so next-gen remodels have played into this technology, including the mobile-only lane in the first refresh. Weisman said the on-the-go mobile functionally being only 3 percent of visits is misleading. There are some heavily trafficked, non drive-thru inline stores where it can represent as much as a third of the business. And more than 80 percent of those guests who use on-the-go mobile come back as retrial.
“It has very high customer satisfaction,” Weisman said, noting the company keeps refreshing the app to quicken the transaction pace.
Dunkin reported flat same-store sales growth in the fourth quarter stateside. It had comps gains of 0.6 percent of the full fiscal 2018 calendar, year-over-year. Revenue rose 3.6 percent as the company added 278 net new Dunkin’ stores in the U.S.