In recent years, retailers have been successfully leveraging loyalty programs to drive new customers into their stores. Although loyalty programs can play an interesting role from an acquisition stand point, their main objectives are to help identify and understand your best customers and find ways to effectively retain them, rather than focusing your time and budget on reeling in customers you don’t know much about.
The retailer-loyalty member relationship is just like any other important personal relationship you seek to nurture. To make it work, both parties need to invest time and effort and receive some form of benefit in return. To start, focus on your most valuable members. Who would those be? Science and experience have proven that the true sign of engagement in a loyalty program is redemption, therefore concentrate on your most engaged members – those who are actively redeeming their points and demonstrating that they believe in your program.
"…a frequent redeemer can spend 30% more on average compared to a non-redeemer and about 15% more than a one-time redeemer."
In fact, redeemers are more valuable than non-redeemers and, interestingly enough, multi-redeemers are even more valuable than one-time redeemers. The graph below depicts this exact notion and is the result of analyses conducted for a player within the Canadian beauty and skin care retail space with an active loyalty program.
Although their program was still fairly new at the time of the analysis, the results speak for themselves - there is great value in turning a non-redeemer into a redeemer, as a frequent redeemer can spend 30% more on average compared to a non-redeemer and about 15% more than a one-time redeemer. The simple fact of redeeming creates excitement which, over time, translates into greater loyalty thus higher spend.
As you work on nurturing your relationship with your redeemers, be careful not to lose sight of what these valuable members need and want. Today, members expect high value and unique experiences when it comes to loyalty programs and these notions should be accounted for when searching for creative ways to continue rewarding and interacting with them.
Designing and implementing a well thought out communication strategy can help you in the process. When your members redeem for rewards, you want to be right there with them with a high-quality message that punctuates that celebratory moment. Furthermore, sending relevant, personalized trigger offers with time or quantity limits can create a sense of scarcity of rewards and in turn can help decrease the time lapse between the first redemption activity and the next and allow you to benefit from the additional value a multi-redeemer brings in.
"…the simple fact of redeeming creates excitement which, over time, translates into greater loyalty thus higher spend."
At the store level, customer facing-employees should be mentioning your program at every interaction. By enabling your POS systems to display member’s points balances, you can make it easier for your staff to remind and encourage members to redeem their available points. Lastly, allow members to redeem through the channel or device of their choice. Ensuring your rewards are easily available online, in-store or via a mobile app makes everything simpler and that first redemption even quicker.
As you enhance the way you interact with members and start investing your marketing dollars effectively by also devoting efforts in your “point burning” activities, it’ll be easier to understand how your brand and products remain relevant to them. Essentially it all comes back to the basics: the more you nurture your relationship with your redeemer, the more valuable that redeemer becomes.
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