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Loyalty Data: How to use loyalty program data to increase revenue

Customer loyalty data - it’s arguably the most contentious loyalty topics to discuss. Technology has made it easy to capture and analyse loyalty data, but it’s also become a sensitive topic for customers wising up to how their data gets used.

For businesses, if there’s one thing you should take away, is that the most important thing you can do to increase sales is to start using your loyalty program data!

Big box brands still make the mistake of over analysing data, only to never use it.

The importance of your loyalty program data

Why would you want to leverage off your customer loyalty data?

It doesn’t matter what type of business you operate, you’re collecting more data than you probably realise.

Data from your point of sale (sales, transactions), website (checkout data, page history, technology), social media sites (profile data), inventory system (stock management), booking engines (customer
details, visitation times) and the list goes on.

More businesses understand that in order to provide a seamless customer experience, across all your channels, you need to integrate your technologies and form an overall view of your customer.

By integrating these technologies, you bridge the gap between what should be a simple point of sale transaction and an entire history of how a customer interacts with your brand.

That’s empowering for any marketer.

It gives marketers the data and insight they need to tailor the marketing mix, better align with your business strategy, or possibly even change it.

How to use your program data to directly increase revenue

It’s important you understand that loyalty programs have nothing to do with customer loyalty. Loyalty is about trust between a customer and your brand. Your customer only trusts you and remains loyal, when you’ve earned it.

Telling a customer to buy more, won’t increase the level of trust your customer has.

So why do brands rely so heavily on loyalty programs? A few reasons;

  • Customer data
  • Marketing subscriptions
  • Increasing cheque size / transaction size
  • Increasing repeat purchases
  • Reducing customer churn

Let’s focus on elements that have a direct relationship on revenue (churn, transaction sizes, repeat purchases).

Customer Churn:

It’s important to ensure all customers are registered to your rewards program, this will give you an indication of how frequently they’re transacting.

Once you understand transaction frequency, it’s important to separate your CRM into segments.

At Goody, we use the terms (new, regular, VIP, at-risk, lapsing and lost). Each interval indicates how many days since a customer last transaction.

By focusing your retention efforts and campaigns on your at-risk, lapsed and lost customers, you’re effectively winning back customers and reducing your customer churn rate.

The fewer customers you churn, the more repeat purchases, the greater the revenues.

Increasing cheque / transaction size:

There are two easy ways to use your loyalty program and data acquired, to increase transaction size:

  1. Encourage customers to spend more as part of your programme mechanics
  2. Nurture customers to reach the next reward level

Encouraging customer to spend more as part of the programme mechanic for eligible discounts, rewards or statuses is an easy way to entice customers to lift their average transaction size.

The is common within fuel and c-store venues, where in order to be eligible for a specific discount or point earn, you’ll need to fill up your car with more litres or spend over a certain threshold.

The second quick win to increase transaction size is to nurture your customers to each reward level.

Typically, loyalty program members will spend on average 5-10% more and visit more frequently. Overall, your customer will have a greater lifetime value if they’re;

  • Registered
  • Accumulating points/rewards
  • Redeeming rewards
  • Nurtured to the next reward level

Repeat purchases: Typically, loyalty programs incentivise customers based on spend amount or visitation. The question is how do you use your program data to entice a customer back in-store, easily and effectively?

This assumes a customer has already earned points with your store. But most programmes are extremely bad at relaying whether a customer has eligible points to redeem or whether they have a reward owing.

Enticing a repeat sale, should be as simple as:

  1. You have 100 points owing = $10 Rewards
  2. Come back in-store and spend your reward points.

These should be visual and across all channels (online, emailed, remarketed and pushed via SMS or app notifications.

3 ways to better use loyalty program data in your business

Negotiate better supplier terms:

If you operate a larger chain, it’s important you understand that your loyalty program is yours to keep. Unlike a coalition programme, you own your customer data.

Product suppliers are constantly trying to get their products into stores like yours and increase sales. The only way they can do that is to better understand who’s buying it, where, how, why, but most importantly ensure you the retailer to push their product more often.

Typically, suppliers will resort to third-party research or payment providers for these sorts of insights or in-store promotions. These can all be incredibly costly for the supplier.

Merging your POS and customer loyalty data will provide you with:

  • Sales by product
  • Product sales by customer
  • Product sales by demographic
  • Order history by customer
  • Marketing subscriptions by product

We’ve encountered retailers negotiating better supply terms, by providing brands access to these reports, or by running product specific promotions to customers that buy or might buy their product.

The easiest way to think about how you could use this to your advantage is by forming a mini-coalition program for your stores.
Think about how an Airline programme advertises certain products, such as vehicle rentals or holiday packages.

You negotiate a better rate with suppliers on the basis you provide them with a product-specific campaign to the right people and share these insights with the supplier.

Note; not all retailers have the marketing resource to achieve this, so start off small.

Advertising and remarketing

Your loyalty program data gives you insights into what your customers are buying, by product and basket.

For a marketer looking to increase sales for specific products, the easiest person to sell to is an existing customer. Even easier if you’re selling them a repeat of what they prefer or might like to buy.

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A simple customer example;

Let’s say you sell pools and want to remarket pool chemicals during summer.

Your loyalty program has identified most of your customers are between the ages of 45 – 65, with a 60/40 split between male and female.

The details you’ve captured from your program include;

  • Customers – name, email, location, date of birth
  • Products – purchase, basket data

You simply;

  1. Extract your customer data
  2. Segment all customers by pool purchases
  3. Drop these users and match by email or phone number into social media channels i.e. Facebook Advertising.
  4. Filter by segment ie. People between 45 – 65.
  5. Create some display ads
  6. Done – you’re now remarketing pool chemicals to all users that bought a pool from you.

It really is that simple and relates to my previous point if you’re wanting to negotiate better supply terms.

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Personalise your rewards and promotions

Understanding who your customer is and creating rewards for all customers or certain segments can be a great way to increase customer satisfaction and sales.

For this, you need two things; customer data from your loyalty program, transaction data and your offer redemption data.
You may find that certain rewards you’re currently running are low-performing rewards, that don’t result in any customer referrals or increased sales.

For example;

Goody works with a multi-site hospitality group that offers a $50 voucher for a member’s birthday.

The group's average sale is about $80, so you’d think they would be losing money on sending these vouchers, right?

But, the lifetime value of customers that redeem these exceeds $600. Further, customers that do redeem the $50 voucher never dine alone. It would be rather sad if they did…

This does three things:

  1. Increases sales
  2. Incentivises customer referrals
  3. Personalises rewards for a customer’s birthday

Start thinking ahead with your loyalty data:

To quote an article from Forbes: “There’s little value in collecting data if it’s not used to generate new insights and drive decisions. Targeting and personalization efforts both require interrogation of data to understand where and how resources should be directed.”

A loyalty program is marketers’ best friend. Rather than spending all your marketing budget on advertising or targeting, you should be embracing your programme data and using these insights to drive revenue and improve the customer's experience.

And the best time to start should be right now.