Loyalty Programs on Fast Evolutionary Track
One more RetailWire entry for this week - this time on the evolution of Loyalty Programs, which have been developing beyond their original goal of simply rewarding expenditures in order to get new customers and/or convince shoppers to spend more. This is done by utilizing demographic and needs-based data of loyalty program users in order to refine offer targeting and message crafting.
But the next trend appears to be "best of breed" shoppers. The idea is that it is "easier to convert your existing shoppers to those who'll come to your stores more often than to change other consumer habits". The financial reasoning behind it - "it can be more lucrative to go after 10% of shoppers who do 51% of your business and spend $750 a month versus a 60% base that only produces 12% of sales and spends $30 a month."
How to start? Issue instant coupons when a customer hits a certain spending level and then offer coupons that are "more specialized to life cycles or even disease states, such as diabetes." Simultaneously, use data more extensively to make sure the deals are properly targeted and that more suppliers are involved. There are also product lines that are better suited to loyalty programs. For example, the hair care category has been especially responsive to loyalty programs since so few customers buy across hair care brand lines, especially color.
Posted by Universal Ad
But the next trend appears to be "best of breed" shoppers. The idea is that it is "easier to convert your existing shoppers to those who'll come to your stores more often than to change other consumer habits". The financial reasoning behind it - "it can be more lucrative to go after 10% of shoppers who do 51% of your business and spend $750 a month versus a 60% base that only produces 12% of sales and spends $30 a month."
How to start? Issue instant coupons when a customer hits a certain spending level and then offer coupons that are "more specialized to life cycles or even disease states, such as diabetes." Simultaneously, use data more extensively to make sure the deals are properly targeted and that more suppliers are involved. There are also product lines that are better suited to loyalty programs. For example, the hair care category has been especially responsive to loyalty programs since so few customers buy across hair care brand lines, especially color.
Bottom-line - in the future, loyalty programs can become one of the most important factors separating one chain from another.
Posted by Universal Ad
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