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. […]
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:
- Which program will best engage and compel your guests?
- What type of loyalty program aligns with your concept type and brand?
- What kind of program can your staff effectively execute?
- Which program will help you achieve your restaurant’s financial goals?
Most convenience stores share similar reasons for having a reward program – such as improving profitability and enticing customers to make incremental sales – but all reward programs are not created equal, and a one-size-fits-all approach may not produce the outcomes that retailers want.
During the webinar “Dos and Don’ts of Successful Reward Programs,” I discussed reward program practices that c-store retailers should adopt, as well as ones that they should be cautious of implementing.
Here are some of the dos and don’ts of successful reward programs: […]
On average about 300 people visit a store’s gas pumps a day, but only 35 percent of those customers step foot in the store. The opportunity to compel store visits is palpable – you are not unlike other marketers who dream of solving this dilemma. We all know that margin, for the most part, lives in the store, not at the pump. Which is why converting fuel customers to frequent in-store patrons is like the brass ring of convenience store marketing.
For years, marketers have tried to solve this challenge. Some send the same ‘buy one coffee get one free’ offer to all customers and then hope it pulls them in. Others have invested in expensive pump displays, point of purchase material and more to convert that customer. There is even a group that has given up trying to convert them – leaving room for competitors to grab their customers instead. There is a better way to motivate store visits.
Use an individual’s purchase data to compel in-store sales. […]