Move your loyalty program to the next level

Move your loyalty program to the next level

Loyalty marketers and loyalty program administrators, this article is for you. Before we start, take a moment to identify where your program sits in this table. 

If your program is at the “Earn & Burn” or “Promote to Everyone” stage, then what follows will be particularly pertinent.  If you are already at the “Promote to Member Segments” and “1:1 Promotions”, read on to see how this approach compares to your experience. 

The main goal of a loyalty program

I suspect that one of the key reasons your company invested in a loyalty program was to harness the data provided by a loyalty program. Your company wanted to use data insights to market better to your members, creating an excellent member experience for your most valuable customers. And I suspect one key goal was to drive better results for your company by owning a bigger share of your members’ wallets. 
It is no accident, however, that many loyalty programs, even some of the bigger ones in the market, get stuck at the “Earn & Burn” or “Promote to Everyone” stage.  Taking a loyalty program to the next level, providing promotions and value tailored to the members’ needs, takes know-how.  And usually a big investment in resources and tools. 

So today your loyalty program is still at “Earn & Burn” or maybe “Promote to Everyone”. One of the draw-backs of this approach is that you are providing loyalty discounts to all your members indiscriminately. Your most valuable, loyal customers (driving the lion’s share of your revenue) are getting the exact same value, the exact same special offers, and the exact same marketing as all other members. 
Loyalty programs at the “Promote to Member Segments” and especially the “1:1 Promotions” stage have typically made a huge investment to get there.  Their programs are the best in class, and you’d like yours to be too.  But the reality is that marketing, IT and BI resources are limited, and it is difficult to know where to begin.   

So where to start? 

How do you get to the “Promote to Member Segments” stage without big budgets and extensive business intelligence departments? To make the shift, you’ll need to take the following four steps. 

1. Define the criteria by which you want to segment your members

Choose behaviours that are the most meaningful to their experience of your business.  Key criteria may include: 

  • the amount members spend 
  • their visit patterns 
  • the time since their last visit 
  • the product categories they buy 
  • their demographic information 
  • their overall customer journey from first to last purchase 

2. Segment your member base into meaningful groupings that share certain behaviours. 

You’ll notice once you’ve done this that each segment makes a particular contribution to your overall sales.   

There are several ways to segment your customer base.  One simple but effective way to divide customers is to use a RFM segmentation : a mix of recency, frequency and monetary value (see more details here).  

Once you’ve segmented, you’ll be able to identify which segments are contributing the most to your overall sales, and where you have opportunities to grow. 

3. You will now define a strategic approach to each segment. 

What is your company’s overall approach to each segment, and what are your goals for each segment for the next quarters?  You probably want to treat your top segments with gratitude and white gloves.  And are your lower contributing segments good opportunities to grow your business?  Can promotions to those segments generate increased visits and turn occasional visitors into top customers? 

4. Now you will rework your tactical approach.

If you were at the “Promote to Everyone” stage, you will now rework your loyalty promotional calendar, your social media campaigns, and so on. Instead of having a cookie cutter approach for all members, you will now run campaigns and promotions by segment.

Moving foward

For some organizations the shift from the “Earn & Burn” and “Promote to Everyone” stage to more value-generating approaches will seem like a long and expensive shift.  I’ve seen companies get stuck in this shift for months–and even years.   

At Numea, we specialize in helping companies with modest budgets and big aspirations get from “Promote to Everyone” to “Promote to Member Segments” in 4-6 weeks.  We have a team of data scientists, loyalty experts, and BI engineers who can work with your loyalty data to segment your member base in a meaningful way, quickly. 

And we help some of the best loyalty programs in North America redefine their tactical loyalty plan to make sure their loyalty spend is rationalized in a meaningful way.  In these cases, members get the loyalty campaigns that make sense to them, and you are using your loyalty spend in the most efficient manner.   

Want to move your loyalty program to the next level in 6 weeks?  Book a meeting with us and we’ll tailor a plan for your loyalty program.