Loyalty Program

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Loyalty Program

Here is a mistake people make when issuing stamps

POS SOFTWARE

One of the most popular and successful loyalty programs in our software is issuing stamps. 

Here is a typical offer. A person comes into the shop and buys something. Every time they buy, they get a stamp in our case an electronic listing too so here after ten (10) visits on the next trip, they get something. 

This sort of offer works for anything, greeting cards, coffee, pet food, haircuts, etc.

Now follow where the problem arises

At first, the customer comes in and buys a product. They are notified of the offer, so they get a card. One item stamped so they are 10% into it (1 stamp out of ten), and they work their way to ten. But here is the issue, once the person has their free article, they start again from zero. Starting from zero does not motivate people much.

So here is a better way to do it.

Make program active on the 12 visits. 

Here is how it should be done.

- When the person first comes into the shop and buys something, they get one stamp for joining. They then get a stamp for their first buy. So they are starting with two stamps. This gives them the feeling that they are getting closer to their reward as now they are 17% (2 stamps out of 12) through it. 

-Once they redeem their free item, they get a new card with one stamp credited for rejoining the program. They get another stamp for the free offer they redeemed. This overcomes this problem of them starting with zero as now they are at 17% again.

Give it a try and see how you go. Then let me know.

 

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At point of sale, what needs to happen

POS SOFTWARE

What is clear now that many retailers immediate and top priority in their loyalty programs is customer retention. Any increase in sales by upselling and getting them to buy more often is now all secondary. 
Not surprising as customers are up for grabs now. 


People are now buying brands that they never purchased before. They are buying from people that they never dealt with before. 

This is the kicker; they have been doing this for months and will continue to do this for more months and something done for months is a habit creation,

We are in the middle of a retail transformational period. 

Questions:

Are those people you lost, going to come back to you?
New people coming to you now are they going to stay with you? 

I have clients who are shut. I see that they are on pushing their store to their former customers on social media. Telling them, they intend to re-open.

Why? 
Answer because they do not want their customers to forget about them.

The first step at the front of the shop like here,

when they are buying, at the point of sale, make sure they know you have a loyalty program.

Then make sure that they can sign up immediately. 

 

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The frenzy stockpiling of toilet paper

POS SOFTWARE

Right now because of coronavirus. We are in the middle of a shopping frenzy for toilet paper.  Shops have entirely sold out even though many are getting daily deliveries.

Explore search interest for Toilet paper by time, location and popularity on Google Trends

{links were removed}

I confess I do not understand why, if someone had or suspected to have it, yes I could understand them mass hoarding, a family with two (2) weeks isolation needs a supply but not this?

 

Old-timers and farm boys know of an old solution, do you remember this?

Anyway, the problem some of my clients face now is that they have customers coming in trying to buy toilet paper and they have none to sell. One of them sent me a checklist of what his chain sent on what they suggest that you do if this happens to you.

1) Try to get more supply, do your best. One of my clients managed to get some commercial toilet paper from a cleaning company. Its not good stuff but at least he got something.

2) Accept the importance of the issue to your client, whatever you think, to the customer, it is crucial, and it is your responsibility to act on the issue.  Tell them the truth that you are trying your best. If they want as supply comes in, that you are prepared to keep some for them in a special order.

3) Above all, stay calm.

 

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Loyalty programs by country

POS SOFTWARE

Here is the KPMG’s November survey of 18,520 consumers from more than 20 countries which shows the use of Loyalty programs by country.

Australian are the most significant users of loyalty programs in the world, with 61% usage.

 

You can read the full report here

One point I did find particularly interesting is that 

"More than six out of ten Millennials say they prefer to donate their loyalty rewards to a good cause than redeem them personally vs. 40 percent of Baby Boomers."

In other words, about half the population are happy to use the loyalty program if you were to donate their proceeds to charity. This may be an answer to the problem of getting people that only use your goods and services infrequently to get motivated in your loyalty program. I know that Amazon gives its clients a list of charities and ask them to select one, you may try that too. Check out the Amazon program here it may give you some ideas.

 

 

 

 

 

 

 

 

 

 

 

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Monitoring your loyalty VIP program

POS SOFTWARE

According to a recent survey we did, we discovered that most of our clients have some form of loyalty VIP program in place. Assuming you have one, you need to monitor it.

What you are trying to do with such a program is to increase the number of sales of high-margin products proactively.

So what you want is a scientific list of what people that are using your loyalty VIP programs are doing with it. I strongly suggest that you do not just rely on gut feel and its not hard to get such a list from our POS software as it collects the sales information on your customers’ purchase histories. This allows you to identify what your loyalty VIP program is doing.

One report that I suggest you look at is "loyalty vs Non-loyalty sales", in cash register reports marked here in green.

 

 

Now if you go into it, although it has plenty of options, just keep it simple for now and put in the last 12 months and run it.

Now out will pop put a comparison list of exactly what the loyal VIP and regular customers are buying.

In particular look at the profit field, it is not uncommon now for over a third of profit in a modern retailer to be from these VIP customers. What is interesting is that they are much more profitable per visit than regular customers.

Now also there is a row there of %Gross Profit. This is for you to see what high margin items people are buying and to allow you to identify possible products for your VIP customers to buy.

Lastly, there is a row of costs so you can see precisely what these VIP customers cost you.

 

 

 

 

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Loyalty programs

POS SOFTWARE

The overwhelming majority of our clients would have some point of sale loyalty program in place in their shops. 

As a rule loyalty scheme, to do it properly should cost about 1% of sales. So if your shop is doing $500,000 a year, your budget for a loyalty program is about $5,000.

Years ago Garth Brennan from our company wrote an article here about it, that was published by National Newsagency magazine.

What I found surprising reading this article is how relevant it still is 15 years later.

Discount Vouchers is the most straightforward system to implement. You can set it up in moments with our system. If you want to test it out, I would suggest using a holiday season and running it for the length of the holiday season and see how it goes. It does work, but we only recommend you do it for a limited time, say a week maximum. Otherwise what will happen is over a long period this program will result in you discounting every product in the shop and so producing customers who demand these discounts.

Moving forward 15 years, I found a useful review of successful loyalty programs in the US today here.

These programs are all very successful. What they have in common is they work with customers by engaging with them. They all work on a VIP points system, which gives the customer benefits and perks for being a member. 

 

This is what some of our clients do. Some have in their loyalty program about 8,000 members with those numbers its worthwhile doing some serious marketing.

 

If you want to see what some SMB retailers have done check out one of our clients with over 12,000 likes on their facebook page here.

 

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Review of Loyalty programs 2019

POS SOFTWARE

The current edition of the point of loyalty is now out. Its the seventh edition and I thinks it is the best review of loyalty marketing for retails in Australia. What it is a consumer research study into the Australian loyalty program written by people who know their stuff. Plus much of the report is based on facts not opinions which I like.

A free executive summary is available here which I would say any Australian retailer should have a read.

Here is what I got out of it.

Most Australian shoppers (89%) are now involved in a number of loyalty programs.

 

This figure, however, is dropping although it does appear to be hovering at about 50% active over the years which means that about half of the Australian Shoppers are actively involved in loyalty marketing for points.

The next item shocked me.

28% of these loyalty shoppers admitted that they purchased something that they did not need to earn points, and that figure is significantly up on last year.  

 

And the reason why is because these people think of the points as cash.


Anyone that wants to argue that Australian Shoppers are tired of points and just want cash are dead wrong. The majority of shoppers today, see these points as cash. Makes sense, if say in a coffee loyalty program where you get a free cup of coffee after buying ten cups, well that eleventh cup is money.

Finally, how best should retailers contact these people?

Answer: Overwhelmingly by email. Any loyalty program should involve the collection of people's email address.

If you think about it, a lot of these are not frequently coming to your shop. If you want to contact them, email is your best and cheapest option.

Anyway have a read, make your mind up and please let me know your thoughts,

 

 

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Loyalty marketing and price cannibalization

POS SOFTWARE

 

VIP members customers marketing promotions

 

I was reading an article that I thought was very interesting here and I think retailers will find it an interesting read even if like me they have some doubts about some of the points.

Here are some points I agree with

) Customers don't want or need loyalty Customers are not loyal.

) Why should customers want to be loyal? Why would people limit their range and options voluntarily? Unlike your pet, they have all the power anyway, so why should they give that up? The average customer can extract as much value from a retailer as a loyal customer, so there is not much benefit in being loyal anyway.

) Loyal customers are demanding customers.

) There is a cost in satisfying the demands of an existing customer. Give a loyal customer 10% discount, and after overheads, you got nothing out of the customer. Few of us can afford even 5% discount.

Here are four observations that I have noticed with loyalty marketing

) Since the economic incentive of most rewards programs is small, few customers are going to go well out of their way to take advantage of a rewards program. The main benefit is the information that the retailer gets on their customers. The information benefits are estimated at 1% of sales so almost all rewards programs work on 1% of sales. This is the retail benchmark. It is not as many think the increase in sales as such.

Most importantly they want their customers' email address to market too. If I send out a thousand emails every two weeks and I get a 1% response rate, I have 10 sales every two weeks.  If my basket size is $50, over the year, my newsletters have generated $13,000 extra income. 

) Most loyalty programs in my experience end out being taken up by people that were going to buy anyway at full price so offering people in the shop already discounts is very dubious. What you want is a loyalty program that will bring them to your shop.

) Many successful retailers like ALDI do not have a loyalty program. Conversely, Coles and Woolworths are more successful and they do have such programs.

) Very few customers that come or leave you do so because they are dissatisfied with the product or service they are receiving. Give them bad service or faulty goods, yes they will leave you but that is another story.

Hope these observations help at the very least give you food for thought.

 


 

 

 

 

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Open rates of email receipts

POS SOFTWARE

Have you ever wondered why when you go to some shops they ask you if you want an email receipt after they have printed out for you a receipt? It is not saving paper as they have already printed it.

It is marketing, something you can do too.

Here are some figures that show the marketing potential 

  • While open rates are at a staggering 70.90%, Mailchimp’s newsletters were measured at 17.19%.
  • The engagement rate is 8.93%, compared to 2.70% for regular emails.
  • The Average Attention Span is 185% higher than regular Emails

Read more figures here

People do read these emails.

Why not send an email receipt and include a marketing notice together with the receipt to advertise specials, discounts, upcoming events or other messages?

Here are some more advantages 

  • Receipts do not get lost.
  • It helps you gather customer email addresses so allowing you to contact them with email and hopefully gain visits and purchases.
  • It puts your shop in front of the customer again when they read their emails.

 

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Aldi slams loyalty programs

POS SOFTWARE

Reward cards

Aldi, here has made an extraordinary attack, on Coles and Woolworths, claiming that they are not worth chasing.  They have made a calculator to show how small the benefits of these people's rewards program.

I think they are right.

However what the article goes on further to say is that "60 per cent of Australians saying it influences where they shop and 36 per cent of people admitting they spend more because of the schemes" so for such small rewards people are being influenced.

To me what it says is that your loyalty program offering does not have to be much to get decent results and there is no denying that it does have an effect.

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