Reward programs are effective marketing tools. They enable retailers to engage with and motivate customers to visit and spend more in-store. However, reward programs need to be updated and refreshed from time to time to match a retailer’s current strategic focus. A simple update to a program can reinvigorate a brand, increase revenue and improve profitability.
Here are four signs it may be time for a program update.
- Declining loyalty penetration and new-member enrollment. Is new-member enrollment declining or stagnant? Is the share of transactions associated with the program down? If new-member enrollment or participation in a program are down it could be a sign of trouble. As a benchmark, a reward program should achieve a minimum of 15% penetration, meaning 15% of transactions should be linked to members. If loyalty penetration is dropping below this benchmark, it may be time for a change.
- Evidence that customers are “gaming” the program to their advantage. Retailers might notice some savvy customers have figured out a loophole in the program that they use to benefit themselves. In a visit-based program, customers can game the program by splitting transactions into pieces so each transaction can count as a “visit” and earn them more points. Reviewing the average transaction value of program members and monitoring the trends will give retailers a good idea of whether customers have found ways to abuse the program.
- Franchisees and operators increasingly complain that it’s just a discounting program. Is the team questioning why there’s a reward program? Have they been seeing the positive results the program is generating? Franchisees and operators need to see the value of the program and how it is helping them achieve their goals. If they are not seeing the benefits of the program, then retailers may need to make some changes to get them back on board.
- The program is conflicting with corporate strategic objectives. When the program is launched, perhaps the focus was on driving visits, but now the objectives have changed and focused on increasing customer basket size. It’s important to have the program aligned with corporate goals. If the brand’s overall priorities changed but the program remained the same, it’s not benefiting the organization as well as it should.
Not all of these signs necessarily mean that a change needs to be made. It might just need a relaunch or some additional management attention. But if retailers are seeing one or more of these signals, take a careful look at the program design. Download “Is It Time to Change Your Rewards Program?” to learn more about these signals and how to spot a program in need of a refresh.
This post is sponsored by Paytronix