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Subway loyalty program faces delays

Subway loyalty program faces delaysThe Subway brand of quick-service sandwich shops is facing some choppy waters, with sales down, franchisees unhappy, and leadership divided on how to turn around the chain’s flagging fortunes. One area of concern: Subway’s long-delayed loyalty program, which has yet to launch. Can the world’s largest fast food brand reinvent itself through customer loyalty?

By Rick Ferguson

The New York Post has the story, which reveals that sales of the privately-held chain have fallen in each of the last two years – 13 percent, according to Restaurant Research – leaving Chief Executive Suzanne Greco at odds with Subway ownership over how to reverse course. Greco has invested heavily in the customer experience, teeing up a store redesign and launching Subway Digital to reinvent the chain’s ordering process with digital menu boards, kiosks, a Facebook Messenger bot and a new mobile app. That digital initiative includes a new loyalty program, which has run into some technical headwinds. Money quote from the Post:

“Greco was also jazzed about the soon-to-launch customer loyalty program that, she hoped, could reignite sales growth from the chain’s 7.5 million orders… But a long-time Subway franchisee told The Post that technical problems have long delayed the roll-out of the loyalty program. ‘The loyalty program is a year behind, with many false starts,’ the franchisee told The Post. ‘A reason is that it hasn’t been able to work yet because of software difficulties, including the corporate platform not talking to the store point of sale systems.’”

There’s also the question of whether an all-in digital push is even the right direction for the chain, given that much of Subway’s sales declines can be attributed to a shift in tastes – particularly driven by Millennial consumers – away from cheap fast-food options and toward more premium fare made with fresher ingredients. It’s the Chipotle model, only without the botulism. Subway’s core customer base is blue-collar, and their store locations tend to be down-market, tucked within suburban strip malls and highway exit-ramp gas stations. Will digital menu boards really turn the tide?

The Post reports that ownership would prefer the company to expand into sub-brands to capture changing consumer tastes. Over at Restaurant News, contributor Jonathon Maze also advises the company to move beyond discounting:

“Subway has also relied heavily on discounts. The chain successfully used its $5 Footlong promotion for years to generate sales coming out of the recession when consumers stopped eating out. And any chain as ubiquitous as Subway needs some discounting strategy. Yet as the economy improved, consumers shifted more spending toward higher quality options, and Subway’s focus on discounts made it the lower-end sandwich seller in the market. It’s probably no coincidence that both McDonald’s and Subway started seeing sales and traffic declines in 2012.”

For now, however, Greco’s CX initiative, with a new loyalty program as its centerpiece, is the company’s stated way forward. Greco’s focus on the customer experience and loyalty is also entirely defensible, given that Subway now ranks dead last in customer loyalty among fast-food chains, according to Brand Keys. As Jonathan Maze points out, however, what the company mustn’t do is put a shiny new digital wrapper on the same old strategy. Subway should make the loyalty program the centerpiece of their relationship-building efforts – and then leverage those best customers to help them reinvent the brand. The loyalty program isn’t the end-game of building customer loyalty; it’s only the beginning.

Rick Ferguson is Editor in Chief of the Wise Marketer Group and is a Certified Loyalty Marketing Professional (CLMP).

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