DQ Tests RFID-Powered Loyalty Program
A Dairy Queen in the
Indianapolis area is testing a loyalty program that uses stickers to attach
radio frequency identification (RFID) tags to phone handsets delivering savings
coupons to consumers. If successful, Dairy Queen intends to expand the test
and eventually take the program national.
According
to RFID Journal, Dairy
Queen has been testing the program for 20 months. Shoppers sign up for
the program by dialing into the restaurant’s system. They then receive
a text message from Dairy Queen with a special promotion offer. The customer
then simply goes to a store and shows the text message to an employee to
get their special deal.
A
total of 900 people have joined the Dairy Queen program and only about
six percent cancel.
Jamie Guse, International Dairy Queen’s web site manager who is
overseeing the
test, said the RFID portion has only been tested for a couple of weeks
but the company has high expectations.
"This
allows us to do real-time tracking on redemptions, and closes the gap as
to how well the text-messaging system is working," he told RFID
Journal. "Our goal is to get a better understanding of customer
behavior, and build customer loyalty based on that information."
The RFID system also enables the restaurants to target messages to individual
customers based on their purchasing habits.
Discussion Questions:
Is Dairy Queen’s RFID-powered loyalty program going to move the mark
on attracting new customers and/or increasing purchasing frequency/rings,
etc.? What opportunities and challenges do you see associated with the
use of RFID in this particular program?
The Dairy Queen project is interesting because it has chosen to sidestep the phone itself and is really using it as a makeshift CRM program.
But the bigger issue is whether this will change consumer behavior. When we talked with the same Dairy Queen people, the key concern was whether or not the ever-present nature of the tag stuck to a phone or wallet (or anywhere else) would make it more likely consumers will use the coupons?
Also, how effective will Dairy Queen be at using the information to customize offers? If they start factoring in flavor preferences, who attends with kids (and their rough ages) and the hours of typical attendance, this could be hugely powerful. Will the system point out that Tuesday evening visits at 7 PM are “drive home from work pick-me-up” visits as opposed to Saturday afternoon “outing with kids” visits and issue different kinds of coupons? Or will it merely look at the items purchased?
DQ is taking a bit of a chance by going it alone. The idea of handing out RFID tags to stick on the back of a phone will work initially, but what if this program is a success? What happens when every retailer in the region starts doing it? How many stickers are people expected to carry? If it works, it’s going to have be standardized, with the device coming from a processor or even a cardbrand and it would hold data for a hundred (sometimes competing) retailers. What then?
Win, lose or draw, this is a significant development in what I call “The Return to Personal Selling at Retail.” One hundred years ago, personal selling went out the door with the advent of self-service, driven by the attendant explosion in productivity in the store.
Over the past few decades, loyalty programs (with cards) simply transcended the weekly roll-up bulk sales data as the dominant communication FROM shoppers. Piercing the opaque mass data to the crystal clarity of the individual shopper, brought a form of “personal selling” back to Tesco, and was one of the major factors that vaulted them to the #3 global retailer slot.
RFID is likely to play an increasing role in “personal” selling at retail, and DQ is properly marrying it to the capability to complete the communication loop: SHOPPER – here I am, it is I! RETAILER – so good to see you again, your favorite again? Think Amazon!!!
So DQ is at the cutting edge of what will become increasingly common. ALL personal electronic devices will eventually have RFID identification, and a new generation of internet access will connect consumers 24/7/365 with retailers. Proximity will allow immediate fulfillment of the offers (DQ), electronic content will be downloaded and other merchandise shipped.
Interesting approach. Selling one-on-one has advanced quite a bit in the digital grocery space. MyWebGrocer pioneered a personalized version of the grocery circular, tuned to individual shopper needs, based on their loyalty data in 2005. They have since integrated this with the shoppers grocery list and can send it along with pertinent CPG ads/offers to the consumers PDA or phone. Seems as though this might be a more efficient approach than RFID.
I am a great believer in technology’s ability to actually serve people. But this one eludes me. The RFID sticker seems over the top. If DQ wants to motivate a customer to identify themselves when shopping, they don’t need a RFID chip and sensors. What’s wrong with motivating the customer to send a text message? DQ can respond very quickly with a relevant offer. I don’t see how the RFID adds substantial value.
The keys to a successful program are relationship, reward, and relevance. The DQ program has all three with or without RFID.
Perhaps it is just that DQ is way ahead of its time, but I cannot imagine this working to drive enough incremental profit for the program to provide a reasonable return. One part of the problem is that DQ is a fairly limited concept that cannot provide a wide enough range of offers across purchase categories to make the technology interesting to the consumer. The other part of the problem is that loyalty programs in general struggle to truly create value for retailers. In fact, often they struggle on an offer-by-offer basis, let alone total ROI including the program overhead costs. So assuming this has higher overhead, the economics are even more challenging.
Someday, as newspaper inserts as a promotion delivery vehicle go the way of the dodo, the technology becomes yet more ubiquitous, and retailers network to create the right content, I do think this idea will succeed. But I think we are 5 to 10 years too soon.
DQ’s initiative leveraging both RFID technology and a CRM loyalty program represents solid innovation and a smart way to engage their target demographic. The millennial generation they are pursuing has no interest in printed coupons and is more dependent on their phone than any other device. I commend DQ for reaching out and testing new technologies to strengthen their brand and build loyalty.
When I first read this story a few days ago on Evan’s site, I thought it was a great idea specifically because (a) customers opted in so wouldn’t be hassled unnecessarily and (b) the chip was with them all the time so they didn’t have to remember to print and take coupons if they had a sudden craving for whatever was on offer. I did think that linking it to a specific shop though was a bit silly for such a big chain.
Later, on consideration, my suspicious side kicked in and I wondered what was in it for Tetherball and what assurances customers would have that their details would not be passed on to other clients. My son emails or texts customers with offers for his sandwich shop every week and they simply have to show their phones (or whatever receives the message) but he does it directly rather than through a third party. Granted he is nowhere near as big as Dairy Queen but I think the direct contact makes quite a big difference. Customers may trust specific retailers but know nothing about intermediaries and have no reason at all to trust them. This could turn them off the retailer and help them decide against opting in.
Evan’s point today about customers not wanting to carry too many of these things once more retailers start offering them and the ways in which the data may not be used to maximum purpose are both very valid and important. Someone has to be a first mover but dangers lurk.
RFID? This is not RFID. This is a text based coupon redemption. It is no different that selective couponing, at a local level, except that it is being done via an interactive SMS. This is bounce-back couponing using SMS. The advertising that informs the consumer about the SMS coupon is the key here, and the request it issues rather than the SMS text.
This is great. Finally, a way to introduce RFID technology to consumers in a way that clearly demonstrates its benefits to them. It’s the WIIFM, What’s In It For Me? This is classic marketing from the bottom up, rather than from the top down. You learn more and inevitably are more successful.
My best friend Jerry owns a DQ back in Topeka, and his reaction was both positive and cautionary. “This is great, but make sure the kids talking to the customers understand it and can explain it.” He’s right, of course, as he nearly always is (except for the time he insisted we could kidnap for-sale signs from yards at night and ransom them back to the real estate companies). Jerry had another excellent comment, “Don’t mention RFID, it’s confusing and doesn’t mean anything to anyone.”
OK, I see the RFID component’s value. I’ve been touting it for years. However, what is the best way to get multiple retailers’/CPGers’ programs on your phone? Is SMS alone the best way for now? Or using a GPS-enabled phone carrier to manage multiple programs?
Do I really need more reasons to go to DQ? All kidding aside, I think this sounds a bit over the top. I agree with Bill Robinson’s comments–RFID for text messaging coupons? Seems like overkill.