McDonald's to Launch Tiered Loyalty Program to Boost Customer Frequency

McDonald's is revamping its loyalty program with a new tiered structure, a strategic shift designed to more effectively reward frequent customers and encourage repeat visits. The plan was detailed by Chief Marketing Officer Morgan Flatley during the company's investor day on Wednesday.

The new system aims to provide "highly personalized experiences" for members, moving away from broad discounting that can negatively impact profit margins. This strategy aligns with a growing trend in the quick-service restaurant industry, with competitors like Starbucks having previously announced similar changes to their own loyalty programs.

A Segmented Approach

Flatley outlined three main customer categories the tiered program will target, although a specific launch date and the number of tiers were not disclosed. The company's two most active loyalty groups, totaling 220 million members worldwide, visit at least once every 90 days.

• Top-tier customers, who visit more than once a month, could receive benefits like faster points earnings, early access to limited-time menu items, and invitations to exclusive events.
• Occasional customers, who visit roughly once per quarter, might be targeted with game-like challenges to encourage more frequent purchases.

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A third group of 150 million members who have not visited in several months will be targeted with re-engagement offers, such as a "birthday bonus," to "give them a reason to reconsider McDonald's," Flatley said. She also noted that U.S. members could expect perks like Uber ride credits and Disney+ subscriptions this year.

The Business Case

The focus on loyalty is a significant sales driver for the fast-food giant. CEO Chris Kempczinski stated that loyalty program members currently account for approximately 30% of system-wide sales and tend to visit 2.5 times more frequently than non-members.

According to Kate Hogenson, a principal consultant at brand-loyalty firm the Mallett Group, the strategy to entice occasional diners to visit more often is a smart one. However, she cautioned that "tiers are tough" and successful implementation is critical. Hogenson noted that other chains have faced challenges with franchisee cooperation when rolling out similar programs.