At this year’s PXUX I lead about 75 people in a paper airplane making experiment. With simple instructions, “just make a paper airplane that can fly the furthest – no balls of paper” the crowd stepped up to the line one by one to see their work take flight. They were highly competitive.
The shortest distance was actually minus about two feet as the craft took a quick turn in the opposite direction, if you can believe it. The longest distance was about thirty feet. Nearly twenty percent of the aeronautical wonders made it at least twenty feet, while the lion’s share of them made it between one foot and twenty feet. Check out the picture to the left.
I then posed the question, “if you had 15 seconds to choose a paper airplane that was not yours, modify it and launch it, and then measure how much further (or less far) it flew than last time, which would you pick? What if I paid you $10 for every foot further that it goes than last time? And, you have to pay $5 per foot if it doesn’t go as far as last time. Which piece of folded paper would you pick to improve?”
The incentive is based on your ability to improve upon something. Therefore, you would likely not pick the airplane that flew the furthest – nor would you pick those in the top twenty percent. Your best bet, would be to pick one in the second to fiftieth percentile. Those are the ones with the greatest potential for improvement.
I used this exercise to illustrate the fact that when you’re thinking about the target audience for your loyalty program, it is best to focus on customers between the second to fiftieth percentiles. They hold the most potential revenue for your organization.
Plus, it’s easier to improve the performance of a low frequency guest than a high frequency guest. So, enroll as many lower frequency customers as you can.
The higher the loyalty penetration rate (number of loyalty checks vs total checks), the greater the opportunity you have to influence your members’ behavior. So, keep your loyalty penetration rate high by reminding your front line staff to say to every guest, “are you a member of our program?” Make it simple and convenient to join – your top customers will jump through hoops to join. However, your casual customers won’t. And, use server incentives and contests throughout the year to add new members to your program.
Remember the paper airplanes – it’s the customers who are visiting you sometimes, but not always that have the most potential for lifetime value improvement.