Analysis: Will the spoilt for choice HK consumer bite McDonald's loyalty programme?

 

McDonald’s is launching its loyalty programme starting with the US. According to a release by the brand, “For over 65 years, McDonald’s fans’ longtime loyalty has been unmatched.”

As such, the brand now wants to reward its fans with the MyMcDonald’s Rewards to unlock freebies by enjoying their favorite menu items.  In the US, the MyMcDonald’s Rewards will be available via the McDonald’s app, and fans will pocket 100 points for every one dollar spent on qualifying purchases.

According to McDonald’s this is part of its “digital experience growth engine” through which the fast food giant hopes to provide a seamless McDonald's experience.  “We want everyone to feel connected to our brand, which is why we are working to enhance your experience,” said the brand in a release.

MARKETING-INTERACTIVE understands that the programme will be rolled out in Asia sometime next year.

In a conversation with MARKETING-INTERACTIVE, Jeffrey Hau, director of Prizm said the move comes at a right time given the new data privacy policies in motion globally. This will no doubt impact how a brand reaches its target audience as cost of acquisition is set to become pricier. “Every brand should quickly start collecting first party data. It is the only reliable way to ensure that a brand can connect with its consumers,” said Hau.

Having the right loyalty programme not only helps with campaign launches and promotions, but enables a brand to have a deeper understanding of a customer’s behaviour in a systematic way. Processed right, the insights can influence an organisation from sales to marketing and operations. “Kitchens can design their menus and meal combos based on preference, and operations teams can decide on seating plans. Management can help allocate staffing in a more efficient manner with the power of data,” he said.

Will Hong Kongers bite?

In recent times, McDonald's Hong Kong has also actively been pushing its app. Earlier this year, it upgraded its mobile app by adding mobile ordering and payment features, and promoted the upgrade with a new video. The five-minute video, developed by DDB Group Hong Kong, featured Hong Kong boy band MIRROR's Keung To, Edan Lui and Anson Lo, telling an office love story among three boys. 

Last year, following a revamp of its mobile app, the brand promoted its special offers with a TVC starring Hong Kong singer Eason Chan

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Clearly, acquisition of customer data through the app has already been in the works for the brand. To take it to the next level, Hau added that the loyalty programme can now enable a personalised experience can also help a brand such as McDonald’s ensure “stickiness of customers” in markets such as Hong Kong where customers are spoilt for choices.

“Hong Kong consumers are bargain lovers hence somewhat disloyal as customers. They will not stay if the programme only focuses on monetary offers and rewards. What will keep them hooked is if a brand can provide fun, personalised and interactive experience that enhances brand loyalty and customer satisfaction in parallel,” he said.

He explained further that in markets such as Hong Kong, marketers need to bank on the data and to unleash their creativity by creating campaigns that are highly relevant the right segments. Unfortunately, he added that not all brands in Hong Kong have access to customer data or communicate with their consumers.

“Sometimes we worry about the lack of volume and depth of data when designing a loyalty programme. But in this case, McDondald’s has all the advantages of building a loyalty programme, such as multi touch-points (counters at physical store, self ordering kiosks, online ordering), and high repeat visits,” he said.

Meanwhile, Lynette Lee, business development director of XGATE added that the with the wide spread of hawker centres, food courts and coffee shops (茶餐廳) in this region, pricing for any fast food brand has to be kept low.

Thus earning points through purchase to get a free meal may not be that great an incentive, in the long run.  “There is already existing loyalty program adopted by local markets here in the form of digital mobile coupons in Hong Kong, hence as a user myself I see it to be an extension of the loyalty strategy more than something new,” said Lee. 

She added that prior to the launch in the region, McDonald’s as a brand can start building up on the customer experience it already provides to existing customers.

One pitfall to watch out for when rolling out the programme in Hong Kong, said Lee, is the fact that customers are spoilt for choices even when it comes to loyalty programmes. At the end of the day, if a competitor was to offer discounts or points in a certain week, it is unlikely that a consumer will stay loyal to any brand. She added:

Consumers in this region are spoilt for choice when it comes to brands offering loyalty programs. Much more innovative and unique offerings will need to be introduced here to entice adoption.

Meanwhile Kevin Kan CEO of Break Out Consulting Asia  was of the view that in a digitally first market like Hong Kong, having a digital loyalty programme will make consumers coming back. “Hong Kong has so many fast food options from both international and local F&B brands, and not to mention the local family owned coffee shop. An ease of use and easy notification of promotions or offers will be key in bringing back consumers,” he said.

He added that a 2018 US study by 1010data showed that 38% of Pizza Hut customers who dined from November 2015 to October 2016 did not return the following year. Instead, from that same time period, 56% dined at Domino’s or Papa John’s. This showed that Pizza Hut lost 21% of its customers to the two chains. 

Kan added that currently, McDonald’s biggest competitors in the region don’t have a fully functional digital loyalty programme and many are relying on promo codes with online ordering. Having first mover advantage will definitely aid McDonald’s.

“As fast food is an easily substitutable necessity, as seen by many cheap corner dining establishments in Hong Kong, you need something interesting, great tasting, desirable and convenient to keep customers coming back,” he added.