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Dunkin’ Donuts tries to best Starbucks in mobile loyalty

October 28, 2013

Dunkin' Donuts is introducing a mobile loyalty program

Dunkin’ Donuts is taking on Starbucks on the mobile loyalty front with a newly enhanced DD Perks program that will be integrated into the chain’s point-of-sale and mobile application.

While Dunkin’s Donuts and Starbucks often go head-to-head in attracting coffee-loving consumers, the Seattle-based chain is the leader in mobile loyalty with a highly successful program that has helped it increase sales. Dunkin’ Donuts has clearly watched Starbucks’ success here and hopes to best it with a program the Canton, MA-based chain says will be the most robust loyalty program in the QSR industry.

“I’m excited about the potential DD Perks has to drive profits using targeted offers, offers specifically designed to drive incremental sales based on guests’ individual behavior,” said John H. Costello, president of global marketing and innovation at Dunkin’ Donuts, during a conference call with analysts last week to discuss the company’s third quarter financial results.

“I’m also particularly happy that this program is largely paperless,” he said. “You’ve heard us say this before, and I’ll reiterate it today. We’re committed to being a leader in digital mobile and loyalty in the QSR industry.

“To achieve this, we’ve been, and we’ll continue to be, highly methodical, deliberate and strategic in designing and rolling out a fully integrated mobile technology program from our franchisees’ unified POS to the mobile app and now with our DD Perks rewards program.”

Mobile perks
The new DD Perks program is designed to drive sales for the company by rewarding loyal customers and encouraging them to spend more per visit as well as to visit more frequently.

Dunkin’ Donuts will begin the phased rollout of the new DD Perks loyalty program on Nov. 4. It will be integrated into the mobile technology platform Dunkin’ Donuts has been rolling out to its franchisees and includes a unified point-of-sales and a mobile app that delivers offers.

The initial markets where DD Perks will be available are Dallas, TX; Portland, ME; Orlando, FL, and Willsboro and Scranton, PA. Dunkin’ Donuts will use these first four markets to learn from as it prepares for a national rollout in the first quarter of 2014.

Once enrolled in the program, customers earn five points for every dollar they spend with an enrolled DD card, either plastic or on the DD mobile app.

Once customers accrue 200 DD Perks points, they receive a free medium beverage.

Customers will also receive personalized offers based on their spend history in Dunkin’ restaurants.

One-to-one marketing
Other QSR chains such as Starbucks have seen rewards programs help them increase the size of the average check for members, something that Dunkin’ Donuts is also hoping to do.

Dunkin’ Donuts reports that customers using its current DD card on the mobile app have a higher average check than guests who do not.

The chain expects the check to increase as the mobile app penetration increases and that DD Perks, on top of that, will accelerate this trend.

The company plans to use the program to build a purchase history with each customer so it can tailor one-to-one marketing to drive the purchases and generate sales increases for its franchisees.

Dunkin’ Donuts will be supporting the new DD Perks program with an increase in its marketing budget next year, including an increase in national TV and in digital spend.

Deeper engagements
Dunkin’ Donuts entered the mobile commerce space in August 2012 with an app that lets consumers pay for drinks and meals via a bar code that is scanned at the point-of-sale.

A few months later the company added in-app targeted rewards to incentivize consumers to use the app more.

The company has also been aggressively using mobile social campaigns on Twitter to drive app downloads.

“This is a very exciting milestone on our long-term digital mobile and loyalty journey,” Mr. Costello said. “And in fact, during the third quarter, we surpassed four million downloads of the DD mobile app, another great milestone.

“But we’re just at the beginning of this journey,” he said. “We look forward to bringing the DD Perks to more and more guests in time and to having an even deeper engagement with them in the future.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York

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