McDonald’s is reportedly developing a rewards program that hinges on targeted offers for driving frequency and discounts based on previous purchases instead of relying on broad-appeal coupons, as the chain has done in the past.

McDonald’s U.S. president revealed the news during the UBS Global Consumer Conference this week, indicating that the implementation of a national rewards program could result in a big uptick in sales for the marketer, who has suffered from fledgling sales. However, McDonald’s will need to rise to the level of other competitors in its industry, such as Taco Bell, who have incorporated interactive and gamification-heavy elements into their rewards platform as a way of bolstering customer engagement.

“Is McDonald’s ‘too late’ to the loyalty game?” said James McNally, senior manager of business development at Prolific Interactive. “There are a few elements to this question: clearly McDonald’s is making a concerted push right now to revitalize the mobile channel (into the kind of meaningful engagement and transactional tool that it should be for a brand like McDonald’s).

“However, this isn’t the brand’s first foray in mobile loyalty – loyalty was purportedly a goal of the relatively underwhelming McD app, released in 2013,” he said. “The loyalty component of that earlier mobile ordering app was essentially a coupon on a phone – which unsurprisingly was not a runaway success.

“That said, mobile loyalty is not a fad – it’s a fundamental aspect of the way customers interact with brands like McDonald’s on mobile. Yes, McDonald’s could have done a better job in releasing a best-in-class loyalty app earlier, but mobile is here to stay for the long term, so better now than never.”

Thinking customer-first
McDonald’s claims the loyalty program, which will be implemented within the brand’s mobile application, could see a national introduction later this year or in early 2017. The platform will be a customer-designed loyalty program, suggesting that it will leverage individual consumer data to present more targeted offers.

For example, the program will likely be linked to app users’ previous purchases, or the number of visits consumers make to McDonald’s locations every month. Customers will have a limited window to take advantage of available deals, which may prompt them to make unscheduled visits and impromptu purchases at the chain’s restaurants.

The new platform will build upon the Big Mac marketer’s existing mobile app. Last September, McDonald’s previewed the app’s U.S. version with consumers in the Philadelphia region by tacking on a complimentary item for each download (see story).

In several markets, app users are able to earn a free McCafé drink after purchasing five beverages. No overarching rewards system has been put into place thus far. The app has seen considerable download numbers, but McDonald’s is still searching for ways to foster long-term usage.

During its January earnings call, McDonald’s revealed it has seen more than seven million downloads of its mobile app since the fall 2015 launch, proving that welcome offers are directly correlated to high registration rates (see story).

“McDonald’s has a few basic levers it can pull to drive downloads, and rewarding good customers is one of the most powerful,” Mr. McNally said. “If this loyalty program shows real value for customers, and is implemented and promoted well, then [there is] no reason it wouldn’t drive more downloads.”

Frying up long-term engagement
McDonald’s is also hoping to use the U.S.-based loyalty program to win back absent customers. If individuals have not shown activity for a while, the chain can lure them back with an exclusive in-store discount for their favorite menu item.

The fast-food brand has been focusing on driving customer retention with a slew of other tactics as well, including developing digital menu boards, and offering all-day breakfast options.

However, one surefire way of boosting in-app engagement would be to follow in Taco Bell’s footsteps by employing gamification aspects – something likely to resonate well with millennials.

Last December, Taco Bell introduced an in-app loyalty program with a gamification-heavy focus on rewarding customers for repeat ordering and engaging on social media (see story).

“Taco Bell has been a sector leader in mobile, and as a general rule, McDonald’s should (and presumably does) study its competitors’ mobile efforts,” Mr. McNally said. “One reason mobile loyalty efforts don’t take off is lack of engagement, touchpoints, and immersion – McDonald’s previous efforts were essentially a coupon on a phone.

“In order to foster repetitive use, apps require a bit more strategy around engagement and a multi-touch user experience – not just a coupon,” he said. “Gamification needs to be used judiciously though –  some light/easy interaction is great (especially if there is a social tie-in), but no one is looking to weave McDonald’s gameplay throughout their everyday lives just for a free Big Mac.

“Gamification for McDonald’s should be based around simple actions that align with the type of social/mobile experiences the brand’s customers are already invested in.”