Generic rewards drive loyalty programme dropouts

QSRs advised to ditch blanket discounts.

Quick-service restaurants (QSRs) are struggling to retain customers in their loyalty programme. The culprit? Generic rewards and a failure to create real, earned value.

“A lot of programmes are actually just kind of blanket discounting and promotional marketing, but under the banner of loyalty,” according to Nick Watson, VP of Business Consulting at Marigold. “There’s no earned element to these promotions or discounts, and what that can do is give an erosion in consumer confidence in the brand’s pricing over time.”

He cited examples from grocery retailers, where “member pricing” leads consumers to feel they’re overpaying if they’re not enrolled. “This isn’t sustainable in the long term,” he added. “A 5% discount needs to lead to a sales increase of 20% to maintain the same gross profit.”

Beyond flawed pricing strategies, Watson said many QSRs falter at the onboarding stage. “It’s incredibly important to move consumers from first purchase to second purchase in order to bring them into a programme and see the value,” he explained. “This often doesn’t happen, so you get members into your programme, but then they start to churn.”

Instead of relying on discounting, Watson urges QSRs to rethink loyalty through four key levers: attribution, rewards, brand strength, and redemption.

For brands worried about setup cost, Watson suggested piloting within existing customer relationship management systems. He also introduced Marigold’s Loyalty Essentials module, which uses templates to segment customers into growers, decliners, and stable users—guiding smarter use of discounts and personalised incentives

“A loyalty programme must be sustainable,” Watson said. “You can’t give away the house just to keep someone’s business.”