On October 6th, 2016 Dunkin’ Donuts announced that it has partnered with Salesforce (the world’s #1 CRM company) to improve the customer experience with Dunkin’s mobile app and loyalty program.1 This good news has prompted us to take a critical look at the program, examining both the positives and the areas where the program needs work, in order to see how the program will be impacting the Dunkin’ brand.
Dunkin’s loyalty program, known as DD Perks, is a mobile application that allows users to accumulate points based on their purchases, which lead to rewards. Loyalty programs are viewed favorably by Wall Street analysts, as they demonstrate that the brand is focused on their customers, which are among the most important drivers of profit.2 According to QSR magazine, a recent study found that there is a great interest among consumers for QSR loyalty programs. Despite this potential, QSR loyalty programs have the second lowest participation rate among all retail loyalty programs. 3
Dunkin’ is one of the few QSR brands that is starting to tap into this potential and use their loyalty program as a powerful marketing tool. To date, there are 4.3 million DD Perks members. 4
An examination of Dunkin’s loyalty program, DD Perks, demonstrates that the program has many positive aspects to it, few negatives, and compares favorably to competitors.
A major positive that cannot be ignored is the recent partnership with Salesforce. Prior to this partnership, DD Perks already created personalized content and rewards for customers. Salesforce has enhanced this function by making it even more automated and efficient.
An important aspect of a customer loyalty program involves rewarding customers for what they buy, as opposed to how frequently they visit. DD Perks rewards customers 5 points for every dollar they spend. One of DD’s major competitors, Starbucks, initially rewarded customers by visit rather than by dollars spent. Starbucks recently changed this in order to improve their loyalty program.
Areas for Improvement
While it is important to examine the positive aspects of DD Perks, it is also necessary to look at the areas where the program needs work.
Based on the “Do’s and Don’ts of successful loyalty programs” from Fast Casual, a successful loyalty program must eliminate any hurdles or barriers. While signing up for the mobile app is virtually effortless, signing up for the DD Perks membership requires a little more work. To enroll, you need an online account and must put money into the account. Dunkin’s Chief Global Customer and Marketing Office John Costello recognizes that there is a gap between the number of app downloads and DD Perks members, and stated that DD is looking to close this gap.5 While this is an area for improvement, Dunkin’ has acknowledged it and is working to fix it.
Comparison to Competitors
Starbucks’ loyalty program has existed longer and has more members than DD Perks; however, DD Perks demonstrates more consistent growth.
It is difficult to compare Dunkin’ Donuts with competitors (i.e. McDonald’s, Tim Horton’s) because aside from Starbucks, many of DD’s competitors do not have loyalty programs in place yet. Dunkin’ Donuts is on the cutting edge of this emerging trend in the QSR world and continues to exhibit the strength of its brand.
After careful examination, it is clear the Dunkin’ Donuts is moving in a positive direction to maintain positive customer relationships through their loyalty program, DD Perks. For the past 10 years, Dunkin’ has been the #1 ranking brand in the “out-of-home coffee” category for customer loyalty, according to the Brand Keys Customer Loyalty Index.
Dunkin’ has succeeded with customer loyalty in the past and this only seems to be improving with time. DD Perks has had and will continue to have a positive impact on the brand.
To learn more about Dunkin’ Donuts and LCR’s projects, contact one of our team members in one of our various offices around the world.