Loyalty programs used to be simple: offer some points, give a discount, and watch customers come back. For a while, that was enough. But today, nearly every brand offers the same perks, free sides, birthday treats, bonus points, and third-party delivery apps add even more options. With so much overlap, it’s getting harder for customers to see what makes one brand different.
According to the Global Customer Loyalty Report 2025, brands are now spending 31.4% of their marketing budget on loyalty and CRM. That’s a record high, and a clear sign that retention is no longer just a tactic. It’s a growth strategy.
A new generation of customers has emerged, with Millennials and Gen Z leading the way. These consumers expect more than just discounts; they seek seamless, personalized experiences that align with their lifestyles and values. Simply offering points is no longer enough. This change is pushing brands into a new era focused on relevance, recognition, and what many now call hyper-personalization.
In fast food, this loyalty problem shows up fast. Deals alone don’t move the needle when customers can bounce between brands without a second thought. What sets great programs apart now is the full experience, how intuitive it feels, how relevant the rewards are, and how little effort it takes to stay engaged. That’s where we’re headed in this piece. So the big question is: how do we get customers to choose our app, and keep coming back to it?
Why Engagement is Declining
Most loyalty programs started with a clear goal: to drive sales. The strategy was built on transactional rewards, offer something in return for spending more. That approach can work in some cases, but it falls short when loyalty is treated as a generic experience. Without adapting to different levels of engagement, programs quickly lose relevance.
That’s where segmentation often goes missing. Many QSRs don’t yet have a clear strategy to identify or differentiate their most loyal users. Without tiers, personalized rewards, or behavior-based incentives, there’s no real path for customers to grow with the brand or feel recognized for doing so.
There’s also the challenge of consistency. Many programs don’t feel connected across digital and physical channels. The app might promote rewards, but the in-store experience doesn’t always support them smoothly. If redemption flows feel clunky, unintuitive, or require too many steps, even interested users may opt out. When every extra tap or decision adds friction, engagement drops.
Ultimately, it’s not that customers don’t care. It’s that loyalty, for many, feels like too much work. And when the path to feeling valued becomes complicated, people simply stop trying.
Use Case: In-Restaurant Experience
The challenges of loyalty become especially visible when digital touchpoints meet the physical world. In a recent in-restaurant study we conducted for one of the largest food tech companies in the world, we saw how small breakdowns, like unclear buttons, disconnected flows, and vague prompts, can derail a user’s intent to engage with loyalty altogether.
Many guests came prepared: they had already selected a coupon in the app, expecting to redeem it quickly and easily in the restaurant. But once they arrived, the experience didn’t match their mental model. Some entered the wrong flow. Others couldn’t find their loyalty code or weren’t sure when or where to scan it. In several sessions, users tapped through different app sections trying to activate the offer, before either stumbling upon the right screen or giving up entirely.
At kiosks, users often skipped early prompts to identify themselves, and later had no clear way to scan their code. Those who tried to sign up for a new loyalty account frequently abandoned the process due to delays in receiving the confirmation code.
A major point of friction was unclear labeling. Guests struggled to distinguish between options like “Add to Mobile Order” and “Redeem in Restaurant”, buttons that led to entirely different flows, neither of which supported redemption via kiosk.
Even when guests asked for help, the experience didn’t always improve. In several sessions, employees had to step in manually when the system failed to recognize loyalty codes, offers, or rewards. In some cases, customers lost points or couldn’t complete their redemptions, and staff weren’t sure how to fix it. A few employees also said they didn’t know which offers were currently live or how to verify if a reward had been applied.
This disconnect between digital design and in-restaurant support disrupted the experience, leaving both customers and staff uncertain about what should happen next. To address this, we collaborated with product and design teams to clarify key interface elements in the redemption flow. We focused on three specific friction points uncovered during research:
- Confusing button labels: The original options, like “Add to Order” and “Redeem in Restaurant”, caused users to misinterpret what action they were taking. Many thought their reward had already been applied or didn’t realize scanning was still required. We rewrote these labels and added clear descriptions and icons to better guide user intent.
- Loyalty code visibility: Users often struggled to find where to scan their QR code during redemption. Some tapped through multiple tabs; others gave up or needed staff support. We addressed this by improving the placement of the code and adding a floating button to keep it accessible throughout the experience.
- Unclear flows across channels: The path from app to kiosk felt disjointed. Users weren’t always sure what would happen next, when to scan, or whether their offer had been applied. We streamlined prompts and simplified steps to make the process feel more cohesive and predictable across touchpoints.
After running an A/B test across several markets, we saw a measurable increase in users completing the correct flow. In one test, clearer buttons improved conversion. In another, changes to QR visibility and redemption flow led to a +2.5 point lift in conversion from offer added to redeemed, and a 7.3 point reduction in scanning errors, including cases where users scanned multiple times or missed redemption entirely. Staff interventions also dropped as users were better able to complete the journey independently.
This kind of fix, simple, targeted, and focused on clarity, points to something larger. Loyalty today isn’t just about giving rewards. It’s about designing systems that recognize intent, reduce effort, and build trust at every touchpoint.
It also reveals an opportunity that’s often overlooked: personalization. Across our sessions, many users demonstrated repeat behaviors, visiting at similar times, redeeming the same offers, and prepping rewards in advance. But the system treated everyone the same. Even lightweight personalization, like surfacing frequently used offers or remembering recently viewed coupons, could have helped users feel seen, not just served. That’s the difference between a transactional experience and a relationship-building one.
Beyond Points—What QSRs Can Do Differently
Loyalty isn’t just evolving, it’s being redefined. As customer expectations shift and more brands offer similar perks, loyalty can no longer rely on transactional rewards alone. Today’s most effective programs create ongoing relationships that recognize not just purchases, but engagement, preferences, and purpose. The future of loyalty is integrated, interactive, and intentional.
To move forward, QSRs need to go beyond static point systems and design experiences that feel personal, effortless, and rewarding at every touchpoint.
Here’s what else QSRs can do to build more connected, effective loyalty programs:
- Design for everyday moments. Loyalty should be built into how people already behave, not something they have to remember. That means minimizing friction, making it easy to scan, save, or redeem, and reinforcing progress with nudges like badges or streaks.
- Make the app essential. Third-party apps offer convenience. Your app needs to offer something more. Whether it’s early access to new products, app-only challenges, or faster ordering, the goal is to turn the brand app into a habit, not just a fallback.
- Treat customers like individuals. One-size-fits-all no longer works. Use data to personalize offers, time outreach more strategically, and let users choose their own rewards. When people feel seen, they’re more likely to stay engaged.
- Close the online-offline gap. Loyalty should follow the customer. If someone prepares a deal in-app, the restaurant should be ready to accept it, without friction. That means syncing systems, training staff, and ensuring every touchpoint supports the same experience.
- Redefine what counts as a reward. Discounts still matter, but so do values, experiences, and recognition. Let users donate points, unlock surprise perks, or work toward something that feels personal and meaningful.
- Keep the relationship active. Post-purchase touchpoints are just as important as pre-purchase ones. Timely nudges, like personalized recommendations, loyalty balance updates, or monthly savings summaries,can help reinforce value and turn one-time visitors into loyal regulars.
Ultimately, these trends aren’t just being driven by Gen Z. They reflect a broader shift in how consumers define value. Loyalty programs that feel generic, disconnected, or hard to use won’t survive. The QSRs that stand out will be the ones that treat loyalty not as a gimmick or a feature, but as a core product experience designed for long-term growth.