Why Eftpos loyalty programs kill retail profit

So, you’re thinking about creating a loyalty program for your stores. But there are so many options out there, and you’re not sure whether to run a CRM based program or connect it to your Eftpos terminal.

Most loyalty providers will suggest an Eftpos based loyalty program.

That’s because it’s easy to set up through payment terminals. But the real reason is that it earns more revenue for the loyalty provider.

Your business gets charged on transaction volume. Put simply, the more loyalty transactions or swipes made, the more they charge you.

What’s an Eftpos Based Loyalty Program?

Eftpos based loyalty programs enable customers to earn points, based on transaction through any enabled Debit, Credit or Eftpos terminal. Each transaction made against the loyalty members account or linked card typically incurs a transaction fee or a fee for redeeming rewards. These vary, but on average they’re about 3% of sale.

These programs typically don’t capture product data or line data, unless you seek this information from the loyalty provider. Again, this typically comes at a cost.

How is this different to a CRM loyalty program?

CRM-based programs don’t incur transaction fees and are typically integrated directly into the Point of Sale or e-commerce software. This captures a lot more member and product data via API calls.

What are the disadvantages to an Eftpos-based loyalty program?

If your business is processing lots of transactions, you need to look at the overall cost of the program.

Let’s say you process 20,000 monthly transactions -- a decent-sized retailer. That’s 240,000 transactions per year. Of which, 15% are loyalty based or member transactions. Loyalty providers will charge you approximately 3% of loyalty transactions made with a payment card.

Let’s assume your average transaction is $40. That would generate you $43,200 in transaction fees, plus GST. This doesn’t include cost related to reward redemption or coalition program costs.

Eftpos based programmes are less flexible and less data-rich:

With CRM based programs, retailers can merge both member, transaction, SKU data but more importantly behavioural data insights.

This is extremely valuable when assessing what your customers are buying and why. Or what they’re not buying, but what you might like them to buy.

Eftpos terminals also struggle to handle line data information. That means your program is limited to transaction value amount.

So, good luck if you’re wanting to reward customers based on multiple items or specific tiers.

How profit diminishes the more engaged your users are:

The whole point in a loyalty program is to empower businesses to make a better decision through data.

But you can only do that by ensuring the business has a program that’s valuable and engaging for members.

It should be your business focus to sign up as many loyalty program members as possible and aim for a lift in average spend compared to non-members.

But with an Eftpos based programme it costs you more, the more program members are engaged.

If your loyalty program participating rate increases from 15% of all transactions to 45%, which is totally possible, your costs just went from $43k to $130k per year.

Now that’s probably fine for retailers that weigh up the cost benefit. But if your CRM loyalty program can bypass this cost altogether, then why pay?

Why retailers pay for Eftpos based coalition programs:

Ever wondered why big retailers operate an in-store rewards program, but also participate in corporate schemes? That’s because it’s less about customer retention and more about customer acquisition.

These programs have a set of engaged users – you know, those old ladies addicted to collecting points on a $4.00 transaction.

These customers aren’t loyal to your brand.

They’re loyal to the points.

And the truth is, they’re not your points. They’re the coalition providers points!

Retailers join these programs to attract point junkies, sell their product online, or simply because they have nothing to sell.

That’s why insurance and finance companies join them. Not necessarily because they want repeat business, but because they’re tapping into new customer channels and members get someone else than a discount on their premium or waving an establishment fee – that’s not sexy. This is more about switch marketing than loyalty.

How do CRM based programmes compare?

Over the past few years, we’ve seen an explosion in options for retailers. This has been driven by cloud CRM technologies that integrate seamlessly with your eCommerce and POS software.

Now, it’s not unreasonable to run an omnichannel loyalty programme for just a fraction of the cost compared to Eftpos.

And the best part? The programme cost remains the same despite increased usage age.

The data and product ownership also remain yours to keep!

Loyalty program prep for the Christmas rush

Tis the season to be Jolly! At least that’s what you’re hoping is going to happen at checkout this Christmas right?

Retailers are expecting a 2.9% boost, according to retail forecasts. But that doesn’t mean you should lose focus on your promotions!

While most of you have pricing or sale incentives are already scheduled, it’s easy to forget about your loyalty program.

After all, it’s one of your best tools to increase profitability, without resorting to product discounts.

Here’s a few handy tips and tricks to get your program prepped this Christmas season:

Start creating member-only benefits: For your business, Christmas is about treating your most loved family members - your customer. Offer customers that little added extra for being a registered program member.

Here are a few examples based on industry:
eCommerce: Free delivery, add-on products.

Hospitality: Upgrades, free tastings, cash-backs, Christmas function discounts.

Retail: Tier based additional discounts pre-loaded loyalty gift cards.

Salon & Beauty: Add-on treatments, pre-Christmas package specials, VIP nights.

Accommodation: Upgrade offers, zero booking fees, cross-over restaurants points.

These also serve as an added benefit for loyalty member registrations. At Christmas time, buyers will often want to join for those added benefits members receive.

Encourage members to spend their points:

During the lead up to Christmas, your members might be more concerned with gift-giving than their current point balance. It’s the perfect time to remind your customers about their remaining balance owed, especially for the price-sensitive buyer.

It’s a win-win for retail, as your point liability is reduced, and you’ll typically find an increase in redemption and sales during this time.

So what if they’re spending remaining balance!

From our experience, if you have a solid programme mechanic then you’ll always see an uptick in sales and overall transaction size. Especially when your customer realises they have more to spend at the point in the year where prices are generally low.

Encourage enrolment

The key to a good loyalty program is ensuring you have a steady stream of newly registered members. The more active members added, the more customer retained which increases your likelihood to be profitable.

Since this is the busiest time for retail, it’s the perfect chance to snap up a new set of registered members.

You can do this by creating registration incentives to encourage enrolment.

Here are a few good examples;

Make it a countdown till Christmas

If you have a lot of frequent customers, then spark their interest by showcasing specific days where members receive additional rewards.

These could be double point days, bonus points or zero shipping fees.

If you really want to start influencing purchase behaviour, start setting double point days with shorter expiration times in the lead up to Christmas.

For example,

Second week December = double points expires December 24th.
This not only encourages customers to shop prior the remaining days of trade but potentially poaches customers from stores they would have visited closer to the time.

That’s what I call a gift that keeps on giving

While your typical promotions are there to create a short-term spike in sales, it’s your rewards program and member participation that can have long-lasting results, all-year round.

Don’t let these opportunities pass you by to enrol more members and activate them down the line.

Challenge NZ joins Goody

We’re excited to announce the addition of Kiwi firm Challenge to the Goody family. Members can now use their existing Goody card or app, at any participating Challenge retailer to earn points, save on fuel or donate towards local community groups.

The ‘My Challenge’ program is a community-based fundraiser and loyalty programme designed to support local organisations that are important to each participating Challenge retailer’s community.

The program allows customers to donate some or all of the fuel discount earned to one of their participating Challenge retailer’s elected Community Groups.

Members can earn points for their spend, which can be redeemed in-store for rewards on products or services.

Goody CEO, Gorran Marusich says: “We’re thrilled to have an iconic Kiwi brand such as Challenge join the Goody family. They add a lot of value to our member base, and it's great having a brand that aligns with our local ethos – that’s what Goody is about. Making sure your customers return to your brand and your store.

Goody members will be able to earn points at participating sites across the country.

Goody by the numbers in the last financial year:

• 850,000 Goody members
• 200,000 new Goody members

Unlike traditional programmes, Goody provides members with a universal membership they can use to manage their reward program participation. Retailers benefit by leveraging the infrastructure Goody has built over the past four years, without incurring transaction fees or participation fees typically required under a coalition programme. It also encourages sending customers back to the retailer, rather than an online store. Helping connect retailer and customer and going beyond just the rewards.

If you'd like to learn more about your Goody membership, visit our member area.

If you're a business owner interested in our loyalty software, you can contact our team by booking a demo or calling us on 0800 10 33 32.

Goody raises $500,000 to chase trans-Tasman loyalty market

Goody has raised a further $500,000 to accelerate its software-as-a-service product and explore offshore expansion. The round was strongly supported by existing shareholders like Alliance Equities and K1W1, as well as Goody staff members.

“The private share issue will enable Goody to scale its business now it has a true software-as-a- service offering not requiring hardware. We have secured some significant footholds in key sectors, and the capital raised will help us further promote merchant demand, grow rapidly and also focus on our technological development,” said Mr Gorran Marusich, CEO of Goody.

“Goody’s strength is that we help our retailers see their customers more often, and help them grow business through rewarding loyalty. We make it easy for businesses to understand and define who their customer is, regardless of the size of their business. Until now, companies would have to consider expensive and inflexible third-party programmes. We solve those marketing and loyalty problems at a fraction of the cost,” said Mr Marusich.

“Also, our SaaS platform has the ability to integrate closely with leading point of sale and marketing tools like Mailchimp, making it easy for companies to build a loyalty programme that works seamlessly on most platforms,” said Mr Marusich.

Goody shareholders have also appointed Aaron Bhatnagar of Alliance Equities Ltd, a NZ based venture capital investor, as their Chairman. The board is closely assessing international opportunities, with a view to future capital raises to fuel its growth.

Having previously raised $750,000 from shareholders in 2016, Goody has signed up more than 1,000 retailers and can be found at McCafé, AUT and the University of Otago. It has also recently secured an enterprise retailer, who is currently being implemented into the Goody network, with an anticipated launch in mid-late September.

To download the Goody App, visit the iTunes App Store or Google Play and search for “Goody”.

About Goody:

Goody was founded in 2014 by Gorran Marusich, and joined early in the business by Shane Bradley, the well known NZ based internet entrepreneur behind successful ventures like Neighbourly, pet.co.nz, Grabone and finda.co.nz .

Goody was formed to help merchants build loyalty and reward their customers with a suite of tools to communicate, receive feedback and analyse repeat customer information. Goody's software drives repeat purchases and increased transaction value for businesses, and our tools help improve customer service and remove complicated marketing processes. Consumers also get great, easy and fast rewards for their loyalty to a business.

Goody’s growth journey is supported by well known NZ based technology and venture capital investors like Alliance Equities (the Bhatnagar Family), K1W1 (The Tindall Family) and the Edgar Family. It also has a significant investment from SL Holdings Ltd, the investors behind the Smart Trade B2B loyalty scheme.

The Lawrenson Group creating karma currency with customers

We’re always faced with questions from retailers migrating because of the cost of their old loyalty program. And it’s easy to believe it’s not working when you keep engaging the same set of customers. But good operators understand the importance of customer loyalty, to a point where they’ve created what we’ve coined ‘karma currency’.

For Lawrenson Group, which operates 20 bars, restaurants and Gastro pubs, they set out to create a currency between the customer and their venues.

Program mechanics

Customers are rewarded based on the amount spent and they can redeem across all their venues. They’re also rewarded for profitable actions, such as reviews. “By rewarding people for experiences, they will come back to us over our competitors”, explains Ian Sewell, Marketing and Events Manager.

The Lawrenson Group has deployed their software instance of Goody throughout all their outlets. The point of sale tablets make registration extremely simple and yield the highest amount of member registrations to facilitate engagement - key indicators to program performance.

Point breakage and redemptions

For instance, last month customers spent 80% of their points earned. Anyone in the loyalty industry will know that’s an incredibly high percentage of spend relative to the points earned.

It’s this currency created with customers that not only keeps customers coming back to redeem, but members spend their points on profitable actions that engage members on a deeper level than just rewards.

By completing additional profile details, members receive additional points. When it comes around to a members birthday, The Lawrenson Group auto triggers off a birthday voucher loaded with $50 credit, via Goody.

The credit gets loaded to their card and their app account. Members can also use their email address or member details should they forget. "For something as simple as giving everyone a $50 birthday voucher, the redemption rate on them is huge. It's massive compared to any other offer. People are grateful for it.", explains Ian.

And let’s face it, if you receive a $50 voucher and redeem it on your birthday, it’s unlikely you’re dining alone – well it’s rather sad if you did!

Registration and card management

It’s standard within the industry to operate a card that’s swiped via the point of sale. Unfortunately, the downfalls to this approach lie in member sign up rates, and engagement rates.

If you’re asking customers to pick up a card, go online, register, then associate their card to their account, then go in store to start earning, then expect lower overall program results.

Sign up needs to be easy, instant and limited to just one or two steps.

“We’ve seen plenty of programs try to incorporate your payment card as the loyalty card, but all these types of programs have either fallen over due to associated transaction costs or the return on program investment.

For businesses out there looking to invest in a loyalty rewards program, you really need to weigh up your program costs, ongoing cots and expected return.

That’s why older technology and cards are still in use and businesses are reluctant to bank all their money on an app build.

"App builds are typically very expensive and only sign up 14% of what you could sign up with a card or direct from the point of sale. I’m sure there is going to be a tipping point within the next few years, to where you see a program return in conjunction with custom app and card builds. But we're not quite there yet.”, explains Rory Moss, Marketing Manager at Goody.

Creating your own currency

Most marketers understand that customer loyalty isn’t about your loyalty program, but rather your value proposition which your brand needs to reflect.

Before trying to implement your program, you first need to understand where your program fits into your overall marketing strategy. You might even find your industry isn’t suited towards a program.

For example, if you’re in a highly competitive or price sensitive industry, and you're operating at a higher price point, then you’re likely using the loyalty program to influence your price perception.

For those wanting to get started creating their own programme, here’s some quick advice:

Keep your overall program simple

Developing too much as part of your programme causes what we call loyalty confusion. If your members or staff don’t quickly understand what it’s all about, then your engagement and point redemptions remain low.

Invest in your rewards

If you’re not prepared to give your customers decent and meaningful rewards each time they visit and spend, then stop here. You’re going to need to start viewing your customers as a lifetime value rather than just a one-off sale. The more you reward them, they more likely you are to convert that customer to multiple transactions.

Seek guidance

Don’t be afraid to leverage off existing platforms and seek help creating your program.

Rise of the Omnichannel Rewards Program

Oh that mighty, ominous word ‘omnichannel’. What the heck does it actually mean?

To me it just means ‘and’.

I can buy this or that online ‘and’ in-store.

And over the past few years, we’ve seen a flurry of businesses market an omnichannel e-commerce experience, or an omnichannel fulfilment process.

Sounds amazing!

In reality, it just means that all systems are working together, talking to each other and your customers can buy something from you the way they wanted to. The way life used to be before the internet.

Cue the rise of the omnichannel loyalty program

New technologies and innovative customer experiences have developed to give customers compelling and relevant offers, at the right time to bring customers back.

That’s logical for retailers because you want to be everywhere your customers are right? An omnichannel loyalty program can enable just that.

Customers respond better, because it doesn’t feel like that same old advertising, we’ve all learned to ignore or ad-block.

It’s relevant. It’s revolving. But more importantly, it’s based on real-time customer data.

Omnichannel program mediums

Here, I almost wrote, “how retailers can suck up customer data and enrol you to their loyalty program”.

And that’s somewhat true.

POS and CRM loyalty programs tend to be the vacuum of choice. Typically, a customer enrols directly via the point of sale and accrues a point balance with the specific retailer. In exchange, the retailer acquires customer data and a certain level of transaction insight. E-commerce platforms have made that same experience relatively easy to translate. Platforms like Shopify and BigCommerce easily connect to your in-store POS loyalty program.

The result of connecting these two, has been an explosion of online and offline customer and conversion data linked to loyalty accounts.

What’s a retailer if to do with all this data? Personalise the customer experience of course.

Merging eCommerce, POS, social and app data empowers retailers with a greater level of understanding about their customer.

A CRM loyalty program acts as the engine that powers all of this, personalising offers based on customer preference, and delivering them through apps, POS or eCommerce websites.

Why is omnichannel loyalty better?

The bottom-line is that an omnichannel loyalty program is simply more convenient for your customer. And convenience makes it easier for customers to purchase and repurchase.

The more platforms retailers can use to reward their loyalty program members, the more engaged they become and the more likely they are to revisit, instore or online.

Small town, big impact: Fresh Fish Tinwald

Fresh Fish Tinwald has been selling classic Kiwi fish and chips, gourmet burgers, and – yes – fresh fish to the tiny community of Tinwald in the South Island for six years. The family-owned and operated business prides itself on its high-quality produce and great customer service, which is why they have such a loyal following in the small town.

Owner Laura Weaver credits Goody with helping the business reward that loyalty – and improve their customer service. The online rewards software lets the Fresh Fish team sign customers on to their database, load reward points, communicate with customers and even offer personalised freebies.

It has worked so well for their business that more than a third of the population of Tinwald has signed up already!

Rewarding repeat business

Rewards schemes are nothing new. In fact, Fresh Fish Tinwald had an in-house card system before they signed up with Goody. That system was basic – customers received a card, staff stamped it when they made a purchase, and they received a free item for every five stamps. However, because it relied on customers remembering to bring their card and ask for a stamp, it was underused.

Goody seems more advanced, but is actually much easier to use. Now, all customer information is stored online, so customers can check in using their email address if they forget the card. This makes it easier for staff to track rewards points and freebies, so customers don’t miss out.

Laura explains how it works for them: “Every Monday I load the Goody Card with a free offer for that week, and it is emailed to our database. For example, this week is ‘Make any purchase instore, scan your Goody Card and redeem a free double chocolate wrap.’ We also have a birthday freebie, so on their birthday they get sent an email and their card is automatically loaded with an offer.”

Boosts and benefits

Since implementing the new rewards system, Fresh Fish Tinwald has had a significant number of sign-ups – in fact, a staggering 1,251 out of the 3,075 people in Tinwald now have a Goody Card. That’s a pretty impressive level of customer loyalty.

The promise of discounts and freebies is a big motivation for customers to sign up, but it’s not the only factor. Laura also credits her staff, who make a huge effort to promote the Goody Card and prompt customers to scan it on every visit.

“The main advice I would give another business looking into Goody is that the best way to get the most out of the system is to actually use it and be active with it all the time. Make sure your staff are asking every single customer if they have or want a Goody Card, because most of the time if you don’t remind the customer they will forget to scan their card.”

Information and insight

Fresh Fish Tinwald’s old rewards system involved handing out anonymous stamp cards, which were often never seen again. There was no way to monitor how many people had the cards, how many used them, or how often people returned to the business. Unlike that system, Goody Card functions as a detailed database of customer information and an efficient way to communicate with customers.

When people subscribe to their programme, they enter details including their name, email address, phone number, and date of birth. This information is invaluable when it comes to tailoring their marketing and promotions. The business can send weekly promotions to the whole database, send email updates of upcoming promotions, and give each customer a birthday message and reward.

The system also lets the business see how often customers return to the business, what proportion of customers are repeats, and what people are buying. This information helps Laura and her team tailor their products and marketing to their customer base.

Laura explains that the database is a huge benefit for Fresh Fish Tinwald: “The more customers we have on our database, the better value for money it is. We ensure customers return by providing quality food, amazing customer service, a clean shop, and enticing freebies using Goody Card!”

Benefits to Fresh Fish so far:

• 1,251 customers signed up to Goody Card
• 8,641 returning customers
• Instant communication with customers
• Valuable database of customer information
• Rewards loyal customers
• Easy for customers and staff to use

Rewarding loyalty in a competitive industry : Lawrenson Group Hospitality

When you’re in the hospitality industry, you have to work hard to stand out from the crowd. Customers have so many options – countless bars, restaurants and cafes – that they’re not necessarily likely to return to a business, even if they enjoy the experience.

For Lawrenson Group, which runs 19 bars, restaurants and gastro pubs in Auckland and Hamilton, Goody helps build customer loyalty by rewarding them for every dollar they spend. They’ve found it a valuable tool for database building, promotions, customer contact, and business analysis.

As Marketing and Events Manager Ian Sewell explains, it’s an important part of the loyalty puzzle: “You get loyal customers by providing a great service, and great products at competitive prices. But Goody is certainly a piece of the puzzle. By rewarding people for enjoying the experience, they will come back to us over our competitors.”

Increasing retention through achievable rewards

Lawrenson Group uses Goody at all their outlets. Customers sign up on one of their in-store tablet apps, and can then use their card at any Lawrenson-branded restaurant or bar.

Lawrenson Group offers customers one point for every dollar they spend. Customers accrue points on every visit, and receive vouchers when they reach a certain point threshold. They also have the option to put their points towards their bill at any time.

Ian Sewell says that making the rewards achievable makes the whole system much more appealing to customers. Because they can see the points adding up quickly, and they receive automated reminders, they’re much more likely to return and redeem them.

Lawrenson Group also sends rewards at other times – for example, customers receive a $20 voucher when they sign up, and a $50 voucher on their birthday.

Ian says that the response to these rewards is very positive: “For something as simple as giving everyone a $50 birthday voucher, the redemption rate on them is huge. It’s massive compared to any other offer. People are grateful for it.”

The voucher scheme is a positive in other ways too – people come in to redeem them with family or friends, and usually end up spending far more than the original $50. They also tend to lead to more sign-ups as other members of the party find out where the reward came from.

Data analysis and targeted marketing

Rewarding customers isn’t the only reason Lawrenson Group likes using the software. It’s also a useful tool for data analysis and targeted promotions.

Ian explains: “It’s massively important for us on several fronts. It’s great for customer retention, great for customer engagement. It’s great for my job in terms of analytics because I can see where the customers are going, I can see if they’re migrating between venues, I can see what their spending patterns are.”

Ian uses the back-office reporting functions in the Goody software to generate monthly reports including net promoter scoring, customer spend, overall sales, and sign-ups. This information is used to motivate staff at the various outlets – for example, if one bar or restaurant has had a high number of sign-ups for the month, others can look at what they’re doing differently.

Analytics also help Ian and the marketing team tailor their marketing to their customers. They narrow down a list of customers by spending patterns or events attended, and send targeted offers. Customers who frequent the gastro pub outlets might receive beer-tasting offers and invites to pub events, while customers who prefer fine dining might receive degustation offers.

The group also partners with suppliers to provide offers and giveaways. They can offer a free sample of a product through the system, track redemption and spend, and then feed that information back to the supplier to use for future promotions.

Keeping it simple

For Lawrenson Group, ease of use is another important feature of Goody. Because they have staff spread over 19 venues, they need any system to be simple and intuitive to use.

Goody more than meets this requirement, as Ian Sewell explains: “It’s so easy, because it’s scan and go. They’ve eliminated the opportunity for user error on our end.”

The system is run through multiple tablets kept at the counter of each venue. This makes it easy for staff to sign up new customers and manage points, without disrupting other transactions.

Customers receive a key tag to scan, but can also scan a barcode through their smartphone app, or simply provide their email address. This makes it easier for the customers too – there’s no need for a wallet full of plastic cards, and no risk of losing points if they misplace their card.

According to Ian, easy communication with customers is another bonus feature. Customer emails regarding Goody go directly to him, rather than an outside helpdesk. This means he can respond to customer queries, investigate problems, find and add lost points, and generally give his customers personalised service through the system. Whereas if they were using a loyalty system such as Flybuys all that would be lost and directed to a separate business.

After using the Goody system for a few years now, he is nothing but positive about the benefits for the business.

“I’d certainly recommend it to any business – the benefits far outweigh anything else.”

Benefits to Lawrenson Group:

• 16,000 customer database
• 100,000 repeat customer visits
• 56% redemption rate on promotional emails
• 10,000 rewards redeemed
• Customised tablet app, email communications, and cards to meet requirements
• Incentives for customers based on dollars spent
• Monthly reports including NPS, average spend, and new sign-ups
• Boost to marketing through targeted eDM's

Putting customers at the heart of Frenchie & Co

Frenchie & Co are a new beauty therapy and hairdressing brand with salons in Browns Bay and in Takapuna. They offer a full range of beauty and hair services, including a special ‘beauty bar’ for quick treatments like waxing, lash tints or spray tanning.

When the brand was launched, owner Brodie Proykova knew that in the beauty business especially, customer loyalty was the key to success. That’s why, right from the start, she included a traditional ‘coffee card’ loyalty scheme. Cards were kept at the salon and stamped as clients came for treatments. Brodie says it worked really well, but it had its downsides – it was hard to manage, especially as the business grew.

“People liked to use it, and would always ask staff to stamp their cards. But it took time to go through the drawer and find the right card. As the business was growing, we outgrew the paper loyalty system.”

Brodie new she needed a digital system – and since she already knew the people at Goody Card – and knew they were at the “forefront” of the digital world, she didn't look much further.

Supporting the ‘customer centric’ values

Once she looked into it more, she saw that Goody offered more than just a digital replacement for her ‘coffee card’.

While it’s just as compelling, Goody also lets Frenchie & Co connect to customers – something that’s at the very heart of the way they do business.

With Goody, Brodie finds she can reward her clients’ loyalty while also keeping in touch with them more easily. For example, she can now send out regular newsletters. It’s given her a greater understanding of who her customers are too, so she knows how best to serve them. That’s good for clients – and good for business.

“Goody helps us put our customers at the heart of everything we do. Lots of people say that, but don’t act on it, but Frenchie & Co was always going to be very customer-centric.”

Goody’s customer data means better services

Goody is also supported by an easy-to-use marketing automation platform – something that Frenchie & Co didn’t have before. It lets them keep track of customer points and lets them offer a wider variety of rewards than was possible with the old paper system.

That means Brodie can spend more time nurturing her existing client base. “It’s a great tool for future marketing, to convert clients from hair to beauty and vice versa. I’m glad we get to offer people a selection of rewards, and they can try new things that way.”
“Wow, this is so cool!”

Brodie has had very positive reaction from her clients. They comment on how attractive the brand looks, and although it’s still too early to track the programme’s financial success, there are already definite spikes in business activity.

“Clients say our brand with Goody Card is really gorgeous, and no-one has ever said ‘No, I don’t want to use it.’ It does look great, really professional.”

With Goody, it’s easy to reward your loyal clients, Brodie says. She’s found it simple and easy for both customers and her team to collect and track points. The support team at Goody has also made things simple – she says they’ve been expert and easy to work with.

“It’s very futuristic. People are sick of all the loyal cards out there. Goody Card is just a little tab that goes on your key ring. My clients don’t have to leave it in the salon because it’s attached to their house and car keys. Simple.”

The advantages for Brodie so far:

• Simpler, faster and easier loyalty system
• Attractive branding
• Wider variety of rewards offered
• Better communication with clients
• Customer data to target marketing
• Expert support from Goody

10 reasons why your loyalty program is not working

A rock-solid loyalty program can mean the difference between a customer shopping at your store or from your competitor. But with roughly two billion loyalty program memberships in the US alone, it’s hard to say it’s a competitive advantage. Still, your loyalty program can be an incredibly useful retention tool if used properly.

When a program fails, it’s less related to the technology used and more related to poor execution.

Here are ten reasons why your loyalty program is simply not making you money!

Lack of defined objectives

Without pre-defined goals of what you’re trying to achieve and how you’re going to measure it, how will you consider your program a success?

Unrealistic expectations

Just because you have a loyalty program doesn’t mean your customers will become loyal to you. Customer loyalty is earned, not created, and increases in customer retention boils down to a great marketing mix (product, pricing strategy, branding, promotion, location, service).

Too often, we encounter customers that think a loyalty program will deliver them new customers. Very rarely does this occur unless you’re entering a network program or scheme.

Time to devote to your program

A customer loyalty program is not something you can build overnight. It requires a long-term, thought through strategy. And with all strategies, it requires the appropriate planning and execution for it to be a success.

If you’ve tried building a loyalty program before only to stop using it after one year - then don't read any further. You should be advertising, not installing a loyalty program.

Customer loyalty is a long-term gain which needs time, commitment from staff and stakeholder buy-in.
Research as much as you can during this time to better understand what customers want from your program.

Lack of research

No marketing agency will understand your customers better than you currently do. Already, you should understand your target market, how customers interact with your business and their basic demographic information.

The amount of time we’ve heard “our customers are demanding an app based loyalty programme”, when their customer base is over the age of 60, still amazes us!

Doing your research properly will ensure your program meets your target audience’s expectations. Understanding what rewards would work best and testing this will ensure your customers are happy.

No visuals

Keep your program visually simple to understand with no more than three steps required.

For instance;

Join – sign up to our rewards program and get a FREE Baseball Cap.

Earn – get 1 point for every $1.

Get rewards - reach 100 points and we’ll give you a $10 reward!

*Pro tip – make sure your points and rewards increment in either 1, 5 or 10. Incrementing points or rewards by anything else becomes really confusing for people to understand.

Program complexity

Creating or communicating a program that is complex to understand will deliver low engagement and slow uptake. Your program should be as simple as possible, with the least number of barriers to entry. Too often, businesses get caught up with capturing details about their customer rather than rewarding them for positive behaviour.

If you’re asking customers to register via a website, with multiple form fields, then you’re asking too much.

If your program contains hundreds of rules, terms or entry requirements then expect low signs ups and low engagement.

Lack of appeal

On average, customers belong to approximately 18 different loyalty programmes at a given time. With so many different loyalty programs out there, it’s important you make sure yours stands out!

If your customers can see value in your program, it’s easy to use and they can use it daily, there is a much greater likelihood that they’ll continue to use your program.

No data capture or utilisation

Once you’ve implemented your loyalty program, you should be tracking monthly metrics. If you’re not doing any sort of customer or revenue analysis, you might miss trends within your program or how your customers are responding to it.

Data collection about your customers gives you a solid understanding about where most of your revenue is derived.

Prior to program implementation, we see as high as 70% of customers abandoning after the first visit. And for most businesses, 80% of their revenue is collected from existing customers. So, the opportunity should be obvious.

Impatience and the desire for ‘quick wins’

Today’s retailer has little room for patience. But just because you’re not seeing results in the first few months of your program doesn’t mean it’s a lost cause. It takes time to build up your customer loyalty database and get your customers familiar with how it works.

Often, businesses revert to an “it’s not working” mentality - if they haven’t seen short-term results.
If you’ve been running your program for a while and it’s still not delivering, then there may be an issue with either; how you’re communicating your program and its value or the reward structure.

It’s crucial that all businesses understand that developing a loyalty program is a long-term strategy which requires commitment. Be patient, keep tweaking and you will see results.

Poor marketing communications

Your marketing is equally as important as your loyalty program. Relying on staff to sign up and communicate the benefits is not enough.

Ensure you have the appropriate online and offline communication materials to educate your customers.

Talk about the rewards! The fact is, no one cares about your loyalty program but they do care about the rewards.

Marketers should be using this to their advantage, especially in industries where you might not have a ‘sexy’ product – I’m talking industries like insurance and finance.

Key Takeaway:

There are a ton of lessons businesses should consider when building their own loyalty program.

The key to building a successful one is making sure you have the right strategy from the start. Don’t blame the technology and don’t expect an overnight success. Good things take time and it’s important you dedicate the necessary resources to execute your program.

Keep things simple, visual and reward your customers how they’d like to be rewarded. That comes down to understanding your customer and ensuring your loyalty program is backed up by a good marketing mix.

Re-branding – taking a leap of faith

How do you combine your “mixed bag” of pharmacies under one brand, without losing the loyal customer base you’ve been growing for years?

For Chin Loh and his business partners that was a major concern.

They knew their future depended on rebranding, but had a tough choice to make. Build a new brand, Antidote where they’d be free to make their own decisions or keep everything under the thumb of Unichem, where they could keep their loyalty scheme, Flybuys. Neither felt like a great choice.

A survey of their customer base seemed to support their concerns – if they lost Flybuys, they’d lose customers. But in the end, independence was worth the risk – but it meant the needed a new loyalty scheme.

They looked into AA rewards, but discarded the idea when Chin saw that they would have to access it through another supplier. That’s when they came across Goody, which Chin says looked like a really interesting programme.

“The way it would reward our customers for the number of visits and amount of spend – allowing us to tailor our offers accordingly – made it a bit different and more accessible for our customers.”

Why Goody was a great alternative to Flybuys for Antidote

Before Goody, Chin and his colleagues were relying on Flybuys, a “generic corporate brand.”
What Chin liked about Goody was that it was more connected to each individual store.

“For a smaller town it created a bit more loyalty, people not feeling like they were dealing with a big corporate. Instead people feel like they are dealing with a local.”

And when it came to running in-store promotions, Goody beat Flybuys hands down, according to Chin. To run a promotion with Flybuys, there was a lot of back and forth with head office, Chin would have to plan months in advance, and there was a large cost involved. The final result was a mail drop by post.

With a Goody promotion, he had a lot more flexibility and control.

The interface, he says, makes it easy to communicate to customers on the fly, rather than having to plan months ahead. With Goody, he can do it “pretty much on the spot.” This more dynamic, simpler way of working was exactly what the businesses needed.

“It allows us to run promotions easily, without too much hassle. For example, we had some leftover stock we needed to sell, and within 20 minutes I’d launched an offer. It went live that same day and was emailed direct to our customers.”

The simple way to keep customers

The biggest goal for Chin was retaining his loyal customer base through the rebrand. The simplicity of the Goody system – and its obvious benefits to consumers – came through.

To transfer their customers over to Goody, and compete with Flybuys, they treated every transaction as an opportunity to sign them up. Since people could easily see why they should bother going through the easy two-step process, uptake was good, said Chin.

Goody was a huge part of why Chin can expect his customers to come back.
“What we’ve achieved is that we didn’t lose a lot of customers, which we thought we would when we lost Flybuys.”

Growing with Goody

Now that the Antidote chain is over the first challenge of keeping customers, they’re beginning to see that Goody can help them bring in new ones too.

The system’s easy-to-use marketing platform, and integration with other software, are features you don’t get with other loyalty schemes.

“We know we could use Goody to grow our customer base if we use the data to market more promotions. It’s great to have that at your fingertips.”

Benefits to Antidote so far

• User-friendly for both the business and customers
• Good alternative to expensive, complicated, corporate loyalty programmes
• Benefits the smaller, local stores
• Quick, easy and affordable to run marketing promotions
• Loyal customer retention
• Helped the smaller stores compete against bigger corporates
• Rewarded their best customers

By The Numbers:

• 10,000 Signups
• 50,000 Scans *3000 Customers Rewarded

Loyal customers create loyal employees

On average, it costs a business 6-7 times more to acquire a new customer, than it does to retain one. If a business has actively focused on a customer loyalty driven strategy, it can afford to pay employees better. That’s because, on average, they’re spending less to acquire customers.

This relationship as Frederick Reicheld says, “Increased pay helps boost employee morale and commitment; as employees stay longer, their productivity rises, and training costs fall; employees’ overall job satisfaction, combined with knowledge and experience, leads to better service to customers; customers are then more inclined to stay loyal to the company; and as the best customers and employees become part of the loyalty-based system, competitors are inevitably left to survive with less desirable customers and less talented employee” (Reichlend and Sasser).

This is especially true when we look at serviced based roles. If a customer has developed a personal relationship with salespeople or staff, the customer tends to rely on that individual’s decision-making help.

This relationship is beneficial to both the business and the customer. Further, the more regular a customer becomes, generally the higher the level of customer satisfaction. Likewise, if staff are dealing with content customers, they are much more likely to enjoy the job more and do a better job.

To a business owner, this should seem straightforward. It costs both time and money to train new staff. If a company can retain good employees and develop loyalty both in their customers and staff, overall the company is better off.

If you’d like to learn how to start creating loyalty within your customer base, start off by taking an assessment of your customer's feedback.

The more loyal your customer, the bigger your profits

Developing customer loyalty is and always will be a long-term strategy. The more loyal your customer is, the more profit a business can gain from a single customer.

This is particularly true in industries such as finance, insurance or any form of credit.

Reducing defections by as little as 5 percent in these industries can boost profits anywhere between 25-85 Percent (Source: Zero Defections: Quality Comes to Services, Frederich F. Reicheld and W. Earl Sasser, 1990).

Which makes complete sense when we’re talking about refinancing or extending the term of your insurance contract.

But the same applies to other industries too, auto servicing for example. Where, put simply, the more loyal the customer (greater the retention rate), the higher the profits.

For example,

A car dealership spends $51 to acquire a new customer. The person services their car initially, but the profit ratio is minimal if you factor in overheads on a $220 average transaction. But a second-year customer is different, provided minimal costs were spent to retain that customer. The balance and therefore the profit ratio grows on the original $51 to acquire the new customer. The reasons for developing a loyal customer base is simply put down to a greater profit ratio.

Reasons to develop a loyal customer base:

• A greater profit ratio
• Sales typically increase, because your customer a repeat buyer
• You strengthen your position in the market, by acquiring a greater share of customer (don’t be confused with market share). A repeat sale is one less sale for your competitor.
• Your marketing costs typically decrease over time when you don’t need to spend money attracting a repeat customer.
• You’re better positioned to deflect pricing competition because your customer base is loyal to you and is purchasing based on more reasons that just price.
• You’re less likely to create a price sensitive buyer

If you’d like to start focusing on a customer loyalty driven strategy, by utilising cloud technology, then get started with Goody today.

Attracting loyal customers, not deal seekers

During the 1970’s and 1980’s, it was commonplace for businesses to pursue a 'market share strategy'. This would encourage price discounting and promotion driven marketing tactics – with short-term results. The outcome attracted deal seekers that shopped based on coupon promotions and ‘best offer’ retailers.

That meant, if a business could afford to undercut its competitor and encourage buyer switching, it would result in a greater share of the market relative to the competition.

But in today’s environment, it can be hard to sustain a market share strategy, purely because your customer has so much choice. Online and offline.

Conversely, it’s not sustainable long term to continuously discount your regular customer base, or discount to a customer which was always going to visit.

Instead, utilising a customer loyalty driven strategy delivers longer benefits over your customer lifecycle.

See the key differences in both approaches below:

For example, during the 1980’s, three major coffee retailers had a majority share of the market – Folgers, Maxwell House, and Hills Brothers.

With all merchants competing on price and coupon promotion, a battle ensued which forced all players in the market toward a price war. The result was disastrous for manufacturers and profits diminished during this period.

By turning the industry, and their business into a commodity market, it left little opportunity to discuss or engage with customers at a branding or loyalty level.

This left the market open for new competition. A small coffee retailer, by the name of Starbucks, launched, offering customers a coffee experience rather than a commodity product. Most people are aware of the success story which followed.

As this illustrated, misused sales promotions, which focus on heavy discounting or ‘deals’, can turn your loyal customer base into a price-sensitive buyer. Focusing your business strategy on the long-term benefits of developing customer loyalty yields a longer lifetime value and avoids price competition, for short-term gains.

For modern retailers, this means 'staying the course' of your marketing fundamentals.

The right:

• Product and offering
• Pricing relevant to your market demographic and elasticity
• Promotions that reward and entice, rather than devalue
• Programmes in place which create repeat purchase and experiences, rather than single visit discounting

If you’d like to learn how to compete on price while ensuring you’re creating and developing a loyal customer base, see how our customer acquisition feature, promotes your business without attracting ‘deal seekers’.