Loyalty Movement Report: QSR

The Secret Sauce to Retaining Customers

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‍Introduction‍

In our previous report, Redefining Customer Loyalty, Cardlytics defined loyalty as a consumer’s preference for a merchant over its competitors. We analyzed $160B in spending across six industries to measure customer loyalty and spending patterns with both loyal and non-loyal customers.

But customer behavior isn’t fixed—customers shift between loyalty segments over time. Understanding these shifts helps identify churn and informs strategies to nurture relationships and move customers to higher loyalty segments. In our Loyalty Movement Report, we dive into customer behavior in the QSR category to better understand engagement over time by analyzing more than $44B in consumer spend behavior.*

QSR Category Loyal Customers

On average, 81% of the category’s customers are not actually  loyal to any brand. But the loyal segment has a much higher share of wallet (67%) than a not loyal segment (15%).

Top Customers (top 10% of most frequent transactors) are show  reverse allegiance vs overall customers. And the loyal customer segment shows more than 3x higher share of wallet.

Findings

We looked into purchase data at all QSRs in the US over the last 8 quarters (Q1-23 through Q4-24) on a quarter by quarter basis to see whether even the “most loyal” customers showed changes in their purchase behavior. 

QSR Loyalty Movement

Overall, quarter over quarter, 58% of customers tend to remain in their existing segments and 21% increase or decrease their loyalty to a merchant, showing that QSR customers tend to be more promiscuous than other industries. Also, there is much more extensive customer loyalty movement within the “not loyal” segments.

Segment Movement

While all segments show purchase behavior movement, the Tied segment (part of Not Loyal customers) shows the most movement - both up (26%) and down (45%) - into other segments.

QSR Leaky Bucket

QSR brands are acquiring new customers at a 3x faster clip than they are losing customers. Yet these customers are less loyal to any specific brand so nurturing the relationship is key.

Diving deeper into the individual segments tells us:

• Loyal customers and those that Prefer the competition are the most rigid (with 63% and 72% staying the same, respectively). Those customers that are Tied have the greatest propensity for a behavior change (with only 13% staying the same).
• ‍Loyal customers are far less likely to churn. Customers that are Tied are 50% more likely to churn and customers that Prefer the competition are 100% more likely to churn!

Definitions of Customer Segments

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Loyal Customers
Loyal: Only shop with a specific brand, or have the highest share of wallet with a given brand and relative rank is lower than all other brands in consideration set

Not Loyal Customers
Tied: Similar relative ranks to 2 or more brands regardless of share of wallet ranking
‍Prefer: Lower share of wallet and higher rank than other brands in their consideration set
‍Lapsed: Shopped historically but do not shop currently, as defined by the analysis time period
‍New: Shop currently but have not shopped historically, as defined by the analysis time period

Takeaways

Marketers know it’s more costly to acquire or re-acquire customers than to keep existing ones engaged. When QSRs neglect current customers, they risk losing them and undoing past investment - not loyal customers are 50%-100% more likely to lapse/churn than loyal customers. But also QSRs are doing a relatively good job of bringing in new customers so staying top of mind is even more important. Marketers must continuously nurture relationships, understand customer needs, and offer seamless experiences. To foster loyalty with your customers, consider these recommendations:

• Use an “always on” strategy to keep customers engaged, regardless of purchase frequency.
• Regularly update/refine customer segments and adjust reward offers to keep them engaged.
• Use targeted campaigns to boost loyalty and revenue.

Cardlytics can deliver a comprehensive Customer Loyalty Analysis with  insights into customer behavior and movement across defined loyalty segments. Contact us for more details.

‍* *For this report, we've selected the entire QSR category in our data, collectively representing over $44B in annual card spend. This sample differs from the previous Customer Loyalty Analysis report.
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About Cardlytics‍

Cardlytics (NASDAQ: CDLX) is a commerce media platform, powered by our publishers’ first-party purchase data, that makes commerce smarter and more rewarding for everyone. We offer a range of solutions to help advertisers and publishers, including financial institutions, grow and strengthen customer loyalty. With visibility into approximately half of all card-based transactions in the U.S. and a quarter in the U.K., Cardlytics enables advertisers to engage consumers at scale and drive incremental sales through our industry-leading financial media network. Publisher partners can enhance their platforms with relevant and personalized offers that improve the shopping experience for their customers. Cardlytics also offers identity resolution capabilities through Bridg, which helps convert anonymous shoppers into known and reachable customers. Headquartered in Atlanta, Cardlytics has offices in Menlo Park, Los Angeles, Champaign, New York and London. Learn more at www.cardlytics.com or follow us on LinkedIn.