Editor’s Note: This article is an excerpt from one of RetailWire’s recent online discussions. Each business morning on RetailWire.com, retail industry execs get plugged in to the latest news and issues with key insights from a “BrainTrust” panel of retail industry experts.
A Dairy Queen in the Indianapolis area is testing a loyalty program that uses stickers to attach radio frequency identification (RFID) tags to phone handsets delivering savings coupons to consumers. If successful, Dairy Queen intends to expand the test and eventually take the program national.
According to RFID Journal, Dairy Queen has been testing the program for 20 months. Shoppers sign up for the program by dialing into the restaurant’s system. They then receive a text message from Dairy Queen with a special promotion offer. The customer then simply goes to a store and shows the text message to an employee to get their special deal.
A total of 900 people have joined the Dairy Queen program and only about 6% cancel. Jamie Guse, International Dairy Queen’s Web site manager who is overseeing the test, said the RFID portion has only been tested for a couple of weeks but the company has high expectations.
“This allows us to do real-time tracking on redemptions, and closes the gap as to how well the text-messaging system is working,” he told RFID Journal. “Our goal is to get a better understanding of customer behavior, and build customer loyalty based on that information.” The RFID system also enables the restaurants to target messages to individual customers based on their purchasing habits.
Analysts on RetailWire’s BrainTrust panel agree that this effort is a big development for RFID. “RFID is likely to play an increasing role in “personal” selling at retail, and DQ is properly marrying it to the capability to complete the communication loop: ‘SHOPPER: here I am, it is I! RETAILER: so good to see you again, your favorite again? Think Amazon,” notes Herb Sorensen, Global Scientific Director, Shopper Insights, TNS Sorenson.
“DQ’s initiative leveraging both RFID technology and a CRM loyalty program represents solid innovation and a smart way to engage their target demographic,” says John Bajorek, Director of Digital Services, WD Partners. “The millennial generation they are pursuing has no interest in printed coupons and is more dependent on their phone than any other device.”
Other analysts, however, feel that the effort might not make enough of an impact to drive incremental profit. “DQ is a fairly limited concept that cannot provide a wide enough range of offers across purchase categories to make the technology interesting to the consumer,” notes Jonathan Merk, SVP, Applied Predictive Technologies. “Loyalty programs in general struggle to truly create value for retailers. In fact, often they struggle on an offer-by-offer basis, let alone total ROI including the program overhead costs. So assuming this has higher overhead, the economics are even more challenging.