loyalty programs: how adding value can add profit
DESCRIPTION
55% of top retailers have loyalty programs because they know how effective they are. It costs retailers up to 10 times as much to acquire a new customer, compared to getting an existing customer to return. Focusing on improving the shopping experience for customers through loyalty programs can boost profits for retailers in any industry.TRANSCRIPT
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.