Increasing loyalty-program participation can boost company-wide revenue, create data for data-driven marketing, and improve customer experience.
FREMONT, CA: Customers have changed their purchase patterns since the pandemic began. Shoppers are increasingly voting based on new worries with their wallets. Purpose influences their decisions along with pricing and convenience. All income categories are willing to trade down compared to pre-pandemic days. Loyalty programs can assist offset consumers' desire to test new brands and merchants. Top-performing loyalty programs can raise customer revenue by boosting buy frequency, basket size, or both. Turning around a loyalty program doesn't require a complete revamp.
Offering incentives to redeem loyalty points "devalues" program currencies. Lowering redemption prices can enhance sales by stimulating latent consumer loyalty without long-term detrimental effects. Companies that promote heavily get brand-loyal customers over time. Executives sometimes overestimate the impact of severe discounts on top and bottom-line performance, but what may be lost in a single transaction can be made up for via recurrent visits and increasing frequency among those cherishing the original, memorable redemption.
High-value sector 'breakage'
All loyalty schemes have members who don't redeem points or realize they exist, thus, they expire. This "breakage" minimizes a program's balance-sheet burden, which benefits program economics. Problems redeeming points, users forgetting they're enrolled, unappealing or irrelevant prizes, and unreachable or expensive reward levels might cause breakage. The finest loyalty programs boost member participation, not breakage, to maximize their value. Measure breakage by client segment to verify programs aren't alienating any group and that high-value segments aren't breaking significantly.
Points-plus-cash can make a difference
Many clients are lured by loyalty program rewards but lack the points to access them. This feeling that prizes are "unattainable" can deter people from continuing to earn points. Points plus cash is a potent combination. Allowing members to purchase with points and cash reduces the redemption threshold and boosts the program's appeal, motivating inactive customers. Reduced redemption tickets generate pricing differentiation for loyal consumers.
Creating manageable customer groups
Businesses must get it right since it's pricey. Optimizing a loyalty program requires data to build meaningful, actionable segments that generate a world-class customer experience and maximize customer value. Loyalty programs provide unique and essential customer data independent of the channel, frequency, or needs. They are segmented by behavior rather than needs, value, or demographics, which guarantees that customer interventions are founded on current behavior and drive toward future behavior. When done right, behavioral segmentation enables tailored customer experiences.