Burger King thought it was in CRM heaven when it started its BK Rewards program a short time ago.
A press release stated that the initiative would "drive interest and excitement to keep customers coming back to Burger King again and again."
That's not quite what happened. Instead, the chain abruptly announced on Nov. 22 that it would cancel the program. And that move fit a classic pattern, according to Dennis L. Duffy, managing partner of Loyalty Rules Inc., Ashville, NC.
"Companies start something called a loyalty program, but they're not sure what it's supposed to do," Duffy said. "It starts with a lot of excitement, then it goes to sleep."
The Burger King effort was similar to McDonald's Road to Rewards, another "test program since gone silent," in that customers had to post coded numbers online, Duffy added. Both were aimed at a youthful audience.
But there were key differences. For one, Burger King printed the code numbers right on French fry containers, whereas McDonald's outlets had separate receipt printers that "often had wads of coupons hanging off the back," Duffy continued.
And Burger King's redemption scheme was "not as straightforward" as that of McDonald's. A customer had to bid for products on a site co-sponsored by eBay.
In the end, both efforts were too complicated, and they suffered from another built-in defect: That the best way to register people in a retail loyalty program—at the point of sale—is impossible for a quick-service restaurant, Duffy said.
Speaking at the National Center for Database Marketing conference in Orlando, Duffy also gave less-than-rave reviews to Citibank Sony Rewards. This program consists of a co-branded credit card that allows users to earn points that can be redeemed for Sony merchandise.
The problem is that the customer has to document the purchases. "There are two manual request processes," Duffy said.
Just as bad is the My Sony program, formerly known as Dreamlink. The name was changed three months ago, but the proposition is the same as it has always been. Customers earn points by clicking through on newsletters.
But Duffy called it a "frustrating" program. For one thing, "There's nothing about buying Sony products," he said. Moreover, the member has to use the points with cash on a Web site. "I've looked at it, and it doesn't look like a deal," he said.
Duffy argued that "when you suggest a level of service, you have to provide it."
Aren't there any good loyalty programs? Yes—there are many, he said. Usually, they result when companies offer value and avoid rewarding business that they already have.
When appropriate, a loyalty program should serve as a tie-breaker in a crowded market. MCI achieved that with its MCI FreeFlix program, which allowed customers to earn free videos at Blockbuster. "A video rental reward as high utility," said Duffy.
MCI also has a frequent flyer program for its more travel-oriented customers. "You must stay with MCI for 60 days—the most volatile time in the long-distance business," Duffy said.
Then there's the Exit to Evian loyalty program, which rewards points that can be used to purchase products like branded T-shirts. It also includes a sweepstakes.
The effort has "quirks and long-term issues," Duffy said. But it allows Evian to do what many packaged goods companies only dream of doing—to get transactional information on customers, he added.
Duffy also praised the Blockbuster Rewards program, for which customers pay $9.95 per year. What does it consist of? The member has to rent five videos in a month to get one free.
"Blockbuster has line-of-site competition (from other chains)," he said. "This is the tie-breaker. But they're not giving away their base business—it's skewed toward incremental business."
