One of the key trends we've been following this year is the welcome and favorable attention of Wall Street to investment by brands in customer loyalty. Analysts have praised companies from McDonald's to Starbucks to Kohl's for their respective loyalty initiatives, and in some cases are rewarding those companies with higher stock prices. The latest beneficiary of Wall Street's belief in loyalty is US quick-service restaurant chain Dunkin' Donuts, which recently hit a loyalty milestone.
As reported by CNBC, the chain's DD Perks loyalty programme has doubled membership in less than two years, reaching 5 million members. The programme is seen by analysts as a key weapon in the fight against arch-rival Starbucks; upon this news, shares of Dunkin' Brands rose nearly 2% despite the company's other recent challenges. Money quote from CNBC:
"The company faced backlash from investors last month after both Dunkin' Donuts and Baskin-Robbins saw same-store sales growth fall well below analysts' expectations. A bump in loyalty programme participation could give investors hope for the second half of 2016."
Those of us who have been in the loyalty industry for a while remember the days when the loyalty team was regarded in many companies as the red-headed stepchild of the marketing department. Today, Wall Street recognises that successful investment in customer-centric marketing is one of the most certain signs that a company has its house in order. A loyalty programme isn't a cure-all, and many retail brands face challenges that a programme alone can't fix. But investment in loyalty does tell analysts that a company has its attention fixed on the most certain driver of profits - its best customers.
-Rick Ferguson
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