Hacker News Reader

Comment by christina97 | Hacker News Reader

Is it not common knowledge that this is the entire purpose of loyalty programs? As far as I know, if you don’t give them your details and just swipe a card, they are not doing facial recognition and PCI stops them from linking your purchases too heavily.

I’m not really surprised by anything here but the fact that McDonalds disclosed all their predictions?

The bigger question here is whether it is good for large corporations to be run with such brutal profit motives, running on extremely precise data to uncover how to best make a bigger profit. It doesn’t appear good to me, but it is how the entire US economy operates. The lift from the per-customer loyalty timeseries and per-customer upsells is probably modest compared to the rest of the data driven work to understand how to sell more “product”.

View on HN

It's not the entire purpose of the loyalty program. The other reason (possibly the bigger reason) is simple price discrimination. McDonald's found that there are two distinct groups of customers: habitual fast food eaters, who go to their restaurants on a very regular basis, and opportunistic fast food eaters, who grab some fast food once in a blue moon because they want something fast.

They found, perhaps counterintuitively, that the opportunistic customers are vastly less price sensitive than the habitual customers. The solution was a somewhat involved loyalty program, which is deliberately enough effort to set up to weed out the sporadic customers from using it. Now, they can charge the less-price sensitive one price, and their more price sensitive customers a different, lower price. As an added bonus, habitual customers are probably more susceptible to advertising/prompting.

I suspect there is actually three groups, because the app also has a sort of coupon-ing in it. The lowest price requires you to search the app to find a "deal" that is currently available, rather than just use your loyalty points to get a discount.

One of the ideas of classic coupons was to offer a lower price to the most price sensitive customers. The people willing to deal with the fuss of finding and cutting out the coupons.

I think lot of habitual eaters are also doing price comparisons between different options. So just being slightly cheaper than competition can move that specific purchasing decision from one brand to an other. So also being able to nudge them specifically will not affect the other group.

Supposedly you can't use coupons with EBT. They advertise pretty heavily that they take EBT. Those customers might be willing to pay more.

Reply on news.ycombinator.com