Key Takeaways from Loyalty Experts Session at NRA 2016

Slack for iOS Upload (3)The Paytronix team was on site in Chicago earlier this week at the National Restaurant Association (NRA) Show. Similar to last year’s event, the show was chock-full of restaurant brands, vendors, and of course: food.  The bustling energy on the floor inspired us during the four-day event as we shared our customer engagement expertise and swapped stories with other attendees. We were especially grateful to have the opportunity to lead a speaking session with one of our clients, Lettuce Entertain You Enterprises (LEYE).

Lee Barnes, Head of Customer Insights at Paytronix, led the session ‘Lessons from Loyalty Program Experts’ alongside Michael Lynch, Director of Loyalty Marketing at LEYE. Barnes is a self-professed data geek who can optimize any loyalty program. Lynch has over 20 years of experience building and managing loyalty programs. With their combined experience, expertise, and wit, this dynamic duo made quite an impression on the 200+ session attendees. In case you missed out, here are the top 5 takeaways from their presentation:

  1. Loyalty programs are a tie-breaker. Let’s think about flights. How do you choose which airline to use? If Airline A and Airline B both offer the flight you want at similar times, similar prices, and have more or less the same user rating, it might seem that it doesn’t matter which airline you choose. Now let’s say that you’re a member of Airline B’s loyalty program, and you’ll earn miles for purchasing with them. Suddenly the decision becomes very simple – choose Airline B and earn.
  2. As people get closer to earning a reward, they visit more frequently. In a Nunes-Drèze study, they used a car wash ‘Buy 8, Get 1 Free’ example to prove that as the customer gets closer to their free car wash, they visit more frequently and accelerate toward the reward. Both Barnes and Lynch have seen this concept proven time and again in their restaurant loyalty program ventures.
  3. Small and frequent rewards are better than large and infrequent ones. Playing off of takeaway #2, this takeaway follows common sense. Customers visit more frequently when they are close to a reward, so it’s better to be give them rewards more often. But – don’t give too much at once!
  4. Don’t give too much – aim for 5%-8%. The guest’s perceived value of a reward should be financially worth 5%-8% of the money they spent earning that reward. So if a customer at a café earns 1 point per dollar spent and needs 100 points to earn a free sandwich, we can calculate that they’ll need to spend $100 before they can earn and then redeem the sandwich reward. If we estimate that the sandwich reward is worth $6.00, then it’s financially worth 6% of what the customer spent to get it. This 5%-8% range keeps your customers motivated without requiring you to give away too much value.
  5. More frequent rewards impact the lifetime value of the guest in a positive way. Lynch witnessed this first hand at LEYE, where they saw guests remaining active for longer periods of time when they changed rewards to be more frequent. Not only will guests come in more frequently, but they will be more loyal over time.


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