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.
With a greater understanding of customer spending and visit habits, marketing becomes more agile, is able to make informed decisions, and can ultimately compel repeat visits and increase baskets through relevant engagement.
There are three main factors that make a loyalty program successful:
A well-designed program. Core loyalty programs typically motivate members to increase visits and spend. Customers need to feel the value of being a member. They should be earning a reward around every 4 to 6 visits. It is best to make sure you have low-value redemption options such as a cup of coffee or a candy bar that customers can work towards redeeming and feel as though they are being rewarded fairly.
Running various kinds of promotions is another key component in a well-designed program. Promotions keep the program interesting and fresh in the eyes of the customer. Getting a surprise reward makes customers excited and more willing to engage in the program.
CPG deals that are aligned with your brands goals. Vendors have their own interest that may not always align with your bottom line. Ensure CPG-sponsored promotions are driving extra traffic into your store, or add incremental spending. Good relationships with vendors allow your brand to work with them on promotions and ways to effectively use their funds. Instead of running a buy one get one free promotion you can use these funds in different ways to drive more visits and spend. For example, drive more full price purchases of an item and in return your customers can earn bonus points towards their next reward.
Support from all levels of your organization. Programs succeed when executive buy-in is present. Harnessing the influence that the top of the organization wields reaches all aspects of the program from motivating general managers to train staff and be accountable for the program metrics in their district to addressing franchisee concerns about discounting. When buy-in is present throughout the entire organization, brands will try new things and continually evolve the strategy that makes an impact on the business.
With 72% of U.S. adults using a smartphone, mobile technology is changing the way that brands connect with their customers. Most brands have started to roll out a mobile strategy that utilizes an app. The average smartphone user has around twenty-seven apps on their phone, but studies show that most users spend 80% of their smartphone usage on just five apps. What are the odds that your app would be one of those? That leaves only 20% of their usage time for apps outside of those five, meaning your app is competing with over twenty apps for the user’s attention.
The good news, a mobile strategy goes far beyond just your mobile app. By utilizing a full mobile strategy your brand can get to the forefront of your customers’ minds. So, beyond a mobile app, what other elements of a mobile strategy can your brand implement to engage customers and motivate them to come into your store? […]
Do you need to reinvigorate your brand, increase revenue, and improve profitability? Upgrading your rewards program may help. However, proceed with caution. Upgrade only when you know the new program will better align the program with corporate strategic goals and likely produce large financial benefits.
There is never a perfect time to change your program. When clear signs arise, give a program upgrade serious consideration. Look for any of these four signs:
1. Declining loyalty penetration and new member enrollment. If the share of checks associated with your loyalty program is declining, it could signify that tenured members are lapsing and that the program is no longer motivating them to come in. If new member enrollment is down, it could be because new guests are not interested in the program or that team members in the store have stopped promoting it.
Your program should achieve a minimum of 15 percent loyalty penetration. This means at least 15 percent of your checks should be associated with the loyalty program, and according to many top brands, their loyalty penetration numbers far exceed the 15 percent benchmark. For example, in an July 2016 earnings call, Panera president Drew Madsen said that 50 percent of company transactions were associated with the My Panera program. If you notice your loyalty penetration rate dropping, and particularly if it dips below 15 percent, it may be time for a change.
2. Evidence that customers are “gaming” the program to their advantage. Have customers figured out a loophole in your program that they use to their advantage? Is your visit-based program increasing the number of split checks, and slowing down operations? Are customers buying low-priced items to earn points, and then redeeming them for expensive items? […]