3 Steps to Improve Loyalty Programs

Mary Chapman, Editor, Special Projects

Customer loyalty card

GLENDALE, Ariz. -- As a general rule, convenience-store retailers don’t want to give their customers significant discounts on something they plan to come in and purchase anyway. But so many loyalty programs do just that.

Lee Barnes, head of data insights for Paytronix, said a well-designed program should motivate customers and drive profitable incremental sales at the same time. He offered Convenience Retailing University attendees these tips …

Segment the customers

Sheetz customers

There’s a temptation to start making conclusions about customers in an effort to customize a loyalty program and its rewards to each person, Barnes said. His suggestion: Use the data to divide program members into three to seven segments. Too few, and you’re treating all your guests the same; too many, and it’s too difficult to manage. Try to come up with several ways that you would treat one segment differently than the others. If you can’t find at least five ways, you don’t have a separate segment.

Change behavior

Coffee and muffin

Provide rewards that change behavior, not just thank the customer for coming. For low-frequency customers, try to get them to do more of the same. If they come in for coffee once or twice a week, target their rewards to get them to come in for coffee four or five times a week. Try to get high-frequency customers to do something new. If they buy coffee every morning, incent them to add a muffin.

Get them through the doors

Paying for gas at pump

Barnes presented a matrix to illustrate how a retailer might segment customers to provide business-building rewards. Plot customers by frequency of forecourt visits on one axis and frequency of in-store purchases on the other. Those with high gas frequency and low in-store frequency may be enticed by samples of your most popular products, say fountain beverages or pizza. He recommended using popular items because they’re most likely to appeal to a broad audience. Daily in-store customers may be swayed by a discount on an adjacent item. Whatever your methods, the matrix may help you see which effort will have the largest impact.

Click here for more insights from CSP’s Convenience Retailing University 2017.