Loyalty programs are a great way to retain customers and keep them coming back to the store time and time again. In fact, by increasing customer retention by just 5 percent, brands can increase profits by 25 to 95 percent, which is why loyalty programs are a go-to marketing source. But there is one major problem with today’s loyalty programs – there has been a 2 percent decline in overall active member rates which leads to slower growth and profits for brands.
What is causing this decline in active participation, and how can brands turn it around to fix this problem?
There are a couple of new insights that help shed a light on the cause of this decline and the tactics that can mitigate and even turn around loyalty programs so they are profitable and engaging to customers. […]
Reward programs have been around for years. Airlines, hotels, and restaurants adopted these programs decades ago. Convenience stores, on the other hand, seem to prefer club programs and simple promotions like 3 cents off per gallon or short-term, low-value programs.
At a high level, mass promotions are a great business strategy, driving more visits and spend. Most of the time they are also paid for by the CPG vendors, so the cost of running these promotions is minimal to the convenience store. Mass promotions and eblasts get brands quick wins and compel customers to make purchases with the incentive of getting an item for free.
Most mass eblast promotions are the standards “Buy 1 coffee, Get 1 coffee Free.” Let’s think about this from the customers’ point of view, a very frequent customer who comes in every day for their morning coffee before they head off to work could get a free coffee just like the customer that has maybe come in once or twice would be able to get the free coffee with their purchase. The fact is, the customer that comes in every day would have been willing to purchase that cup of coffee at full price. You are essentially rewarding the frequent customer with a free coffee for not changing their behavior or driving an incremental visit or spend and eroding the revenue you did get from driving the customer who has not come in as much and did change their behavior. […]
Today we are talking with Paytronix power-user Devin Handler, director of marketing, Garbanzo Mediterranean Fresh, about how his loyalty program is driving more sales and visits.
Listen to the Paytronix Webinar, “What the Heck Happened: Recapping 2017’s Challenges and Identifying 2018’s Solutions,” to hear more about Garbanzo’s loyalty best practices.
Can you give us some background on the Garbanzo V.I.B. Rewards Club?
Garbanzo has 27 units and approximately 110,000 members segmented into various bands in the V.I.B. Rewards Club. Not all restaurants participate because their POS systems don’t integrate with our Paytronix-powered rewards program. We encourage members to interact with us in whatever way makes them comfortable, whether that’s a physical badge on their key chain or through our mobile app.
At Garbanzo, we believe that simple is best. And, like the food we serve, our interactions at every touchpoint should be simple, fresh and friendly – including and especially our rewards program. We make it easy for them to join our V.I.B. Rewards Club any way they want – digitally, analog or some combination of both. […]
Before HuHot found Paytronix scoring, the marketing team would segment guests based upon how many visits a person had made in the past year. That old approach wasn’t perfect, as guests may have visited several times in a short period and then dropped off, so a lapsed guest could look like a frequent visitor. And a guest who may have only visited three times all year would likely be seen as a low-frequency guest, without the context to know all three of those visits took place within the past month.
HuHot uses scoring for smart, agile marketing automation that customizes Paytronix offers for light, medium and heavy user groups. Marketing can target guests with specific offers that drive their desired behavior, to produce incremental revenue. […]