Loyalty Programs Should Maximize Customer Value Not Discounts

August 1, 2022
Barbara Castiglia


Groupon has it wrong. Or at least partially. Taking a deep dive into customer data and analytics, Zach Goldstein, CEO & Founder of Thanx, a loyalty, CRM, and guest engagement platform shares his insight on what it means to build customer loyalty with The Main Course host Barbara Castiglia.

Our understanding of what loyalty is, is wrong. While the Groupon model of offering discounts will get customers in the door, it won’t make them come back. This model of offering discounts is outdated and ineffective. According to Goldstein, loyalty should mean something else.

Goldstein explained, “Loyalty means maximizing customer lifetime value. Loyalty means building relationship with your best customers and it starts with knowing who those people are. Discounts can be one tool but they can’t be the only tool or you are stuck in a rote rewards program which really is not maximizing loyalty.”

The way customers engage with restaurants today has changed over the last three to four years, accelerated by the pandemic. Now, customers are ordering online and dining off site, with some portion of that revenue going to third party delivery.

When a similar situation began happening in a different industry, brands came up with a solution. Goldstein said, “The only way those brands fought back…by having a loyalty program and encouraging consumers to book directly or in the case of restaurants, purchase directly.”

There is a reason airlines have loyalty programs and why hotel chains have stuck around for so long: loyalty programs that provides the correct incentives and recognizes the customer. The system should be the same for restaurants. Loyalty programs with incentives specific to the customer are no longer niceties, but necessities.

Using guest engagement technology, Goldstein is able to “talk” to customers without them being in the restaurant. Incentivizing consumer behavior can help bring customers into the restaurant AND have them spend more money while there. Goldstein said this is key.

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