Loyalty programs are more intuitive than ever, and the stakes are high for customer data. Here are three tips to get the most out of your loyalty programs from the experts.
Loyalty programs and bigger and badder than ever. They’re intuitive and progressive, bringing together a brand and its consumers using modern technology. These loyalty programs encourage customers to repeat their visits and spend more, driving customer engagement. Customers like them, especially when using one means rewards. After all, they’re likely not willing to give up personal information with them.
Programs aren’t all on the same level
Brett Spiegel, co-founder and COO of Koala (a Chowly company), reminds brands that loyalty programs are not one size fits all.
“It’s important to recognize guests have different backgrounds, expectations, needs and abilities to participate,” he said, “so when it comes to a loyalty program, one-size-fits-all isn’t always going to work. When a brand can have different programs available, guests can opt-in to the one that works best for them.”
Spiegel uses P.F. Chang’s rewards program as a good example. The brand recently introduced a paid loyalty tier (platinum), for their most avid fans who are willing to invest in a deeper relationship with the brand.
“This is more interesting than a traditional tiered program (where customers earn status based on spend), because any customer can pay to quickly get to the status level they want,” Spiegel said. “Because both tiers (free versus paid) have their own set of discounts and experiences, P. F. Chang’s guests are able to determine which has the most value, and immediately begin participating without having to wait for their status, which is naturally part of a spend to earn status program.”
Create a positive user experience
Len Covello, CTO of Engage People, recommends putting the customer first and developing the ultimate user experience as the center point of a program.
“To achieve this, it’s crucial to assess the customer journey for your current program from initial interest through to conversion and beyond,” he said. “This means understanding how customers interact with your brand, identifying their pain points, and addressing them to enhance the customer experience.
This involves developing an omnichannel approach and consistency in communications across all touchpoints. Customers should be able to access and engage with your loyalty program across different channels, including mobile apps, social media, on your website and in-store. Moreover, it’s crucial to make the redemption process easy and convenient for program members. Ensure that program members can easily redeem their rewards for what they want, when they want.”
Covello recommends facilitating a program around the customer journey, which is essential for success. “To continuously improve, it’s important to get regular feedback from program members, be responsive and listen to their needs,” he added. “You can do this by using social media channels and direct interactions to gain insights into how your program can be improved and be made more responsive. Finally, to create the optimal experience, communicate regularly with program members and provide added value such as exclusive offers, personalized rewards, and early access to new products or services to enhance their experience and keep them engaged with your brand.”
Accurately measure the reach of your program and prioritize growth of that reach
Zach Goldstein, CEO and founder of Thanx says that while check averages and visit frequency have traditionally been the most commonly tracked metrics for loyalty programs, winning brands know that measuring reach, or what percentage of revenue is coming from known customers, is a far more powerful indicator of program success.
“Measuring reach, or capture rate, enables brands to better understand how many customers they can actually influence through marketing,” he said.
Goldstein turns to Starbucks as the zenith of loyalty, a successful example of the power of measuring and prioritizing the growth of capture rate over time.
“In Q4 2022, Starbucks reported 55% of U.S. revenue is attributed to loyalty members in an earnings call,” he said. “That means Starbucks has comprehensive data and a direct relationship with over half of their customers to better inform marketing strategy and increase revenue-driving customer behaviors including first-party direct ordering.
“Knowing your brand’s loyalty reach is crucial because If you are only able to reach a small percentage of your customers through your loyalty program, then the overall impact of that loyalty program on revenue will be small. Simply put, if you cannot reach your customers, you cannot change their behavior. Without reach, it is much more difficult to change other important metrics that directly impact customer lifetime value such as churn or third purchase conversion.”
Goldstein said the higher the capture rate, the greater the amount of revenue that is generated from customers with whom you have a direct relationship via a loyalty program, creating marketing opportunities. Customer data captured through loyalty including spending habits and messaging preferences helps personalize interactions and drive greater ROI. This is a critical advantage because segmented, personalized communications are six times more effective than generic email marketing, he said.
“Brands can improve their capture rate by ensuring their enrollment processes are frictionless and that ongoing participation in loyalty is not painful either,” Goldstein added. “Loyalty platforms that offer advancements such as credit card linkage and automatic enrollment on digital purchases ensure that 100% of digital customers enter the customer database while all subsequent purchases, both in-store and online, are tracked without any effort on behalf of customers or staff. Thanx customer Velvet Taco grew their capture rate to above 30% within their first year on Thanx by benefiting from frictionless technology for their program.”
Mandy Wolf Detwiler is the managing editor at Networld Media Group and the site editor for PizzaMarketplace.com and QSRweb.com. She has more than 20 years’ experience covering food, people and places.
An award-winning print journalist, Mandy brings more than 20 years’ experience to Networld Media Group. She has spent nearly two decades covering the pizza industry, from independent pizzerias to multi-unit chains and every size business in between. Mandy has been featured on the Food Network and has won numerous awards for her coverage of the restaurant industry. She has an insatiable appetite for learning, and can tell you where to find the best slices in the country after spending 15 years traveling and eating pizza for a living.