Loyalty Strategy Review: Dunkin’ Donuts

| September 17, 2018 | By

With Dunkin’ Donuts announcing plans to invest in 1000 new store openings across the pond, Yoyo takes a look at how the brand has successfully built up an 8 million-strong loyalty scheme in the US by combining a mobile-first strategy with customer data and value-added payment experiences.

Loyalty Strategy Focus: Dunkin' Donuts

Growth through mobile

It’s been a busy year for Dunkin’ Donuts. So far it’s been working on dropping the word “Donuts” from the brand, announced a $100m investment in “next-gen stores”, and said it plans to open 1000 net new outlets in the US by 2020.

In a year when 1000s of retail stores are predicted to close in the US, Dunkin’ Donuts is certainly bucking the trend. What’s more, it’s also placing its mobile app users at the heart of future activity.

It’s reported that 50 new test Dunkin’ outlets will open by the end of the year, with a distinct focus on digital kiosks, fast pickup areas and dedicated drive-thru lanes for app users.

This move comes off the back of major competitors like McDonalds and Starbucks investing heavily in similar mobile-led experiences. The Starbucks app, for instance, has had a particularly good year when it was recently announced that more people were using it then Apple Pay!

But Dunkin’ is certainly fighting fit – its US operations saw sales rise by 2.8% in 2017, and since then it’s continued to invest in app-led payment technology – most recently utilising Amazon’s virtual assistant, Alexa, as well as Google Assistant, so that US-based customers can now order their favourite Dunkin’ donuts on voice command.

Delivering rewarding experiences

According to Dunkin’ Donut’s digital and loyalty marketing VP, Stephanie Meltzer-Paul, by the end of 2017 the Dunkin’ app had gained more than 18 million downloads and over 8 million customers had joined its app-led DD Perks Loyalty Programme.

As the brand continues to shift more focus onto its mobile app users, let’s take look at what has attracted these 8 million customers to join the DD Perks Loyalty Program:

  • The DD Perks Rewards Program was launched in January 2014
  • Only customers who sign up for a DD card can reap the benefits of its rewards programme
  • Customers can pay using either a physical or in-app DD Card – funds need to be prepaid onto the card
  • 5 points are earned for every $1 spent
  • When a customer reaches 200 points ($40 spend), they receive a voucher for a free beverage
  • DD Perk members also receive a voucher upon enrolment and when it’s their birthday.
  • The rewards programme also gives DD Perk members access to special offers and the chance to earn bonus points
  • Through the app, DD Perk members can share their vouchers with friends and family

Adding value to payments

In 2016, Dunkin’ Donuts introduced order-ahead functionality to the app – customers can now pre-order up to 24 hours in advance and just need to confirm their order when they are ready to pick up their order in-store or via a drive-thru.

Speed at the point-of-sale is certainly the major focus for the brand. Back in 2016, when pre-ordering was introduced, Dunkin’s director of consumer technology and mobile, Matthew Kraft, told Computer Weekly, that their customers were looking for a fast service.

“They’re looking for a fast experience. They want to get in and out of stores quickly. They want to get on with their busy work day and they’re not going to slow down.”

And what was true two years ago is still true for the brand in 2018, with Dunkin’ reporting that a massive 80 percent of its customers who’ve tried the mobile ordering service are using it at least once more.

What’s more, Dunkin had estimated 30 percent of its staff’s time was spent taking orders – the introduction of pre-ordering has enabled them to focus on other operational aspects, including store appearance.

Dunkin’ is also planning to further enhance its payments experience so that its loyalty members can reap the benefits of DD Perks, whether preloading their DD card or paying through card or cash.

Utilizing customer data

“You never equate big data with coffee and doughnuts, but that’s the next frontier”, said Dunkin’ Donuts’ VP Sherrill Kaplan earlier this year (who has since moved onto a new role).

Injecting a personalised experience into Dunkin’s app experience has been vital for bolstering its reputation for speed.

When the app was redesigned in 2016 users gained complete access to the Dunkin’ menu, meaning there was 15,000 ways to order a coffee. In response, functionality was introduced so that regular customers could save their favourite coffees and make one-click orders.

Dunkin’ is also using its customer data to run product trial offers based on individual purchasing preferences.

One campaign saw customer receive offers based on a product they were most likely to buy, as well as products that other people tended to buy alongside it, which resulted in “some fantastic results”, according to Kaplan.

Yoyo’s verdict on Dunkin’ Donuts

When it comes to both customer expansion and retention, Dunkin’ Donuts has put its money squarely on the customer experience, with a focus on speed and convenience for the customer rather than monetary gain.

The introduction of pre-ordering in 2016 was a game changer, with two million new customers joining DD Perks in 2017 alone – this success has been an obvious driver for the brand’s future growth plans.

When it comes to numbers, Dunkin’ has a way to go before it catches up with the likes of Starbucks’, which currently has 15.1million active users in the US.

But in terms of app ratings, both are virtually on par (currently 4.8 out of 5 for Dunkin’ on the Apple App Store compared to 4.7 for Starbucks).

Couple this with Dunkin’s intention to further enhance the payments experience and open up it’s loyalty (whether customers preload their DD card or pay through card or cash), and we could see the gap between Starbucks and Dunkin’ close in the near future.

All-in-all, Dunkin’ has been able to create a superior end-to-end customer experience – something that has seen its loyalty programme take flight.

And with its parent company already reporting strong revenue numbers this year, it’s no surprise then that Dunkin’ will look to aggressively expand through new store openings and bring more of its target “on-the-go customers” into the Dunkin’ fold.

Our review of the Dunkin’ Donuts loyalty programme was undertaken in partnership with our partner Preoday, which has also published its own take on the company’s order-ahead strategy. You can check it out, here.