Quick-service restaurant Togo’s Eateries Inc. decided it was time to freshen up its punch card loyalty program and launch an app-based digital rewards program.

The sandwich joint tested the in-app loyalty program in 10 of its 260 locations in January. It brought on 25 more locations in July and by the end of September, 6,810 customers had signed up to be a Togo’s Tribe rewards member. It added 10 more locations to the loyalty program at the beginning of October and by March 31 all of Togo’s locations will offer the loyalty program, says Leslie Lopez, brand manager, channel marketing at Togo’s.

“With the punch card, customers got their reward, but there was no way of tracking. How often are they coming in? What deals spur them?” Lopez says.

When consumers download the app they go through a registration process that enrolls them in the loyalty program. Consumers can also sign up to be in the loyalty program online. 87% of the loyalty registrations have come through the app, Lopez says.

Consumers in the loyalty program earn a point for every dollar they spend. After 50 points, a member receives a $5 reward. When a customer orders online or in the app he is given a unique three-digit code. When he goes into the store to pick up his order, he tells the cashier the code and his name so that order is tied to his account.

If a customer is ordering in the restaurant, he can hit “check in” in the app and his information is sent to the cashier’s POS system. When he orders, he tells the cashier he is a Togo’s Tribe member and gives his name. The cashier can then give him the loyalty points for his order. Instead of checking in the app, the cashier can also look up a rewards member in the point-of-sale system when he orders and give him points.

Since purchases from loyalty customers now have a digital trail, Togo’s knows that rewards members spend an average of $14 on each visit to the restaurant compared to a non-rewards customer who spends $10.

Since Tribe members spend more per visit, the restaurant has even more reason to motivate those customers to come in more often. Togo’s will send loyalty members offers in app, such as a free drink, and put the digital coupon in the app and will take it away once it expires. Togo’s can also send the offer via email and customers can click to load the offer into the app.

This spring Togo’s tried out a promotion that sent an email offer for a free bowl of soup to its 1,000 rewards members. 35.3% opened the email and 11.7% of the rewards members came and redeemed the free soup. Consumers who came in to redeem the offer spent an average of $9.48, so those customer clearly bought other items to go with the free soup, Lopez says.

In another effort to boost sales, the chain offers Tribe members double points for their orders, so that a $6 sandwich earns the customer 12 rewards points instead of six. Averaged across the first three Tuesdays in September, the number of loyalty members coming into a Togo’s increased 60% and the loyalty members spent 89% more than they would on a typical day.

For several years, Togo’s has also run an email club, which is a group of more than 100,000 consumers who have signed up to receive emails from Togo’s, Lopez says. Email club members, however, are not necessarily rewards members, and Togo’s can’t automatically move them over to the new program since consumers have to agree to terms and conditions. Eventually, however, Lopez hopes all of the email club members will sign up to be Togo’s Tribe members. The open rate for emails to loyalty members is about 30% while the open rate for the email club is between 19% and 20%, she says.

Togo’s recently started testing push notifications, or alerts that appear on the smartphone’s lock screen, to app consumers. It sends either one or two push notifications per week, one of which is to remind consumers of the double-point Tuesday offer, Lopez says. 33% of consumers who downloaded the app have opted in to receive push notifications, she says.

Togo’s trained its franchisees and managers via webinars on the new loyalty initiatives. It also provides ongoing monthly training and program updates via a webinar, Lopez says. Cashiers are trained to ask every customer if he is a rewards member and encourage him to sign up if he isn’t. Togo’s will run contests for each location to motivate their crew members to encourage this initiative, Lopez says.

“The livelihood of the program lives with the crew and cashiers,” Lopez says.

Eventually, Lopez’s goal for the program is for 40% and 50% of transactions that occur in the restaurant to stem from rewards members. Currently only 8% of transactions come from members, but Lopez considers that a pretty strong metric.

“I’ve been pleasantly surprised with how engaged customers are with the program,” Lopez says.

Togo’s uses Paytronix Systems Inc. for its app. The companies  began developing the app in September 2014, and the restaurant chain began testing it about four months later. Two Togo’s employees work on the loyalty program full-time.

Togo’s uses a white-label Paytronix app, meaning Togo’s uses Paytronix’s standard app format but presents it with Togo’s branding. Although there are some limitations, Lopez has been impressed with the app’s capabilities and says the app feels custom-made for Togo’s. Lopez would not disclose how much the app cost, but says custom apps are typically 10 times the cost of a white-label app such as the one Paytronix provides.

In the future, Togo’s will add mobile payment systems Apple Pay and Android Pay into the app, so customers can pay for their purchases with their smartphones.

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