Promotions are used to directly, quickly, and profitably change behavior. Most commonly, that behavior change falls into one of these categories: driving more visits, encouraging people to purchase at a time they normally would not, or inspiring more profitable bulk purchases.
The most common types of promotions are challenges, bonuses, and occasion based rewards.
Challenges. These promotions challenge reward members to perform actions to earn a prize. For example, a challenge could be “buy gas five times this month and get a free large coffee” or “spend $50 on snack items this week and get a free liter of soda.” These challenges are intended to increase visits and spend during a specified period of time.
Bonuses. These promotions often offer an instant benefit for the rewards member. “Purchase a sandwich and a large soda and get a bag of chips for free” is one example. Bonuses are primarily designed to increase spending during a visit, but secondly, they may also increase the number of visits since customers could seek to take advantage of a bonus multiple times.
Occasion-based rewards. These promotions are dependent on a time of year, such as the holiday season, or a well-known event. An example of an occasion-based reward could be “purchase two bags of chips and get a liter of soda for free during the week leading up to the Big Game.” […]
Loyalty programs are all about connecting with your customers and creating a great experience for them whenever they interact with your brand. However, there are mistakes that brands make that can limit the success of a loyalty program and end up hindering the customer experience from the start. The biggest mistake that brands make is failing to adapt their programs to keep up with modern customer engagement trends. Those that don’t meet the needs of their customers will likely fall behind the competition.
Here are the five mistakes that could cripple your loyalty program: […]
There are many different types of reward programs which make it challenging to choose which one is best suited for your brand. Ultimately, there are four considerations to always keep in mind when designing a program.
Design for “Silver” customers. These are your 50th to 80th percentile customers. They are your regulars, visiting your store while purchasing gas and food. But they almost certainly go to other stores as well. By targeting and motivating these customers an opportunity is presented to drive them to visit you more often and for more purchasing occasions.
Get customers to their reward, fast. Customers should earn their first reward quickly. When someone enrolls in your program they need to see immediate value in it, meaning that their first reward needs to happen within the next couple of visits so the customer can see the value in being a member. Additionally, silver customers, the customers your program is targeting should be earning their rewards fairly frequently. If you are doing a points program, have low-value redemption options such as coffee or candy that they can earn every five to ten visits, at least.
Reward good behavior. Good behavior is whatever your concept wants it to mean, but probably includes a store visit and gas purchase, upgrading to premium gas, or visiting for more purchases, and new day parts. Your program needs to support your corporate goals. If you are trying to compel customers to visit and buy more freshly prepared food, then make sure the program and stores support that initiative.
Leverage vendor funding to drive your results. Vendors’ interest are not always well aligned with your bottom line. If their promotion switches volume from, say, Coke to Pepsi, then that’s great for Pepsi. But if it didn’t drive any extra traffic into your store, or any incremental spending, then what did it do for you? Think about whose customer is. They are yours, not the CPS’s. Vendor funding can be used in different and unique ways in order to drive more visits and spend. A good use of vendor funding would be to leverage those funds to drive more purchases of an item and in return, the customer earns bonus points.
The greatest revenue-generating potential a loyalty program can tap into is a brand’s segment of customers who visit sometimes but not always. We have seen this proven time and again across more than 300 reward programs.
Each segment of customers visits at a particular frequency. Customers with medium-to-high frequency are giving the brand nearly all of their possible visits. Since they are already your biggest fans, getting them to visit you more is going to be tricky. On the other hand, low-frequency customers are visiting your brand occasionally, but other brands are being visited by them more frequently. The potential for your team to move low-frequency customers into a higher-frequency segment is where the value of any successful loyalty program comes into play, as the goal is to steal visits from the competition.
So, if the value of your loyalty program depends on your ability to attract lower-frequency members, how do you do it? There are three key factors. […]