Understanding the Drivers of QSR Customer Loyalty

Problem
When the economy is soft, consumers become more price-sensitive. In response, companies are trading down on product quality so they can offer goods at lower prices and keep their loyal customers from defecting to lower-priced competitors. A quick service restaurant company needed to understand the drivers of customers' loyalty to evaluate the impact lowering prices could have on sales and margins.

Solution
To keep price erosion from decreasing its profitability, the quick service restaurant company realized that it needed to understand the value that it delivers to its most frequent customers in order to develop desired behaviors in other customer segments. Before the company could consider redesigning its rewards program, it needed to collect insights from its loyal customers to identify the value proposition and satisfaction, as well as desired features and benefits.

We conducted an online member survey to gather information about loyalists' preferences, likes/dislikes, desired features, etc. This data was analyzed in conjunction with customer purchase frequency and other metrics. This rich information allowed us to develop various customer models to design highly targeted marketing strategies for each segment that accelerated a move from purchase to loyalty.

Impact
Because customer loyalty is intrinsically bound to the well-being and long-term growth of the company, the quick service restaurant needed to glean actionable insights from the data they collected. Within weeks of delivering the marketing recommendations, loyalty marketing became a major marketing tool to increase customer frequency and retention.

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