Guest Feature: It isn’t broken because of customers. It’s broken because of the design
Merkle Says QSR Loyalty Is Changing. I Say It Isn’t Changing Nearly Enough.
I kept circling back to the recent Merkle article on “redefining loyalty” in QSRs. It’s polished, optimistic, well-structured, and full of the usual modern marketing vocabulary. It nods knowingly at QSR pain points. It gestures toward the future. And yet one question lingered in my mind: Is this really the revolution everyone keeps promising?
Because if Merkle is accurately capturing how most QSRs currently think about loyalty, then we’re dealing with a very serious misalignment. The strategies they champion orbit the same gravitational center QSR loyalty programs have been stuck in for years: loyalty as rewards, engagement as a postscript, differentiation as an afterthought. If you’ve been in the engagement trenches as long as I have, you know you cannot fix structural weaknesses with a fresh coat of transactional paint.
There’s a tension here worth exploring, because the gap between what QSR loyalty needs and what QSR loyalty is being told to do continues to widen into what I once called The Loyalty Chasm and the industry is still marching toward it.
Merkle’s Central Premise: Loyalty Is Shifting. The Problem Is That It Isn’t Shifting Enough.
Merkle argues that QSR brands are leaning away from transactional loyalty and toward emotional loyalty. They speak of connection, personalization, and “meaningful journeys.” On the surface, that sounds right. It’s the right vocabulary. But vocabulary isn’t transformation.
The examples they provide all rely on the same underlying chassis that created today’s loyalty stagnation: better personalization, tighter segmentation, smoother convenience, more efficient reward flows. It’s essentially a well-polished remodel of the old architecture, an evolution of methods that no longer differentiate.
Personalization? Table stakes. Customers assume you can do it. AI made it cheap, predictive modeling made it ubiquitous, and the competitive advantage it once offered has long since evaporated.
Convenience? QSRs have been worshipping frictionless experiences for years. But friction, used intelligently, can be one of the most powerful engagement levers we have. In my work on FUNstration, I show that humans bond through micro-tension, anticipation, and emotional stakes, not through perfectly polished ease. Smooth out every interaction and you risk losing the very texture that makes an experience memorable.
So yes, loyalty is shifting. But mostly sideways.
The Real Trouble: Merkle Describes the Symptom but Not the Diagnosis
Merkle correctly identifies the financial pressures QSRs face: rising costs, thinning visits, tighter margins. Loyalty programs are being asked to shoulder more of the business outcome load. But the article stops short of admitting the truth every QSR CFO already feels:
Most QSR loyalty programs don’t generate enough incremental behavior to justify their cost.
Rewards alone, no matter how cleverly packaged, rarely produce sustained lifts in visit frequency. As I’ve argued for more than a decade, points and badges create loyalty theater, not loyal behavior. They are financial levers, not engagement engines. And AI assistants will soon expose this truth with ruthless clarity.
This is why we built SNES: Steve’s Net Engagement Score. Most QSR apps lack the psychological design elements that produce real engagement: interesting choices, meaningful consequences, and time pressure. Without these, digital loyalty collapses into passive tracking. Customers forget programs the moment they close the app.
Redemptions and MAUs might tell you that customers are present, but they don’t tell you if customers care. Merkle’s proposed fixes strengthen the same weak foundation.
What Merkle Calls Differentiation Isn’t Really Differentiation
Merkle argues QSRs must stand out with more modernized, personalized loyalty experiences. True, but refining a points system or polishing UX flows does not create differentiation. Those are basic operational improvements.
Real differentiation lives in psychological and emotional territory. In experiences that feel alive. In systems that create memories, anticipation, narrative, agency, belonging.
Merkle nods in this direction but retreats before the hard work begins. QSRs don’t need a nod. They need a new loyalty architecture built on the deep engagement dynamics that games have mastered for decades: interesting choices, consequence, and time pressure. These are the mechanics that transform passive customers into active participants.
We embedded these principles directly into PUG’s Picnic platform, not as decoration but as the functional core. Because engagement that moves business outcomes only exists when you move human behavior. And you don’t move behavior without psychology.
Merkle Also Misses an Even More Basic Reality
There’s a category dynamic Merkle never addresses: QSR is a low-involvement purchase cycle. Most people only think about Taco Bell, Wendy’s, or Popeyes in the brief moment they’re deciding where to eat, not during the other 23.5 hours of the day. Engagement tactics that require ongoing attention outside the dining decision window are fundamentally mismatched to the category.
And equally important: if the food or experience disappoints, no amount of clever engagement design will matter. Before a QSR earns the right to engage, it must satisfy the eater. Engagement amplifies momentum but it does not manufacture it from scratch.
Merkle Underestimates the Threat That Will Reshape Loyalty Entirely
The biggest omission in the Merkle article is the most urgent threat to the future of loyalty: AI assistants.
As I argue in my analysis of the death of loyalty under Google’s new AI-powered shopping, we’re entering an era where customers won’t choose brands. AI intermediaries will choose on their behalf. When an assistant selects your restaurant based on optimization logic, your points program no longer matters. Your personalization engine no longer matters. Your carefully optimized offer strategy no longer matters.
This will hit QSR first and hardest because QSR purchases are habitual, interchangeable, and price sensitive. If your loyalty program is merely a discount mechanic, an AI assistant will outperform you instantly.
Merkle praises innovation but ignores this existential shift. A rewards-based loyalty program cannot survive in a world where the assistant chooses the rewards, the restaurant, and the reorder pattern. The only defensible moat is emotional loyalty, community identity, and interactive engagement, the elements AI cannot flatten into an optimization matrix.
Where QSR Loyalty Must Go Now, Not Eventually
QSR brands need a loyalty transformation deeper than the Merkle blueprint. Their recommendations are sensible but insufficient. The category does not need a systems upgrade. It needs a new operating system built on psychology, emotion, identity, and participatory engagement. A world where loyalty programs feel alive rather than procedural. Because when AI assistants take over the transactional battlefield of customer choice, the only thing your brand will have left is the part Merkle never wrote about: the emotional, interactive world customers choose to return to.
So, What Should QSRs Do Right Now?
QSR leaders need a practical starting point today. Here is where to begin:
A. Introduce meaningful customer choices.
Not just “pick your reward,” but choices that shape the customer’s journey and reveal their preferences. Even a single branching decision path can convert passive loyalty into active engagement.
B. Give those choices consequence.
In game design, choices without consequence are noise. In loyalty, they’re wasted money. Let customer actions unlock experiences, influence rewards, and build progression. Progress is addictive.
C. Add time-based dynamics.
QSR is an impulse-driven category. Limited-time quests, streaks, seasonal arcs, short-burst challenges. These are the mechanisms that align with real dining behavior and create urgency.
None of this requires a massive overhaul. You can start small: a choice mechanic here, a consequence mechanic there, a time-bound challenge next month. Within weeks, the data will show what every game designer already knows: engagement is a design problem, not a frequency problem.
And in an AI-mediated future, the brands that thrive won’t be the ones who tweak their earn-and-burn tables. They’ll be the ones who build interactivity that customers want to experience and that can’t be flattened into a spreadsheet.
About the Author
Steve Bocska is the CEO of PUG Interactive, a pioneer in gamified engagement and loyalty. A former video game producer for Electronic Arts, Disney, Sega, and Ubisoft, Steve helps brands transform their customer relationships into meaningful, memorable experiences.