Loyalty Program

These items have been uploaded and published about the subject

Loyalty Program

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.

 


 

 

 

 

Add new comment

Restricted HTML

  • Allowed HTML tags: <a href hreflang> <em> <strong> <cite> <blockquote cite> <code> <ul type> <ol start type> <li> <dl> <dt> <dd> <h2 id> <h3 id> <h4 id> <h5 id> <h6 id>
  • Lines and paragraphs break automatically.
  • Web page addresses and email addresses turn into links automatically.
CAPTCHA This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.

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.

 

Add new comment

Restricted HTML

  • Allowed HTML tags: <a href hreflang> <em> <strong> <cite> <blockquote cite> <code> <ul type> <ol start type> <li> <dl> <dt> <dd> <h2 id> <h3 id> <h4 id> <h5 id> <h6 id>
  • Lines and paragraphs break automatically.
  • Web page addresses and email addresses turn into links automatically.
CAPTCHA This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.

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 here 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.

Add new comment

Restricted HTML

  • Allowed HTML tags: <a href hreflang> <em> <strong> <cite> <blockquote cite> <code> <ul type> <ol start type> <li> <dl> <dt> <dd> <h2 id> <h3 id> <h4 id> <h5 id> <h6 id>
  • Lines and paragraphs break automatically.
  • Web page addresses and email addresses turn into links automatically.
CAPTCHA This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.

Reasons not to have A Retail Loyalty Program

POS SOFTWARE

The thinker

Thinking about it here are some reasons why someone would pick not to have a loyalty program.

Much of these difficulties are particularly true in the set-up phase of the program

Costs

Our point of sale software gives you the tools you need to run such a program, but you will need to provide your customers' benefits to make it work. 

Work and skills

It is work.

You do not feel your organisation has the social media skills now days required to make it work plus the management expertise to make it work. It needs constant thought and fine-tuning to find out what is working and what is not working.

Customers' information

You do not feel that you can get enough peoples information to make it work for example you think you cannot get enough peoples email addresses. You need about 500 to 1000 people to gain critical mass.

Lack of time

Busy enough AS IS and they do take time to set up, and they will take time to manage. Based on our clients' comments, an hour a week. 

Commitment 

Once you have a loyalty program in place, they can be difficult to stop if they do not work out. Customers can get upset if they feel that you are cheating on them. Always remember if starting one that you do need an exit clause. 

The other problem can be if you feel that your organisation objectives may change shortly and you cannot make the commitment.

You have infrequent customers

We have a client in a holiday area, and they tell me that the people are always changing and that they see most of their customers for about a week or two and then they are gone. The locals are only a tiny part of their business. 

Offers cost you

The expected cost of the proposal is higher than the expected return. The overwhelming number of customers will buy anyway from you at your prices, so there is no point in offering any benefit as such as all it is doing is giving away value to my existing clients who is willing to pay full price.
 

So What Alternatives are there

Here are some ideas.

Nothing

Often nothing is the correct response. Why interfere with something that is working,

"If it is not broken do not fix it".

Discount vouchers

This is where you offer every customer a discount when they buy products in your shop at the next sale. Here is how to set it up in our system, which would give you an incredibly powerful discount voucher system.

Be warned that these discount sales programs are much more expensive then loyalty programs, but they do produce results. See here for numbers.

Guerrilla Marketing

If you are near a major operator that brings in traffic consider how to be able to piggyback on their operation. Let them do the work in getting customers coming to what you are doing here is trying to divert some of their traffic to you eg near a supermarket, a coffee shop might do well. 
 

Add new comment

Restricted HTML

  • Allowed HTML tags: <a href hreflang> <em> <strong> <cite> <blockquote cite> <code> <ul type> <ol start type> <li> <dl> <dt> <dd> <h2 id> <h3 id> <h4 id> <h5 id> <h6 id>
  • Lines and paragraphs break automatically.
  • Web page addresses and email addresses turn into links automatically.
CAPTCHA This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.

PERSONALISED OFFERS

VIP program

 

Some people to buy your products need a kick; some come anyway. A straight 10% discount offer as such is often killing your margins.

If you get an exciting product, this has proven to be a successful method. What you need is your retail email mailing list and point of sale system like ours that can handle VIP marketing.

Firstly send everyone out an email with an offer for the goods. Hey, we just have now this XYZ product.

Those that did buy send them shortly afterwards an offer to buy a second one at say 5% off. See how you go, if they liked one then they may want another.

Awhile later those that did not respond at all, send them an email with a 10% off 

If you are still stuck with stock after a while, well you have nothing to lose by offering 20% off to all.

See if you can do something similar in your business.

The idea being Instead of giving a straight discount, going through the previous purchase histories of your customers and then personalise your offers.

It will help you maximise your margins

Add new comment

Restricted HTML

  • Allowed HTML tags: <a href hreflang> <em> <strong> <cite> <blockquote cite> <code> <ul type> <ol start type> <li> <dl> <dt> <dd> <h2 id> <h3 id> <h4 id> <h5 id> <h6 id>
  • Lines and paragraphs break automatically.
  • Web page addresses and email addresses turn into links automatically.
CAPTCHA This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.

Lastest Australian loyalty program released

POS SOFTWARE

 

Loyalty point does the most detailed studies yearly that I know of Australian Loyalty programs and have now released 2016 reports.

An executive study is available here free.

From what I can see the report does not show a lot of difference between this year and last year. Last years report 2015 is available. It is an fascinating powerpoint presentation?

One result that stuck me was that 81% of people stated they wanted cash back rewards rather than point based other rewards.

 

And there was little difference between those that preferred an immediate cash back to a point based system.

"

 

Plus most 68% prefer higher-value rewards that take a longer time to accumulate vs immediate lower value rewards.


This all suggests that a system with a spend of $100 to get a $5 cash back voucher is preferable to a spend of $1.00 and returns a 5 cents voucher cash back now.


Anyway make your own mind up, they are certainly a great piece of work, with plenty of food for thought.

What is the best retail loyalty programs?

POS SOFTWARE

I was reading today about the Bauer program here on Reader Rewards, which is a loyalty marketing program to increase sales of their products. 

According to the article, it lifted sales by 1.6%, which is believable for a loyalty program but as the article makes clear it is not primarily a loyalty program but a data collection program. This is the point of all good retail loyalty programs, that extra percent or two you can pick up by getting the customer's information to market to these people. That way, they buy more by either making bigger purchases or buying more often depending how you structure the program. This is what justifies the cost of the program, and it is what your program aim.

And they do buy more if it's done properly. You can see it on the Average Daily Sale value, Units Per Transaction, Margin on Goods sold compared to the non-member customers.

What is also important is that not only do they buy more, but as they are happy that they get others to join such as friends and family.

In my experience, the biggest mistake retailers make when launching such a program is that they do not communicate enough to the members; you should not be waiting till they come into the shop, if you do that many of the members of your program will just forget you. You need to communicate with them online.

 

The importance of loyalty programs is undeniable

POS SOFTWARE

Repeat customers reportedly spend 10 times more than new ones. Once you have them, what you cannot do is rock the boat. It is something that we discussed here. A retailer set up a discount voucher system, it did not work now they are frightened to change it.

Once you establish a loyalty program it is extremely dangerous to make any changes. So you need to cross your t's, dot your i's and check how its going to work carefully before making one.

This clearly is not what Woolworth appears to have done when they made their recent changes in their loyalty card program in October. Then Woolworths announced that it was going from a point system to a cash system stating that people do not want points, they want money. Well bluntly as you can read in customerthink many people do not want the money; they wanted the points. That is why they went to Woolworths in the first place. The pressure has become so extreme that Woolworths has done a complete turn and are now planning to bring back an option for the points.

Like our loyalty system, the customer will still need to get a card with their personal details. This is because the value of the customer monitoring, email addresses and the information is considered to be worth 1% and Woolworths is not giving up that 1% up, and neither should you.

Clearly as this shows that many shoppers would rather be earning point and discounts when they shop than not. So shops that have a loyalty programs offer a competitive advantage.
 

Our point-of-sale system make it easy to implement and manage such a rewards program, so that you can stay on pace with your competitors.
 

Woolworths makes a new reward program

POS SOFTWARE

Many of our readers will be struck about how similar the new Woolworths reward program is to our standard loyalty program. It's no accident, what happened was just before we designed the program, We went to a conference which largely dealt with loyalty programs. As we listened to what these experts from some of the largest convenience stores in Europe and Australia such as 7-11, Telstra and Optus said we took notes and later used their ideas to make our adaption. Presumably Woolworths listened to the same experts.

You can see how it works here, and as you can see it's exactly the same as ours.

You must have a card and to get it you must supply Woolworths with your personal details. This is because the value of the customer monitoring, email addresses and information is considered to be worth 1% and Woolworths are not giving that 1% up.

Then when you purchase selected products, in their case the items marked with an orange ticket, your account collects Woolworth's dollar (points) on your card.

When your account reaches in Woolworth dollar (points) $10, you get $10 off your NEXT eligible purchase. There is no part payment accepted like some rewards programs have.

If you do the figures, it works out to for every $800 of purchases, their customer will get back about $10, or 1.25% assuming they do redeem it. In practice, many do not redeem it so reducing the cost somewhat.

The payout figure itself is not surprising as 1% cost as I stated is about what most loyalty programs work on. Note the Woolworth rewards program is not going; I am sure to cost Woolworths 1% as I can guess who will be forced to pay for it!

Here are some links with more information.
 

http://mumbrella.com.au/woolworths-faces-protracted-battle-to-maintain-loyalty-after-ditching-qantas-deal-says-expert-326622

http://mumbrella.com.au/woolworths-axe-qantas-frequent-flyer-points-rewards-card-326552

http://www.dailytelegraph.com.au/business/companies/woolworths-ditches-qantas-rewards-tie-up-as-shoppers-complain-of-points-fatigue/story-fnkjkokq-1227581485265

The system itself is a tested and proven system and is available to all our clients in our software.

 

Comparing discount vouchers - a reply

POS SOFTWARE

I was not too happy about an article published which I think is misleading. To quote an Australian Prime Minister Bob Hawke "And here let me make one point so that even our opponents can understand it; and let me make it beyond all their power's of misrepresentation and distortion."

The figures I released on their discount voucher system as plainly stated here came out of their system, not ours so whatever our systems features, the comparisons to their system and the alleged twenty key differences is concerned, it is irrelevant. It is a blind.

That it is expensive, as you can see from the above image, they gave $4,475.89 discounts on $98,299.79 sales = 4.6%.

http://www.forbes.com/sites/hbsworkingknowledge/2014/02/24/six-myths-about-customer-loyalty-programs/

"Indeed, grocers like Tesco, Sainsbury’s, Kroger, Safeway, and Stop & Shop give back 1-2 percent of the total spent to their card-carrying shoppers. Stores in other categories—Staples in office supplies, Barnes and Noble in books, Best Buy in electronics—offer similar rewards. Boots, the UK-based pharmacy and beauty supply retailer, offers a substantial reward of 4 percent, but that rate is more exception than rule."

So this cost of 4.6% is over the exception.

I think there is a very real argument here to say that people can become used to discounts. It become addictive. If you give them freely and advertise their prominence on your checkout, you are feeding this addiction. You actually training people to purchase from you because you have a discount.

Update: I note that they responded to this report not with facts but an evasion. If they want to get some credibilty I suggest that they show exactly how we have used their data incorrectly and/or inaccurately.