The real value of loyalty programs: data192 views
by Jeanne Jennings
Incorporating loyalty programs into marketing campaigns will not only encourage repeat business, but they also present an opportunity to collect a diverse scope of customer data.
“We looked at loyalty cards but we didn’t want to spend all that money”
- Clive Schlee, chief executive, Pret A Manger
The Washington Post, April 2015
When I read this quote back in April I was shocked – Pret A Manger is looking at loyalty programs as a cost center? They’re missing an opportunity here – with a little strategic planning, a loyalty program can be an important profit center for a business.
So I was pleasantly surprised to see that Subway is embracing the opportunities inherent in a loyalty program with their new Rewards Program.
Loyalty programs are a great way to drive repeat business, but done correctly they’re also a smart data play. This is especially true for any business with brick-and-mortar locations, since it’s often challenging to collect data on offline transactions.
That said, not all marketers with loyalty programs are using them to their full potential. Whether you’re looking to set up a new program or want to take an existing program to the next level, here are a few tips that will help you:
1. Observed data
This is probably the most obvious type of data you can collect from loyalty programs. By having someone swipe their card for every purchase, you can see not only what they purchase, but when, where, and how frequently they purchase it.
This granular data can be used to create offers that are more relevant to each individual customer. You can also use it as input on customer journeys and create models to determine the best way to drive the action you’re looking for.
To stick with the Subway example, if someone is a solo weekly lunch customer Monday through Friday, they might be a good candidate to add a weekly breakfast purchase. Someone who eats at Subway once a month on the weekend and typically orders three or more sandwiches with each purchase might be a better candidate for a cookie upsell.
2. Reported data
Notice the Birthday Bonus that Subway is offering? This is a play to get the registrant’s age.
Loyalty programs are a great opportunity to ask your prospects and customers for more self-reported data. The value provided in a rewards program is higher than that of a free email subscription, so the registrant is often willing to provide more information on themselves to get the reward.
It would be silly to ask which store the person frequents the most or which sandwich is their favorite, since Subway will be able to observe this information once the registrant begins using the card. However, asking for a birthday to get age is a good starting point, as this is something that you won’t be able to easily observe.
The key here is to determine what data you can most effectively use for marketing that is a bit more difficult to observe, and ask people to provide that.
3. Appended data
The third way to use loyalty programs is to get the information you need to be able to append even more information to the person’s file. In the B2C world, the standard here is name and home postal address.
It’s not a best practice to ask for a postal address when someone is signing up for a free email newsletter, but it is something that usually works for a loyalty program. The increased value provided by a loyalty program makes registrants more comfortable providing a postal address. Many loyalty programs also use the postal address to deliver some of the benefits, like physical coupons.
Once you have a full name and postal address, you can look at appending information on household income, whether or not there are children, and other more specific details like this about your consumers.
One word of caution: appending is a somewhat expensive proposition. The more data you want to receive, the more you’ll pay. So be sure to think through what data is most beneficial for your marketing strategy and purchase just this, no more.
These examples are related to food, but loyalty programs can be effective for a wide variety of industries. Take a few minutes to jot down the data you’d like to get from your customers and prospects, along with what additional value you could provide them in return. A loyalty program might be a smart addition to your marketing mix.