measuring returns from loyalty marketing

Loyalty 202 Measuring and Optimizing Loyalty Returns

Loyalty Marketing

Experts agree that loyalty is the most e!ective and highest return marketing

Retailers with loyalty programs, on average,are 88% more profitable than competitors who do not.

DELOITTE RESEARCH SURVEY

Customer loyalty is the single most important driverof growth and profitability.

HARVARD BUSINESS REVIEW

It is 6 to 7 times more to acquire a newcustomer than to retain an existing one.

BAIN & COMPANY

Loyalty Automation Platform

Loyalty marketing is more relevant today than it has ever been

• Your biggest asset is your existing customer base and foot tra!c

• Data shows that loyalty programs can increase customer visits by 20 percent or more

• With social media, each of your customers can now share your brand with hundreds of others

• Technology can now automate most of your loyalty marketing needs

• It’s marketing that’s fun and makes sense!

POS Relationship Manager

FiveStars Card Merchant Toolkit

You have all the tools you need to

become a loyalty marketing expert!

Loyalty Automation Platform

Once a customer becomes truly engaged with your loyalty

program, you will begin to see them come back more frequently

Increasing Visit Frequency


Frequency Compression for Coffee & Tea

Days Between

Visits"

Visit Number"

2.5 visits/month - 1.85 visits/month 0.65 visit/month x $4 per visit $2.60 x 4000 $10,400


Case Study: Tpumps

After FiveStars: Customer Visits Before FiveStars: Customer Visits

Additional Visits from FiveStars

Gross Profit Additional Profit per Member

Number of VIPs

Additional Profit with FiveStars

$10.00

$12.00

Before FiveStars After FiveStars

Increasing Spend Per Visit

Revenue per Customer Visit (Illustrative)

Only possible if you have rewards based on spend

Ideas to encourage customers to spend

more per visit

Loyalty Program Mechanics: Instead of doing one point per visit,

do one point for every $5 in spend to encourage more spend per

visit.

Cross-Sell: Starbucks gets customers to spend more by

promoting their baked goods and other food items.

Bundling: Create compelling bundles or packages (buy entrée,

dessert, and drink for $12). Or create compelling package for

groups (buy a large pizza and get an additional medium pizza

for half price).

Increasing Spend Per Visit

Use Text Messaging to Drive Loyalty

•  Brings your best customers in the door immediately •  Customers prefer getting timely messages from places they already go to, especially places they frequent •  Text message promotions can reach customers throughout the day, they don’t need to be in front of a TV or computer •  Good text message campaigns can complement your other marketing efforts

# of times people look at their cell phones

150X PER DAY!

91% of people keep their phones within 3 feet of themselves 24/7

Driving Sales from Promotions

Scan Card


Cost of Text Campaign: 400 x $0.015 = $6.00

Total Revenue Generated Cost of Goods Sold

Cost of Text Campaign Profit from Text Campaign "


Soulman’s BBQ Campaign Profit

15 Customers Responded: 15/400 = 3.75%

$107.40 - $32.22 - $6.00 $69.18"

Revenue/Marketing Cost Multiple of 18x! "

Calculating Costs of Rewards

Cost of Rewards in February

Free Beverage Costs: 585 x $0.80 Free Beverage & 1 Bag of Tea Costs: 31 x $1.30

Free Beverage & Eco Cup: 12 x $1.80 Total Reward Costs

$468.00 + $40.30 + $21.60 $529.90

Loyalty Program ROI

Text

Calculating Cost of Rewards Loyalty Marketing ROI

Text

Loyalty Program ROI Calculation Review

Text

Source: Harvard Business School Publishing Corporation - 2007

Lifetime Value of a Customer

Profit from increased visits

Base profit

Profit from increased spend per visit

Profit from promotions

Profit from referrals Lifetime

Value Index

figure"

Loyalty Increases Lifetime Value of Customers

“The development and retention of profitable customer relationships is vital to the health of every business...Companies need to be concerned with the future revenue & profit streams associated with the ongoing satisfaction & retention of their core, profitable customer bases. The companies that fail to recognize this truth overspend in marketing to acquire & retain less profitable, or even unprofitable customers and do not spend enough on keeping profitable ones.”

- Harvard Business Review!

Lifetime Value: the key to running a successful, long-term business

Lifetime Value of a Customer

Keep enrolling members to your loyalty program

Run a text message promotion and

measure your return

Contact us so we can help you think about improving your loyalty returns

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