Loyalty programs must advance with the times, but the basics still remain the same.
By Erin Rigik Del Conte, Senior Editor
As customer needs and technology continue to evolve loyalty programs also must adapt to stay relevant, a delicate move as major changes can rattle loyal customers.
Target, for example, recently ended its Cartwheel pilot program, choosing to roll a version of Cartwheel into its main app—a move that left many of its customers upset.
“As retailers learn more about what works and doesn’t work with their loyalty apps, they often make changes or end the app entirely if it gets too expensive,” said Melissa Fruend, LoyaltyOne global solutions partner and author of the 2017 COLLOQUY Loyalty Census.
“Any type of change to a rewards program that could be interpreted as ‘detrimental,’ particularly to a retailer’s most engaged customers, needs to be handled with kid gloves. That means cost can’t be the only factor driving a decision to make a change,” she said.
When testing a new loyalty initiative, c-store retailers should follow four steps, Fruend said: customer research, user experience study, planning and communication.
It’s vital to mange that communication step when implementing changes in order to avoid alienating current loyalty customers. After all, Fruend pointed out, the purpose of a loyalty program should be securing and maintaining a loyal following from customers already interested in the brand.
INFLUENCING BEHAVIOR
According to the latest biennial Colloquy Loyalty Census, overall, U.S. consumers hold 3.8 billion loyalty memberships in retail, financial services, travel and other types of loyalty programs. Retail is the largest sector for loyalty programs with 1.6 billion memberships, versus 1.3 billion memberships in 2015. Retail now accounts for 42% of the overall loyalty landscape.
The 2017 Census shows that across industries loyalty membership growth continues, but has slowed to 15% compared to the 26% growth rate achieved in 2015 when total memberships were 3.3 billion overall.
“The membership growth slowdown in 2017 signals the U.S. loyalty market is maturing and retailers need to up their game on how to attract and retain members within their loyalty programs,” Fruend said.
The biggest trend in loyalty today is the influence of experience on customer behavior. The biggest driver for active participation in a retail loyalty program is that the program is easy to understand, according to Colloquy’s research.
“Other top motivators for participation in the retail sector were emotional—a love for the brand as well as being made to feel like a valued member,” Fruend added.
DIFFERENTIATING WITH LOYALTY
In April 2017, Break Time, a division of MFA Oil Co., headquartered in Columbia, Mo., revamped its loyalty program by rolling out a Paytronix-powered MyTime Rewards program to its 73 locations in Missouri and Arkansas. The rewards platform integrated to NCR’s Radiant point of sale (POS), and replaced a previous paper punch card system.
Previously, the company was running a punch card ‘club program’ for specific items in the store, including fountain drinks, coffee and sandwiches, awarding customers a free item for every nine they previously purchased.
“This program was antiquated to say the least. To keep pace with the competitive landscape, we felt an upgrade to a comprehensive loyalty/rewards program was actually long overdue,” said Anita Bichsel, Break Time marketing manager.
Break Time chose to partner with Patronix, impressed by Paytronix’s customer portfolio in the fast casual dining industry. It also helped that the software technology was able to integrate with Break Time’s current POS.
However, Bichsel said, it was Paytronix’s expertise in loyalty that really solidified Break Time’s decision. “Their experience in the field of loyalty was invaluable as we went through the process of constructing our program,” she said.
Through MyTime Rewards, customers can now earn rewards in two ways.
1. They earn points—20 for every $1 spent in store, and 10 points for every gallon of fuel purchased—which can be traded in for merchandise or dollars off merchandise.
2. They also earn free drinks and fuel discounts based on the number of times they visit Break Time per month.
“There are four membership levels that can be attained via visits and each level brings its own set of rewards. The more you visit, the more you earn,” she said.
Customers have many ways to spend points. For example, customers can spend 1,000 points for a free fountain drink. Points can also be converted into Break Time Bucks and loaded onto the MyTime card to be spent for anything in the store. MyTime rewards members also receive random coupons and rewards just for being part of the program.
Break Time is currently in the process of integrating its rewards program into its mobile app.
The Paytronix user interface has the capacity to help Break Time optimize its customer data to gain better insights into customer behavior, then use that data to set and achieve its business goals, a part of the program Break Time is just beginning to tap into.
“We identify specific products each month that offer the customer double MyTime points if they purchase. We’ve been doing this for the past three months and it seems to drive purchases on those products. But just as important is our stores’ ability to make sure these products are spotlighted accordingly. This is a collaborative promotion with our vendor partners,” Bichsel said.
So far, customer feedback has been positive. “For customers who were already frequent visitors, we believe this has further solidified that brand loyalty with them. We believe brand awareness is at an all-time high,” she said. “At the base of the program is free drinks and fuel discounts, so most of our customers are extremely happy to get both of those. They are engaged in the program too. It’s fun to see them watch their visit count and make sure they qualify for a certain membership level by the end of the month.”
MyTime Rewards is also different from anything the chain’s competitors offer, helping it stand out.
“This gives customers that reason to go out of their way to visit Break Time versus other c-stores available to them. Once we get a little larger sample size, we are expecting to see other benefits in the areas of visit frequency and sales dollars,” Bichsel said.
Since the program launched, Break Time has given out more than 100,000 MyTime cards, and 42% of those are registered users.
TESTING NEW CHANNELS
BP introduced a new text-messaging program across all BP marketing regions on Aug. 1, called BP Offers. To join, customers just text the keyword MOBILE to 38831. Once they opt in, customers receive personalized messages, interactive games and discount codes for BP gasoline. As Fruend recommended above, the program is extremely easy to join and use.
“We’re always looking for new ways to communicate with our consumers,” said Jo Brecknock, director of brand and communications for BP Fuels North America. Brecknock noted many brands communicate through text with customers already, so it was a logical communication platform to test.
BP is targeting all demographics with the move. “I think it can reach every generation, smartphone is ubiquitous, everyone is well used to texting,” she said.
The program doesn’t replace BP Driver Rewards. “BP Offers is a continuation of all our loyalty efforts. It is another channel with which to communicate. We already communicate with BP Driver Rewards members through email, so this is something to see if texting is a better way or another way we can add to our channels of communications,” Brecknock said.
The app features games, such as ‘Spin to Win’ where customers spin the wheel on their phone and get a discount code for so many cents off per gallon of gas depending on where they land. Other games include having customers send MyBPstation.com for a keyword, which could win them a limited-time gas discount.
“We want to reward our most frequent shoppers, our high-value consumers, and if we have maybe someone we find frequents BP a bit less then we might try to get those back in with an offer,” she said.
The app includes geolocation capabilities as well.
“The question is can you engage with customers when you’re not just offering fuel discounts,” Brecknock said. “That’s going to be a question we’ll focus on here and we’ll get quite a lot of (information) back because we have different ways to segment consumers based on how they have interacted with the programs.”
OTHER BEST PRACTICES
Even if you’re not looking to revamp your loyalty program, taking the program you have now to the next level can be as simple as executing flawlessly on the basics and keeping on the pulse of current trends.
Word of mouth marketing and social continue to be strong trends, particularly with many Gen Z and Millennial customers.
“Brands should continue to incentivize product reviews and sharing as much as possible. For those channels that don’t allow a reward for sharing, such as Facebook and SnapChat, just a suggestion of sharing the experience is motivation enough for many to engage,” LoyaltyOne’s Fruend said.
Fruend outlined the top three basic factors c-store retailers must get right with a loyalty program:
•Maximize the experience. “Remove the friction from your customer experience, make it more personalized, and watch your sales grow,” Fruend said.
•Send only relevant communications. “Customers share information and expect retailers to use it to provide targeted offers and content,” Fruend said. Be relevant in image and offers. Don’t continually blast the same offer to everyone.
• Recognize best customers. “Customers want to be recognized for their loyalty,” Fruend said. “Surprise and delights are lovely, but a follow up thank you for the purchase is a simple and effective way to recognize loyalty to your brand.”
