Taco Bell is gearing up to overtake its competitors in mobile strategy by announcing plans to roll out a customer loyalty program as part of its mobile application later this year, placing it a step above other fast food chains such as McDonald’s and Burger King that do not offer rewards platforms.

While the brand has not revealed specifics of the in-app loyalty program, it plans to make the experience of logging Taco Bell orders more game-like, rather than a traditional punch card. Taco Bell has been placing a greater emphasis on mobile in recent months, which began with its introduction of mobile ordering in 2014.

“This news will definitely entice customers to visit Taco Bell more frequently,” said Esha Shah, manager of mobile and strategy at Fetch, San Francisco, CA. “People carry their smartphones with them everywhere so by integrating a customer loyalty program into the Taco Bell app, it makes returning to Taco Bell for rewards more convenient than a traditional paper punch card.

“Their loyalty program will also feel more like a game than a traditional punch card, making it more fun for customers to interact with the Taco Bell brand. In addition, Taco Bell’s app may also allow users to order food for deliver, further incentivizing customers to utilize their app.”

Attracting diners
Taco Bell could leverage a big advantage over its competitors with this program, which is being designed to attract more diners in the United States to visit its bricks-and-mortar locations. Integrating the loyalty aspect alongside the mobile ordering platform within its mobile app is also a smart tactic.

Although Starbucks is also leading the pack with its initial rollout of mobile order and pay options, fellow fast food chains such as Chipotle, Burger King, Wendy’s and McDonald’s have not been foraying into the loyalty sector, despite offering mobile apps to consumers.

“Brands like McDonald’s and Wendy’s that do not offer loyalty program are at a huge disadvantage because it is paramount for brand success to stay relevant to millennials,” Ms. Shah said. “Without a loyalty program built in to their apps, it’s hard to encourage customers to use the app regularly.

“Brand loyalty is all about getting customers to feel connected to your brand by interacting with it, and with millennials’ using their smartphones as their gateway to the world, incorporating loyalty platforms is key to reaching this important segment of customers.”

As many consumers of fast food restaurants are frequent visitors, rewarding them with free food or discounts after a designated amount of orders is a beneficial strategy to drive in-store traffic.

Beverage brand Starbucks is taking mobile ordering to the next level by announcing its plans to introduce two delivery models this year. It will be teaming up with on-demand delivery service Postmates to allow consumers to order food and drink products from the Starbucks mobile app and have their items delivered within specific areas (see story).

Meanwhile, its second option, a “Green Apron” barista delivery feature that that would enable consumers in specific buildings to order beverages and food, which will be brought to them by a Starbucks barista, is being tested in New York.

This could prompt fast food chains to follow in its footsteps and attempt to cater more to the lunchtime working crowd.

“Touting how their breakfast offerings are different from what’s offered by the competition is one thing, but rewarding regular customers for their loyalty is something entirely different,” said Shira Anderson, marketing manager at Como, Israel.

“If you feel that Taco Bell is paying attention to the fact that you visit frequently and you’re able to benefit from that in ways which aren’t available to other customers, you’re being given an experience that you wouldn’t normally have unless you were in your local coffee shop, a restaurant you frequent, or another business close by your home that you stop by regularly.”

Boosting sales
Taco Bell, which has already seen sales bump up thanks to its recent mobile enhancements, could continue seeing an upward trajectory in revenue with the inception of the loyalty platform. If consumers need a certain amount of orders to receive free food, they may be willing to bring family and friends in-store with them to help achieve that goal.

The mobile ordering app also helps bolster order amounts due to its ability to suggest complementary add-on menu items to users.

While Taco Bell’s parent company Yum! Brands saw an $86 million fourth-quarter loss in 2014, the taco chain has seen the average order from its mobile ordering app come in at 20 percent higher than in-store orders (see story).

“By making loyal customers feel special when they get to the cash register, Taco Bell is enhancing the experience they have when they stop in for a bite or pick something up for later,” Ms. Anderson said. “It’s something that small retailers know how to do well and that mobile apps are helping them to do better as they can incorporate their loyalty programs into apps and communicate with their customers through them.”

Furthermore, the opportunity for valuable data collection will be significant.

“Also, the Taco Bell app can provide a wealth of information on what customers like and don’t like about their experience with the brand. For example, the app can collect data on customers’ purchasing habits, time of day they visit Taco Bell and if they’re using coupons,” Fetch’s Ms. Shah said.

“From this data, Taco Bell can better understand and target individual customers based on their specific habits, providing promotions and offers that are personalize and most relevant to that customer.”

Final Take
Alex Samuely is an editorial assistant on Mobile Commerce Daily, New York