Cards, Rewards and Contests: Fast food looks for loyalty

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The fast-food industry is slowly catching up to building and maintaining customer relationships via loyalty marketing-with mixed results.

Fast food "is one of the last huge industries where the customer is invisible," said Michael Capizzi, VP-marketing at Frequency Marketing, a Cincinnati-based company that designs and runs loyalty programs. Jim Buckley, marketing director-targeted media and print solutions at Valassis Communications, said the industry uses "mass media so voraciously" because fast food is such high-traffic business. "Mass [media] is a very inexpensive way to talk to people," Mr. Buckley said. "Unfortunately, it's not very personal."

Now, however, Starbucks Corp. and Burger King Corp. are trying to get closer to their customers. Starbucks continues to evolve the prepaid debit cards it introduced last year, while Diageo's Burger King Corp. last week concluded its test of an online loyalty program called BK Rewards.

spurring sales

Last month, Starbucks added a reload option to its cards, allowing customers to replenish balances automatically. The marketer hopes the card can grow into a loyalty tool as customer data is accumulated about customers' purchase patterns and incentives are added (see story at right).

To spur reload sales, Starbucks launched with Visa International a "Get an Extra Shot from Visa" contest through Nov. 11 to match the reload balance for five randomly selected customers who reload their card using a Visa card.

Conversely, Burger King ended its BK Rewards online program after two rounds of testing in three markets. "We are currently evaluating every aspect of the program to determine the best possible method of moving forward," a Burger King spokeswoman said.

Burger King's test, begun in Erie, Penn., and Albany, N.Y., in February, expanded to Miami in June. Customers collected points from Burger King food packages and used them to bid online at bkrewards.com for prizes. Many of the prizes were bartered with AOL Time Warner properties and ranged in bids from as low as 1,000 points for items like a DVD to as much as 20,000 for a VIP trip for four to Warner Bros. Studios. The BK Rewards Web site will remain active through Nov. 22.

Burger King wouldn't comment on when or if it will roll out the program, handled by its interactive agency, WPP Group-owned VML, Kansas City.

But the marketer's false starts to expand the effort nationally reinforces questions raised by loyalty experts about fast feeders' biggest loyalty-marketing challenges: how to make rewards attainable with cost-effective transactions.

"I don't have a lot of $25 transactions at Burger King," Mr. Capizzi said. "My average ticket ... is probably $3 to $5, and it takes me a lot of $3 to $5 transactions to come up with enough value to use in any meaningful, exciting or compelling way."

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