Marketing Restaurant Online

Flickr-Nick J Webb

Paper Based Loyalty Punch Card Is A Good Concept For Restaurants To Attract More Customers. But Why It Turns Out To Be Costly To Franchiser And Franchisee Though It’s Main Goal Is To Benefit Both?

Subway one of the most successful restaurant chain has tried paper based loyalty card. There is no doubt that the concept is good. Because essentially the idea is to give one more reason to your customers to choose your restaurants in the crowded space of restaurants. When you are offering one free meal after the 6th or 9th visit then you are rewarding your customers for their loyalty. The theory part is perfect. But when you bring that into practical field of restaurant marketing especially with thousands of chain restaurants like of Subway there is a fundamental problem. I like to call it a disorganised tracking system.  Since this is only in paper based and not in the digital form, it can be duplicated, altered and stolen and more importantly can not be tracked. That is when this good concept in theory turns out to bad in practical.

Subway have done that and been there with their paper based loyalty punch cards. They had to pull out this program because of the volume of the fraud that was going on. It was doing more harm to the Subway Corporate and Subway franchisee than the well intended benefit they were seeking from the program. There are couple of lessons to be learnt from the mistake that Subway has done that could save a franchiser tons of money and more importantly the hassles that a company has to go through later.

5 Reasons Why paper based loyalty program turns out to be not beneficial as intended in the first place:They are as follows:

1. Not Trackable-
2. Frauds - Internally and Externally
3. Creates Confusions among Customers
4. Chances of Loosing the Cards
5. Creates Disharmony between Franchiser and Franchisee

Not Trackable - The biggest draw back of the paper based loyalty punch card is tracking system. It virtually doesn’t have tracking mechanism that can essentially track the cards and card holders and the redemption. So when you can not track what you are doing how can one know if they are really benefiting from the loyalty program.  It is like you are selling food in your restaurant but you are not able to track how much expenses your restaurant occurred and how much profits your restaurant made. It would be like firing a missile in the air without any target.

Frauds - Internally and Externally - Subway’s paper based loyalty program faced the biggest challenge not only from externally but internally too. When those loose paper loyalty cards are lying on the tables at the restaurant any employees or managers could take the cards and give it to their buddies or worst could sell in half price for profits. Another problem was from the fraud people out side of the restaurant who just wanted to take advantage of loop holes of disorganised system. The thieves would imprint exactly the same card may be in their own garage with a new laser printer and use it in multiple Subways. God knows how many times they would have used in those stores. I am guessing they were enjoying FREE Subway sandwiches for days if not months until they took away the program.

Creates Confusion to the Customers- Since the Subway Franchisee is hit with those fraud cards multiple times, he or she is very careful with every new free sandwich cards. May be some of them would have brought their thick lens glasses to make sure they read it right. Well now this creates confusion to the customers. Now the customers who are bringing the original cards are confused with the franchisee looking at the cards as if it was a duplicate one. This creates tension between a Restaurant business owners and the genuine customers.  Customers might feel that the restaurant owners didn’t trust them. So it could be that the same customers might never come to that restaurant. After all you do business only with them who trust you right.

Chances of Loosing the Cards. This is not a major issue but still counts when you have thousands and thousands of restaurants like of Subway. When customers comes claiming that they lost their cards there is no way you can track them. If it was a digital card you could deactivate the lost card and instantly issue a new loyalty card.  As a franchisee restaurant you don’t know what to do with these customers who come to you claiming they lost their cards. If it is only one card then it might be OK. But when there are millions of customers claiming for lost cards and worst claiming that they had 9 punches already and the 10th was next when they get their free Sandwich. This puts franchisee and franchiser in really an awkward situation.

Creates Disharmony between Franchiser and Franchisee- Franchisor created the loyalty program with a good intention to benefit their franchisee. But because of the disorganised tracking mechanism, it puts pressure on the franchisee with unnecessary hassles. This might lead to even loose some of their loyal customers due to trust issue. This creates a communication gap between a franchisee and franchiser. Franchiser with a good intention implement a program. Since the program doesn’t work in the practical field, the franchisees don’t accept the concept. This then leads to create disharmony between Franchiser and Franchisee relationship.

Hope other restaurant chains big or small may take note of this and learn from the mistakes of Subway. It is said smarter restaurant are those who learn from their own mistakes but smartest restaurants are those who learn from other mistakes. So I hope you will not make the same mistake that Subway made and save tons of money and hassles. If you do decide to implement the loyalty program I would urge you to use loyalty program that you could digitally track.