loyalty programs: how adding value can add profit

WHAT ARE THEY?

WHY HAVE ONE?

Loyalty programs help retailers add value and give customers a reason to return

It costs retailers up to 10x moreto acquire a new customer

Returning customers spend 67%more than new customers

TIPS FOR GREAT LOYALTY PROGRAMS:

Hotel Rewards Card

MY COFFEE SHOP

$20 CREDIT FOR 12 PAWS

RETAILERS DOING IT RIGHT:

V I BR O U G E

V I BV E R Y I M P O R T A N TB E A U T Y I N S I D E R

B E A U T YI N S I D E R

Birthday gift, gifts after gaining 100 and 500 points, invites to events, discounts, first look at product launches.

FOR THE AVG.CUSTOMER

SPEND MORE THAN$350 PER YEAR

SPEND MORE THAN$1000 PER YEAR

S E P H O R A

Drives more spending asmembers strive for bothmore points and thenext reward level

PROS:Beauty Insider benefits,more frequent free gifts, private VIB only events, beauty concierge.

PROS:All other benefits, free ship-ping, private VIB Rouge only events, unlimited access to beauty studio, surprise gifts.

PROS:

Loyalty programs are a great way to keep them coming back,

55% of top retailers have a loyalty program

More than 2/3 of groceryexpenditure occurs at

the consumer’s “favorite store”

Linked to a phone numberand email, and can be usedin store and online

Average of 23 loyaltymemberships per household

How Adding ValueCan Add Profit!

LoyaltyPrograms

Provide a loyalty membership thatcan be used on all channels

you operate in.

Make it difficult for other retailersto follow the same model and steal

customers. If you have a tieredsystem, make sure each level adds

significant value.

It’s a big data cycle: the morecustomers spend, the more data

you can collect and the betteryou’re able to target them with

effective rewards to getthem to shop again.

Give it a second thought. Typically thesetypes of retailers aren’t able to providemuch back without being negativelyimpacted.

Include All Channels

Rewards Must BeSignificant and Distinct

Why it Works:

Different forms:

No purchase necessary forcertain perks - drives storeor website traffic

Provides value for customers at multipleincome levels and drives larger purchases toget up to the next level for better rewards.

Have a Tiered System

REDEEM

Keep the Data Rolling

Operating on small margins?

Collect and analyze customer databefore implementing. The more you know,the better and more relevant offersyou can provide!

Collect that Info!

Reward AccountLinked to Your Email

or Phone Number

Giving Back a CertainPercentage of thePurchase Amount

Physical Cards

%

55%

10x

95% of people who enrolled in a loyalty program said they were

likely to continue using it

%

Online Only Rewards Program: G I L T

G I L T

POINTS CAN BE EARNED BY

Visiting the Website Making PurchasesEngaging with theBrand on Social Media

Why it Works:

IncentivizesMultiple Actions

Rewards Based OnPrevious Buyer Behavior

Pr i c i n g Pe r fe c te d.

Looking for other ways to boost profits?

Loyalty rewards are a “thank you” to the consumer from thestore for the privilege of collecting loyalty card customer data.

As former Tesco CEO, Sir Terry Leahy put it:

Let us help power your pricing strategy.