Loyal to a Fault

Service | October 29, 2012 9:12 am

Most traditional customer loyalty programs, like the one your supermarket probably uses, reward frequent customers of a store. These customers end up more connected to the business, and the business gets great data from them.

Web-era loyalty programs can subvert that model. OpenTable gives users points on its own reservation system. It doesn’t promote loyalty to individual restaurants. Then there’s the old Groupon complaint: Users love the deals, but they don’t attach to businesseses the deals come from.

Can you serve both customers, with great deals, and businesses, with improved sales and great analytics?

One of the most aggressive answers to this question: MOGL. It gives diners a huge 10% back in cash money for dining at member restaurants, plus a bonus if they’re among the top patrons of a restaurant. The model encourages repeat business; CEO Jon Carder says it leads to 70% more visits by users at member establishments. The system also keys off credit cards; users don’t need a separate loyalty card.

Even with the low margins at restaurants, the repeat business makes it worth it for restaurants to sign up, Carder says. MOGL also gives clients awesome data back, like a list of the the most popular competitive restaurants that a restaurant’s customers eat at.

The business started as an experiment in game mechanics (one early, bad idea: make the program act like Monopoly). But getting loyalty programs sorted out is no game. The right formula can make a significant impact on almost any business.

- Rafe

See also:
Groupon Challenged by Loyalty-Card Startups (Businessweek)
How OpenTable puts loyalty to the test (CNET News)
Receipts are the new locations (CNET News)

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