Reward programs have been around for years, with the airline, hotel and restaurant industries adopting these types of programs decades ago. But at convenience stores, most loyalty programs are simple club programs or promotions such as 3 cents off per gallon or other short-term, low-value programs.
At a high level, mass promotions such as these are a great business strategy, as they drive shoppers to visit and spend more. Most of the time, they also are paid for by vendors, so the cost of running these promotions is minimal for retailers. Mass promotions and email blasts get brands quick wins and compel customers to make purchases with the incentive of getting an item for free.
Most mass email promotions contain a standard offer such as “Buy One Coffee, Get One Coffee Free.” Let’s think about how this relates to individual customer behavior: A very frequent customer who comes in every day for his or her morning coffee before heading off to work could get a free coffee—just like the customer that has visited the store once or twice.
But the fact is, the customer that comes in every day would have been willing to purchase that cup of coffee at full price. Not only do these types of mass promotions reward the frequent customer without changing their behavior or driving an incremental visit or spend, but they also erode the revenue a store would receive from generating a new visit from the infrequent customer.
In addition to simple mass promotions, many convenience stores run basic rewards programs that offer members deals such as 3 cents off every gallon of gas. While this is a great reward to give customers who sign up for the programs, these promotions are given to every program member regardless of their purchase behavior or visit patterns. Is this program driving any different behavior from the customer, or is it just something they know they will get when they stop into your store?
What if instead of giving away these rewards and asking very little of the customer in return, c-stores were able to drive incremental visits and spend? Well-designed rewards programs are a great way to target certain customers and compel them to take action in order to be rewarded. By using a rewards program, your store can capture more relevant customer transaction data and leverage that data to connect with customers in a relevant and motivational manner.
By leveraging customer data, the buy-one-get-one coffee promotion could be targeted to the customers who are purchasing coffee less frequently and could use an incentive to come in. Using segmentation to target the customers who are not coming in as frequently and encouraging them to do so in order to receive a free coffee is rewarding their good behavior.
Remember this: It is better for your business to always reward the customers who change their behavior rather than entitling those customers who do not.
Leveraging customer data and segmentation is just the beginning of the conversation. In a recent webinar, Paytronix discussed what convenience stores need to do for a successful future. Click the link to watch the webinar “Who’s Buying Your Cold Drinks and Why Should You Care?” and learn more about leveraging customer purchase data to drive more revenue.
This post is sponsored by Paytronix