How to Fix the Problems with Loyalty Programs

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 Good Customer Behavior, Don’t Entitle Them

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. […]

An Interview with Devin Handler, Director of Marketing – Garbanzo Mediterranean Fresh

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. […]

How to Choose a Loyalty Program That’s Right for Your Convenience Store

In case you haven’t already heard, loyalty programs deliver outstanding financial returns to restaurants by motivating guests to visit more often and spend more on each visit. Simply put, if you want to maximize your restaurant’s revenue, you need loyalty.

However, when we talk about loyalty, we don’t mean the standard “buy five items, get one free” deal that comes along with a paper punch card. That was loyalty 1.0. Loyalty 2.0 delivers far greater ROI but is a more complex science. To be successful at it, you’ll need to address the following questions:

  1. Which program will best engage and compel your guests?
  2. What type of loyalty program aligns with your concept type and brand?
  3. What kind of program can your staff effectively execute?
  4. Which program will help you achieve your restaurant’s financial goals?

[…]