Loyalty Trends 2024: Loyalty Gets Personal with Experiences

Key Takeaway: Taking loyalty programs to a new level of personalization with advanced personalization tools helps operators maximize customer lifetime value through hyper-relevant experiences. 

People look for brands that recognize and serve their individual needs as they decide where to spend their money. Smart restaurant and convenience store operators understand this and work to create unique and personalized experiences for guests through their loyalty programs.   

According to the National Restaurant Association’s (NRA) State of the Restaurant Industry 2024 report, guests typically join an average of 3.6 restaurant loyalty programs. Gen Z adults lead the pack by joining 4.4 loyalty programs, on average: 

According to NRA data, guests prefer going to places that give them special, personalized treatment. 

The NRA report reveals that 78% percent of current loyalty program members are more likely to visit a restaurant where they can earn points, even if it’s less convenient. And 81% say they’d join another loyalty program if it was offered by their favorite establishment. 

Loyalty programs offer operators the best opportunity to engage with guests and more operators are taking a hyper-personalized approach to stand out. In February 2024, Starbucks Rewards made news by achieving a record 34.3 million active U.S. members and revealing plans to focus on greater personalization to increase patronage. “We talk a lot about our personalization capabilities at Starbucks, but truly that job is never done because as new technologies and capabilities come online, we are grabbing those and integrating them into our system,” Brady Brewer, SVP and CMO. 

A New Level of Personalization Is Needed  

Loyalty program membership grew 19% from 2021 to 2023, according to the Paytronix 2023 Loyalty Report. That means more competition your loyalty program must overcome to make an impact. PwC’s Customer Loyalty Executive Survey 2023 revealed that the top reason customers stay loyal is because “the experience feels personal and created just for them.” This is the level of personalization consumers expect these days, and anything less misses the mark.  

To get the most from their loyalty programs, operators should emphasize offers that speak to guests on an individual level. Advanced personalization tools that create differentiation, emotional connection, and brand affinity should be front and center for loyalty programs in 2024. Here’s what that looks like: 

1. Differentiation 

To stand out in a crowded marketplace, loyalty programs need to offer rewards that fit the brand and match what each individual member craves. This could mean offering a monthly subscription or meal passes, providing early access to new menu items, or celebrating milestones like birthdays with experiential rewards like a hands-on cooking class.

2. Emotional Connection 

By analyzing purchase histories and contextual cues, operators can develop personalized loyalty communications and offers that drive positive feelings towards your brand. Examples include wishing members a happy anniversary with a buy-one-get-one (BOGO) deal, welcoming members back from vacation with a coupon for their favorite pick-me-up beverage, or thanking members who reach annual spend tiers by donating in their name to a local cause. 

3. Brand Affinity 

When guests feel known and appreciated, their brand affinity increases. Personalization engines that enable individualized loyalty experiences are key to creating and sustaining win-win experiences. As the 2023 Paytronix Loyalty Report found, the top 10% of loyalty members--those most likely to receive personalized messages--make up more than 40% of all loyalty visits and about half of all loyalty spend.

In all three areas, using guest engagement platform to unify and operationalize customer data is paramount. This allows real-time adaptation of every communication and offer, based on constantly evolving guest profiles, loyalty status and purchase behavior. The ability to test, measure, and optimize by combining historical preferences with in-the-moment insights—like purchase category or geolocation—is what unlocks one-to-one personalization at scale.

Personalization Success Story: Peet’s Coffee  

When Peet’s Coffee relaunched Peetnik Rewards on the Paytronix platform, membership increased 350% within six months. Loyalty check penetration increased by 47%, and a single offer generated more than 1.5% of retail comp sales. 

"With Paytronix, Peet’s tests and measures everything with control groups and we talk with our team about how best to structure offers,” says Lisa Regelman, Director of Loyalty at Peet’s. “We can see how frequently customers come in and what they like to buy, and then target campaigns in a more one-to-one manner.” 

Personalization Requires Planning

With so many consumers—especially high-value guests—receptive to personalized offers and willing to switch brands for more relevance, enhancing loyalty programs with advanced personalization capabilities is a must for 2024. 

Consumers crave flexibility in how they earn and redeem rewards, with options like subscription models, points-based systems, gamification, and experiential rewards growing in popularity. Loyalty programs must evolve beyond rigid, one size fits all formats to provide relevant, individualized value propositions. 

Only 44% of consumers say the offers they get are relevant, indicating a desire for higher levels of personalization, according to a PYMNTS Intelligence report, Personalized Offers Are Powerful—But Too Often Off-Base. The report affirms that 83% of consumers are receptive to personalized messages, and nearly half are likely to switch brands for more relevant offers. In fact, “appropriately tailoring offers to a consumer’s specific needs and interests doubles the chances the consumer will switch merchants.”

Creating or retooling a program that supports this level of enhanced personalization requires careful upfront alignment with your brand identity and target audience segments. Think about how you can tailor your loyalty program's core structure, earn/burn mechanisms, and reward offerings so they resonate with what each guest segment truly desires. Leverage your brand's unique selling points to differentiate the program's value proposition in the market. 

For example, a fast casual brand could implement a points-based system where members earn and redeem for free food, merchandise, and exclusive experiences. A coffee chain may find success with a subscription model for unlimited beverages combined with surprise-and-delight rewards. Convenience stores can drive loyalty program signups through fuel rewards tied to in-store purchases. 

The key is designing a flexible program architecture that allows you to continuously test, measure, and optimize, delivering the level of personalized value that cements long-term loyalty. A great way to get the wheels turning is to assess other brands’ loyalty programs, listing out the pros and cons of each one. This exercise will help shape your approach, while addressing critical considerations such as:

• The most effective ways to engage specific guest segments 
• Creating a flexible structure that allows for brand-aligned promotions 
• Ensuring ease of management for your staff 
• Identifying program structures that deliver the highest return on investment 
• Implementing robust data-capture mechanisms for accurate and effective guest segmentation

Every loyalty program consists of three components: the core structure, layers, and promotions 

Once you've established a program that’s aligned with your goals, you can layer on additional features and promotions, like subscriptions or visit challenges, that add depth, drive sustained engagement, and foster customer lifetime value. 

Personalization Success Story: Smashburger  

Looking to meet aggressive same-store sales growth objectives, Smashburger® leveraged its loyalty data and Paytronix’s AI and machine learning tools to create personalized, one-to-one marketing campaigns.  

Smashburger enlisted Paytronix to “micro-segment” its customer base and deliver targeted rewards and messaging based on preferences and behavior. Successful promotions included:

• A veggie burger offer for guests who don’t consume beef 
• A free order of fries for trying a new menu item  
• Double and triple points for Gold and Platinum members 
• Preferred birthday rewards 
• Triple points for ordering online 

The new paradigm resulted in a 20% lift in spend, a 16% lift in visits, and an incredible 61x ROI. “Offers are tied to core behavior so that guests get what they love,” says Lexi Ryan, the burger chain’s Loyalty Manager. “We want them to make their experience personal.” 

Data Drives Increased Personalization 

Delivering meaningful value and experiences hinge on capturing, analyzing, and acting on a wealth of customer data from various sources. 

First-party data is the bedrock of your program. This includes purchase histories, visit frequencies, spend levels, marketing responses, points balances, reward redemptions, and other engagement metrics from your owned channels like email, mobile app, online ordering platform, and loyalty. This rich behavioral data provides a direct window into guests’ individualized preferences, purchase drivers, and value potential. 

Third-party data from partners enhance guest profiles with deeper psychographic, interest, and lifestyle insights. Location data may reveal routines and affinities, while demographic data can provide clarity into life stages and household dynamics. 

Together, this multi-dimensional guest view allows you to map guests against fine-tuned segments and predictive models. Every interaction—including purchases, reviews, emails, and abandoned orders—offers another vital data point to refine your understanding of each individual. 

For example, an urban millennial's weekly burrito visits and engagement with vegan promotions could incentivize your team to prioritize plant-based menu updates and sustainability messaging. A family's consistent weekend pizza orders may unlock bundled meal deals and tailored specials for new product categories. Lunchtime regulars at sandwich shops could receive timely prompts to try new seasonal sandwich specials using an order ahead function. 

By adopting a data-driven approach that continuously analyzes and optimizes across channels, operators can achieve: 

• Heightened offer relevance  
• Superior experiences aligned with guest's needs  
• Higher engagement, conversion rates, and customer lifetime value 

As the PYMNTS Intelligence report notes, “Tools that can parse through large volumes of consumer data to identify patterns, preferences, and behaviors will prove to be critical for merchants looking to create more precise and relevant marketing campaigns.” Those capabilities are essential for operators to truly know their guests as individuals and profitably grow each relationship over time. 

Personalization Success Story: Dutch Bros Coffee® 

A growing national coffee chain in a competitive market dominated by national brands, Dutch Bros unveiled its first digital loyalty program during the pandemic. The company used the Paytronix customer experience platform to replace its previous punch-card system and gained 1.4 million members in the first month. 
 
The Dutch Bros program uses a points-based system in which customers can earn rewards, win contests, and receive one-of-a-kind, personal, Dutch Bros experiences. Paytronix data-driven insights, AI and machine learning technology, and comprehensive campaign capabilities not only generated new business, but also won back more than 220,000 lapsed loyalty members. 

“We needed a partner with a platform that provided capabilities that we were able to tap into for custom features like app stickers and hookups,” says Anne Schultheis, Director of Loyalty. “The Paytronix platform allows the digital experience to be truly ‘Dutch’.” 

Branded Mobile Apps Deliver a Connected Loyalty Experience 

In today's mobile-centric world, developing a branded mobile app gives operators the opportunity to deliver an integrated loyalty experience.

According to the NRA, 60% of current loyalty program members prefer to access their programs through a mobile app, underscoring the desire for a frictionless and on-the-go loyalty experience. These apps enable guests to track and redeem rewards points, manage gift card balances, and receive location-based push notifications—all while fostering a sense of community around your brand. 

By investing in a well-designed, feature-rich mobile app, operators can take their loyalty program to new heights and meet the evolving needs of younger, tech-savvy guests. A branded app not only streamlines the loyalty experience but also serves as a direct communication channel, enabling targeted outreach, easy location check-in, personalized offers, and real-time engagement. All of these are pivotal elements in cultivating long-lasting brand affinity and loyalty. 

In the past, branded mobile apps were expensive and difficult to manage, often requiring custom development to make simple changes like updating images or offers. Platforms now offer feature-rich, customizable mobile applications that can be deployed quickly and easily maintained. These apps offer a central place for guests to manage loyalty points, messaging, check-in, payments, and even online ordering.  

Personalization Success Story: Alltown Fresh®  

Alltown Fresh is a unique concept that combines a handcrafted kitchen and market with fuel sales. Looking for a guest engagement platform that would match its brand promise, Alltown Fresh chose Paytronix to launch its online ordering and delivery service, a new guest loyalty program called Fresh with Benefits™, and a mobile app.  

By addressing behavior and intent, the brand dramatically improved customer engagement, driving lifetime value. Mobile and online orders quickly became a key part of overall sales. 

“The ability to custom-order your sandwich, smoothie, or salad—and use the same app to fuel your car and pay without touching the PIN pad—is a game changer,” says Joanna Linder, Alltown Fresh’s Vice President of Marketing. 

Elevating Guest Engagement Through Personalized Loyalty Strategies 

Operators who recognize the need to adapt to evolving consumer expectations must prioritize launching or revamping their loyalty programs with immense personalization in 2024.  

A meticulously designed loyalty program, powered by advanced personalization tools, including CLV segmentation, automated lifecycle programs and branded mobile apps can increase customer engagement and support broader organizational goals. These may include strengthening brand equity, driving customer lifetime value, and facilitating data-driven decision-making that propels continuous improvement and growth.

The key to success lies in partnering with a provider that can ensure seamless alignment among your loyalty initiative, overarching business strategy, and long-term objectives. 

To learn more about how Paytronix can help you develop a hyper-personalized loyalty program that fosters meaningful guest relationships and delivers tangible business impact, download our loyalty development guides for restaurants and convenience stores or request a demo now.