4 Rewards Program Dilemmas Solved

Using data to your best advantage

Roger Dow, creator of the Marriot Rewards Program, once said, “The first two years, I had peers trying to kill this idea a hundred times over.” Fortunately, Dow knew the key to tackling program push-back is knowing how and when to present program results.

generic loyalty card

There are four questions that retailers need to ask themselves about the dilemmas that new rewards programs face. Read about them below and learn how to tackle them.

1. Is my program working?

Regardless of the way retailers measure their program’s success, if they don’t have the team focused on the right things at the right time, there will be a misalignment of expectations among staff. When initially designing the program, be sure to set first year KPIs. These should include metrics such as loyalty member enrollment, number of transactions, and store over-store-sale improvements.

Focus on program enrollment initially when evaluating the program’s performance. It isn’t enough to just count the number of new guests that enrolled. Be sure to know how the program stacks up against other similar programs. If retailers find their enrollment rates are in the lower percentile, they may need to adjust the new member acquisition strategy.

For example, a client noticed its enrollment rates were lower than similar programs. They took a deeper dive into the data. It compared stores with low registration rates to stores with high registration rates and discovered that top performing stores were using iPads in each store to push registration. It decided to implement iPads in all stores. The next month it noticed an upward trend in registration across all stores.

2. Am I attracting the right audience to sustain my brand for the long haul?

Attracting the right audience is key to brand success. Look at how guests are enrolling and engaging as age can change the way they interact. For example, a client was looking to attract a younger demographic to their program but saw that they had a higher registration rate from an older demographic. The client added a cardless enrollment option that appealed to a younger demographic and quickly saw an increase in the number of registrations for their target demographic. More details on this cardless enrollment success story can be found here.

3. Am I running the right promotions?

Determining which promotions are best for a brand depends on the opportunities that are uncovered in the data. A restaurant sent out an email with an offer for kids. The open rate was 20% lower than its typical open rate of 32%. The email was not relevant to everyone on the list, and consequently, the restaurant received a high percentage of opt-outs from members who were clearly annoyed by the irrelevant offer.

To better target the right demographic, the marketing team added a question to the enrollment questionnaire: “Do you have kids in your family?” After they segmented based on kids, the open rate was 42%, but traffic wasn’t as high as the previous email. Why? A guest doesn’t have to have children to purchase a kids’ offer. Instead, they used data to identify guests that are buying kids’ items. Targeting based on what guests do versus what guests say allows retailers to send relevant offers.

4. How do I identify and combat fraud?

There are several types of fraud that can be simplified down to two main categories: guest fraud and worker fraud. Guest fraud is when someone signs up for your program multiple times to receive a registration perk. Worker fraud is more costly and destructive to your brand.

Signatures of worker/server fraud with a rewards program:

  • The cashier creates an account and then swipes a card on multiple checks to earn a reward.
  • Then, the cashier redeems rewards on cash checks to pocket the cash.

Since we know that cashier fraud occurs most frequently on cash checks, retailers can check for any outliers in the data or a transaction with a high amount of rewards redeemed on cash checks. Having data that shines a light on employee theft is just one of the many benefits to having a loyalty program.

When retailers initially launch a rewards program, they will undoubtedly get pushback from peers. Be sure to use data to your best advantage to make informed decisions, and effectively communicate program progress at the right time.

This post is sponsored by Paytronix

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