McDonald's Tests Online Loyalty Program

Eyeing more business from consumers in their teens and 20s, McDonald's Corp. is testing a new promotional currency loyalty program online called Road2Rewards to easily track customer purchase behavior.

Involving 15 McDonald's restaurants in Asheville, NC, the program rewards members for recording purchases at Uniquely, consumers do not have to register before earning and there are no membership cards to carry and present.

“They've also done it in a way that does not slow things down at point of sale, a critical factor in quick-service restaurants,” said Dennis L. Duffy, managing partner of Loyalty Rules Inc., an Asheville loyalty marketing and CRM firm.

Customers get a McDeals coupon for making a purchase of $1 or more in the participating McDonald's restaurant. The coupons have a 15-digit code that is entered at after the consumer has registered.

Once members reach an acceptable redemption level, they may redeem online. Redemption is voluntary. McDonald's, Oak Brook, IL, said it will mail reward coupons four weeks after receiving the request online.

“Typically a customer must register first to become a member of the program and then they may earn,” Duffy said. “In this program, a customer may have a transaction, get one of these coupons and then decide to register and take advantage of the opportunity to earn points for a transaction that occurred before.”

Rewards include an extra value meal for 250 points and a free movie ticket at any participating United Artists theater for 500 points. Redeeming 750 points wins a CD worth $20 from a participating FYE store.

It helps that the program is real-time, Duffy said.

“I made a purchase at a participating restaurant for about $4.50, went back to my office, logged on and posted my code less than one hour later,” he said. “It knew instantly how much the purchase was from the code number and posted the appropriate number of points.”

The point schedule for rewards is equally simple. Spends of $1 to $2.99 earn 10 points, and $3 to $4.99 garner 40 points. Spending $5 to $7.99 earns 70 points, and above $8 gets 100 points.

Members who registered before Feb. 1 were offered 30 points.

From Feb. 11 to 24, customers earn an extra 30 points for qualifying purchases made between 2 p.m. and 5 p.m.

“It's after lunch and before dinner,” Duffy said. “It's the time when traffic is classically very slow at McDonald's and most restaurants.”

Referring friends brings a bonus of 10 points for each one, up to five.

A member may earn a free extra value meal in as few as three transactions, or at least $21. But the first one is much easier because of the enrollment and survey response bonuses, Duffy said. Thus, a member who spends $13 can earn the first reward in just two visits.

To win a free CD requires at least eight visits and $61 in spending, though it is just seven visits and $53 for the first time.

“Any way you look at it, it's a rich funding rate,” he said. “In terms of face value, it's tough to find programs where you spend $20 and you get $4 or $5 back.”

Coupons were issued starting Jan. 21, running through March 17. Consumers may input coupon codes and redeem by April 15, however.

Catalina Marketing's coupon printer in the Asheville area is printing the coupons.

McDonald's is supporting Road2Rewards at point of sale with tear pads and in-store signage. Advertising in the local Asheville-Citizen Times newspaper also supports the effort.

“The Web site is well done, clean and simple,” Duffy said. “They avoided the temptation to over-engineer this thing.”

McDonald's declined to comment on the program.

In a way, McDonald's is trying to stay ahead of the curve with its loyalty program. As broadband Internet access proliferates, consumers increasingly will participate in self-reported loyalty programs while paying bills, reading e-mail and doing other online chores.

“I look for other companies to follow this basic model for loyalty marketing, especially those companies that cannot easily track customer purchase behavior,” Duffy said.

Other marketers may have beaten McDonald's to the punch. French food giant Danone last fall put codes on labels for Evian bottled water. Data storage firm Imation Corp. also has a Rewards Imation Program with a similar tracking mechanism.

But for all the plaudits, Duffy thinks that McDonald's could improve Road2Rewards.

First, he recommends eliminating the mailing of the reward. When members redeem, they have to wait up to four weeks for their reward certificate in the mail. should let members print their certificates on the spot, he said.

“I would also make this test longer,” he said. “It's less than two months long. It's tough to get a real read on this in less than six months. There will be a lot of short-term experimentation by people who will give it up quickly. I'm curious to see what McDonald's does at the end of this test period.”

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