Monthly Archives: November 2014

Surprising Facts About Customer Loyalty Marketing

Is your company more focused on acquiring new customers or nurturing existing ones?Though 63% of marketers consider customer acquisition to be the most important advertising goal, successful companies know that engaging their loyal customers is critical to their bottom line.

Recently, FiveStars performed an analysis of 14 million store visits from more than 1 million customers, as well as the results of loyalty programs from over 2,000 businesses. The study found that loyal customers (those who visited stores at least 10 times) account for about 20% of the company’s customers.Businesses, however, shouldn’t scoff at the deceptively low percentage. That 20% drives 80% of your business’s total revenue and 72% of total visits to your business.

According to FiveStars, “depending on the vertical, loyal customers can account for up to 84% of total visits.” Best of all, loyal customers spend 10 times more than new ones.


Other reasons for focusing on loyal customers:

  • VIP and loyalty program members are 70% more likely to spread the word about your business.
  • 65% want stores they want to frequent to email them coupons and promotions.
  • The probability of making an additional sale or upselling to loyal customers is 60-70%.Compared with loyal customers, new ones are more price-conscious.The chances of getting a sale from a new person is 5 to 20%. And actual sales from promotions sent to them is less than 1%.

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McDonald’s Doesn’t Have a Loyalty Program, but It Could Use One

For McDonald’s (MCD) customers, the only reward is the food. It may be just a habit, a particular craving, or mere proximity that brings them to the Golden Arches, but no one goes because a loyalty card or, these days, an app lured them with discounts, points for free food, or other bonuses. McDonald’s doesn’t have a loyalty program yet—but it could use one.
Traffic at McDonald’s stores is declining. In the U.S., comparable restaurant sales were down 3.3. percent last quarter. The company is looking for ways to bring in more customers more frequently, and one of the things it’s considering is a new smartphone app, which would include promotional offers, mobile payment, and ordering, according to spokeswoman Becca Hary. The company declined to provide further details.
Other fast-food chains have loyalty programs. Customers at Starbucks (SBUX) can earn free drinks or food and get deals and early access to new products with My Starbucks Rewards. Subway has My Subway Card, and Panera (PNRA) has MyPanera. At Dunkin’ Donuts (DNKN), the rewards plan is called DD Perks. Taco Bell (YUM) just launched an app with exclusive app-only deals.
None of the big three burger chains—McDonald’s, Burger King (BKW), or Wendy’s(WEN)—has rolled out a national loyalty program.

“Fast food has always lagged behind in adopting and adapting to technology,” says Darren Tristano, executive vice president of restaurant industry researcher Technomic in an e-mail. It’s expensive, and restaurant margins are thin.
Yet loyalty programs have proven successful in luring small spenders in other industries, such as casinos. Harrah’s (CZR), for example, introduced a Total Rewards program to “let even small gamblers get treated like movie stars in Vegas,” as Bloomberg Business Week reported in 2003.The cards collect data on the gambling behaviours of customers—such as elderly slot players who were largely neglected but make more money for Harrah’s than any other demographic—and offers them such target benefits as free meals, shows, rooms, and merchandise. By 2010, the program was “the linchpin of Harrah’s success.”

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The changing face of loyalty marketing

Loyalty programs are structured marketing tools that reward, and therefore encourage strong customer engagement. Without them, its forfeiting profit.

Loyalty marketing is more than just a punch card that will get you a free drink. At the highest level, it is the culmination of the customer experience: the strategies, technology, touch points and subsequent behavior that positively impact the bottom line. And with the advent of data mining and the insights that are gleaned from this wealth of information, loyalty marketing is continuing to evolve and drive the customer experience.Every business should be looking at how they engage with customers and what they can do to improve this engagement. When it comes to allocating the marketing budget, the companies that are doing well are shifting their money to investing in the customer experience.

Building trust

The definition of loyalty is unique — it’s changing and no longer focused on programs, but on driving process and engagement. The shift in spending is dramatic, especially for those who are doing very well.

There are some trends that define the current and future state of loyalty marketing. One salient attribute of companies producing outstanding customer experiences is a true commitment to doing so—which is the only way to achieve real results.

Corporate transparency

Almost 70 percent of marketers who spend on loyalty believe they are innovative, which indicates a high level of confidence and risk-taking that helps drive results.

Blended as part of the marketing mix, organizations making those commitments and taking those risks are doing very well, because it is part of their process, which allows them to do great things.

Other takeaways from my survey include the importance of bench-marking to see how a program is performing vs. the market, rather than measuring performance by incremental gains. When you gauge your performance against the market, this helps justify budget increases and investing in innovation. In addition, there is a trend towards transparency with customers—respecting their time by being as upfront and clear as possible builds trust and bolsters the overall experience.

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Loyalty messaging can triple customer visits

Merchants that maintain frequent communication with loyalty programme members report three times more customer visits than those that do not send any communications, according to a recent analysis by digital loyalty marketing platform provider SpotOn.

The company’s findings were based on user data gathered since February 2014 when SpotOn launched its ‘Campaigns’ feature, allowing merchants to send real-time, digital offers to invite customers to come back. The resulting figures point to a direct correlation between communication and increased customer activity and specifically increased customer visits.

Small businesses that send loyalty members two to three communications per week have seen three times more customer visits than businesses that do not send any, with merchant sales reportedly increasing by 15%-50% as a result of these loyalty programme-driven communication campaigns.However, the study also found that while consistent communication is good, there is a tipping point that can lead to diminishing returns. Businesses that sent more than 13 campaigns each month saw reduced customer visits.

Campaigns sent to loyalty members highlighting a promotion see an average open rate of 41%, compared to the 19% industry average open rate for email marketing. And marketing campaigns that included a redeemable offer achieved open rates that were more than 20% higher than non-promotional emails (such as newsletters or product announcements).

More than 60% of SpotOn’s merchant clients have already sent at least one such campaign. For example, according to Bruce Chiang, owner of M&H Cafe in Davie, Florida, “We hit a record day in sales after trying our first campaign several weeks ago, and we’ve already increased year-on-year sales by 15%-20%.”

Liberty turns Instagram likes into rewards to nurture loyalty

Liberty is looking to turn Instagram likes into something more with the launch of an app that rewards customers based on their behaviour on the social network.The luxury goods retailer has launched a free loyalty “Tapestry” app that serves bespoke in-store offers based on their Instagram likes and purchasing history.

For example, if a customer is a fan of the Marc Jacobs Instagram page, then they will receive offers for the designer’s clothes.The app links to a users’ Liberty account and generates special gifts with purchase and reward points that can be redeemed at tills directly from their phones.Through iBeacons, the app also lets people unlock vouchers when they near certain products.The app, which has been developed by start-up Upside, is available to use until the end of the year.

Liberty is the latest luxury goods brand to experiment with mobile and social media in order to boost preference. Ralph Lauren is making its Harrods window shoppable so that fans can make purchases directly from their smartphones should they spot a must-have product. Meanwhile, Burberry has set up interactive windows at a Parisian department store and is also letting fans purchase clothes directly from Twitter using a “buy now” button.

The investments reflect a steady transformation around digital across the luxury goods market. Previously, the category has concentrated on older consumers but with an influx of new demographics marketers have looked to digital to enhance their desirability factor and charisma.

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5 Trends for Winning Loyalty in the Digital Age

TECHNOLOGY With the ongoing proliferation of social media, companies are learning to connect with consumers on their own terms.

We’re living in a three-screen world. Just think about the items you interact with daily—a mobile phone, a tablet and a computer. Across all of these screens, we engage with communities through Facebook, Twitter, LinkedIn, Instagram and many more.Companies are tailoring operations to suit the way we live and learning to connect with us in meaningful ways. In 2014, we’ve seen these important trends:

1. Consumers are in control

First and foremost, consumers literally have a world of choices at their fingertips. Any email or    offer that is irrelevant can be zapped away with the touch of a button.

2. Cashing in on mobile payments

Mobile technologies have created an on-demand marketplace that is universally accessible via a multitude of devices. Companies from Starbucks to Walgreens to Lowes have apps for a variety of services including mobile payments. These apps translate to speedy checkouts, allowing us to jump to the front of the line or take advantage of offers based on our preferences and GPS locations.“Today’s consumers demand fast and easy delivery. With advances in technology, the definition of speed and ease is advancing every day.”

3. Must have it now

Fueled by services like Amazon Prime and Uber, today’s consumers demand fast and easy delivery. With advances in technology, the definition of speed and ease is advancing every day.

4. Mixing work and play 

Call it the emergence of “playsumers.” Shoppers want brands that are fun, so games and contests are entering the fray. Nike has been delivering on this notion using its running app and its Nike training app to reward users with content, social influence and discounts on merchandise. Walgreens and Sears also offer rewards for physical activity, in addition to shopping.

5. Experiences trump “stuff”

Loyalty programs used to “surprise and delight” members by delivering unexpected perks, discounts and rewards. Nowadays, discounts and rewards have become commonplace and recent research by COLLOQUY and FanXchange show that 48 percent of loyalty program members are not satisfied with current reward offerings.

In the future, we expect to see more loyalty programs adding exclusive, personalized experiences, such as admissions to special events. The COLLOQUY/FanXchange Customer Engagement Report, released in September, cited that live event tickets are the most appealing rewards to customers (56 percent), while 44 percent prefer airline tickets. Caesars Entertainment and US Bank recently began offering members the opportunity to redeem loyalty points for tickets to sporting events, concerts or a Broadway show. That is putting into their hands something that could win hearts.

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Give Loyalty Members a Reason to Stay

It is no secret that customer loyalty is critical to business success. Consumers are inundated with programs and mobile apps that track their purchases and even their geographic locations to deliver offers that that encourage repeat purchases.

And to some degree, efforts to drive customer loyalty are working. The number of loyalty memberships in the U.S. is up to 2.6 billion and the average U.S. household is enrolled in about 22 loyalty programs, according to Colloquy, the research arm of marketing and transaction services provider Alliance Data.But not all memberships are active, since customers often sign up once to receive a discount and never use the program again. According to Colloquy, only about 10 memberships are active for every household.

More than half (55 percent) loyalty members drop out of a program within the first year, reports marketing research firm L2. And more than 90 percent of members want to receive communications from loyalty programs but only 53 percent receive relevant content, according to the survey.As a result, marketers are investing in solutions to drive higher engagement rates from loyalty members.

CRM data and Web analytics are the top two areas that marketers are investing in to improve loyalty engagement rates with social media management systems coming in last, according to L2′s survey of more than 100 retailers.Takeaways: Relevance and customer choice are essential. In addition to offering rewards or deals that meet the customer’s needs, allow customers to control the frequency and type of deals that they receive.

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Why is customer loyalty important ?

There’s no avoiding it — in order to have a successful business, you need to have loyal, repeat customers. They’re the ones who keep your lights on and doors open, and are most likely to advocate for your brand. In our current marketing landscape, loyalty is the new currency. That’s why it’s so important to have an excellent customer experience, across all channels, all the time.

Sometimes, a great experience isn’t  enough. Many loyal customers will still switch brands if they feel like they aren’t getting a good enough deal. The ability to get exclusive prices and loyalty discounts actually influences their purchasing behavior. The difference between you and your competitor could very well come down to who has the best loyalty program.

This infographic is meant to show you why it is so important to have a special rewards program for your loyal customers. Among the obvious reasons, it’s really just the right thing to do to show your appreciation. If you don’t treat your customers well and appreciate them, someone else will !

Why Is Customer Loyalty Important   Infographic    Ciceron

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Loyalty programs play critical role in success

When companies begin thinking about how to spend their marketing budgets, loyalty programs should be considered an important aspect of their strategy. By creating a truly engaging system where the benefits of membership are clear and relevant, any business can create a more passionate customer base and improve its bottom line in the process.
There are few companies out there today that provide as strong proof for this idea as Starbucks. Loyalty360 noted that the leading coffee shop chain achieved an incredible 9 percent increase in same-store sales during Q3 2013. During the same quarter, profits rose by 25 percent, and Starbucks’ leadership believes its loyalty initiatives played a critical role in this significant success.
“Starbucks Q3 results represent the best across-the-board third-quarter performance in our 42-year history,” CEO Howard Schultz said in a conference call, the source reported. “Our more than 19,000 store global footprint, our fast-growing CPG [consumer packaged goods] presence and our best-in-class digital, card, loyalty and mobile capabilities are creating a ‘flywheel’ effect elevating the relevancy of all things Starbucks and driving profitability.”
Why loyalty works
But what is it about loyalty programs that is actually helping the company maintain its position as an industry leader? According to Business Insider, Joe LaCugna, director of analytics and business intelligence at Starbucks, explained at the recent Big Data Retail Forum in Chicago that a big part of the equation is taking a highly personalized approach.
Loyalty cards are beneficial to companies in a multi-faceted way: The more customers use these tools, the more insight the business gains into their habits and what they might want. From there, companies such as Starbucks use the information to “[set] up rules based on [members'] purchase behavior,” which allows them to determine which loyalty rewards to send certain individuals. LaCugna noted that often, these offers go to customers who are seen as at-risk of not returning, as showing these people they are cared about and their relationships with Starbucks are valuable through the right discounts and offers can bring them back from the brink. Members who are already highly loyal might not need to receive certain types of loyalty rewards as frequently, as Starbucks knows these customers intend to keep buying beverages even without constant incentives.
The way Starbucks segments customers based on data related to their past purchases can benefit any business, especially because it can save firms money. When companies know which particular loyalty problem members are more likely to consider leaving for a competitor, they can strategically send out discounts at the right time. Furthermore, this also means they won’t use up their budgets sending these offers to customers who are less likely to redeem them. The most loyal customers might be better served by other types of exclusive benefits, including gestures of appreciation that surprise and delight.
Additionally, having an excellent loyalty program improves customer experience, which can widen profit margins by making people more receptive to opening up their wallets. SalesForce pointed out that in its studies, only 10 percent of customers who are satisfied with their interactions with a business are concerned about price, compared to 74 percent of those whose expectations haven’t been met. The source stated that Starbucks is an excellent example of this concept in action. People are consistently willing to pay morefor their drinks because the company provides them with higher-level care.
Implementing the right private-label loyalty program that supplies customers with highly personalized, valuable rewards is a recipe for success. Happy members fuel great results, and it’s never too late to start the journey toward a more successful, customer-driven business.
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