Loyalty 202
Measuring and Optimizing Loyalty Returns
Loyalty Marketing

Experts agree that loyalty is the most
effective and highest return marketing
Customer loyalty is the s...
Loyalty Automation Platform

Loyalty marketing is more relevant
today than it has ever been

• Your biggest asset is your ...
Loyalty Automation Platform

You have all the tools you need to
become a loyalty marketing expert!

FiveStars Card

POS Re...
Increasing Visit Frequency
Once a customer becomes truly engaged with your loyalty
program, you will begin to see them com...
Increasing Visit Frequency

Frequency Compression for Coffee & Tea

Days

Between

Visits"

Visit Number"
Increasing Visit Frequency

Case Study: Tpumps
After FiveStars: Customer Visits
Before FiveStars: Customer Visits
Addition...
Increasing Spend Per Visit

Revenue per Customer Visit (Illustrative)
$12.00
$10.00

Before FiveStars

After FiveStars

On...
Increasing Spend Per Visit

Ideas to encourage customers to spend
more per visit
Loyalty Program Mechanics: Instead of doi...
Driving Sales from Promotions

Use Text Messaging to Drive Loyalty

•  Brings your best customers in the door immediately
...
Driving Sales from Promotions

Scan Card
Driving Sales from Promotions

Soulman’s BBQ Campaign Profit
Cost of Text Campaign: 400 x $0.015 = $6.00
15 Customers Respo...
Calculating Costs of Rewards

Cost of Rewards in February

Free Beverage Costs: 585 x $0.80
Free Beverage & 1 Bag of Tea C...
Calculating Cost of Rewards
Loyalty Marketing
Loyalty Program ROI ROI

Loyalty Program ROI Calculation Review
Text

Text
Lifetime Value of a Customer
figure"

Loyalty Increases Lifetime Value of Customers
Profit from referrals

Lifetime
Value
In...
Lifetime Value of a Customer

Lifetime Value: the key to running a successful, long-term business

The development and ret...
Goals for the Week

Keep enrolling members to your
loyalty program

Run a text message promotion and
measure your return

...
Q&A
university@fivestars.com
Measuring Returns from Loyalty Marketing
Measuring Returns from Loyalty Marketing
Measuring Returns from Loyalty Marketing
Measuring Returns from Loyalty Marketing
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Measuring Returns from Loyalty Marketing

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Learn a basic framework for measuring returns from loyalty marketing, see real data from small businesses that are using rewards programs, and understand how to optimize returns from loyalty.

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Measuring Returns from Loyalty Marketing

  1. 1. Loyalty 202 Measuring and Optimizing Loyalty Returns
  2. 2. Loyalty Marketing Experts agree that loyalty is the most effective and highest return marketing Customer loyalty is the single most important driver of growth and profitability. HARVARD BUSINESS REVIEW Retailers with loyalty programs, on average, are 88% more profitable than competitors who do not. DELOITTE RESEARCH SURVEY It is 6 to 7 times more to acquire a new customer than to retain an existing one. BAIN & COMPANY
  3. 3. Loyalty Automation Platform Loyalty marketing is more relevant today than it has ever been • Your biggest asset is your existing customer base and foot traffic • Data shows that loyalty programs can increase customer visits by 20 percent or more • With social media, each of your customers can now share your brand with hundreds of others • Technology can now automate most of your loyalty marketing needs • It’s marketing that’s fun and makes sense!
  4. 4. Loyalty Automation Platform You have all the tools you need to become a loyalty marketing expert! FiveStars Card POS Relationship Manager Merchant Toolkit
  5. 5. Increasing Visit Frequency Once a customer becomes truly engaged with your loyalty program, you will begin to see them come back more frequently
  6. 6. Increasing Visit Frequency Frequency Compression for Coffee & Tea Days
 Between
 Visits" Visit Number"
  7. 7. Increasing Visit Frequency Case Study: Tpumps After FiveStars: Customer Visits Before FiveStars: Customer Visits Additional Visits from FiveStars Gross Profit Additional Profit per Member Number of VIPs Additional Profit with FiveStars 2.5 visits/month - 1.85 visits/month 0.65 visit/month x $4 per visit $2.60 x 4000 $10,400
  8. 8. Increasing Spend Per Visit Revenue per Customer Visit (Illustrative) $12.00 $10.00 Before FiveStars After FiveStars Only possible if you have rewards based on spend
  9. 9. Increasing Spend Per Visit Ideas to encourage customers to spend more per visit Loyalty Program Mechanics: Instead of doing one point per visit, do one point for every $5 in spend to encourage more spend per visit. Cross-Sell: Starbucks gets customers to spend more by promoting their baked goods and other food items. Bundling: Create compelling bundles or packages (buy entrée, dessert, and drink for $12). Or create compelling package for groups (buy a large pizza and get an additional medium pizza for half price).
  10. 10. Driving Sales from Promotions Use Text Messaging to Drive Loyalty •  Brings your best customers in the door immediately •  Customers prefer getting timely messages from places they already go to, especially places they frequent •  Text message promotions can reach customers throughout the day, they don t need to be in front of a TV or computer 150X PER DAY! •  Good text message campaigns can complement your other marketing efforts 91% of people keep their phones within 3 feet of themselves 24/7 # of times people look at their cell phones
  11. 11. Driving Sales from Promotions Scan Card
  12. 12. Driving Sales from Promotions Soulman’s BBQ Campaign Profit Cost of Text Campaign: 400 x $0.015 = $6.00 15 Customers Responded: 15/400 = 3.75% Total Revenue Generated Cost of Goods Sold Cost of Text Campaign Profit from Text Campaign " $107.40 - $32.22 $6.00 $69.18" Revenue/Marketing Cost Multiple of 18x! "
  13. 13. Calculating Costs of Rewards Cost of Rewards in February Free Beverage Costs: 585 x $0.80 Free Beverage & 1 Bag of Tea Costs: 31 x $1.30 Free Beverage & Eco Cup: 12 x $1.80 Total Reward Costs $468.00 + $40.30 + $21.60 $529.90
  14. 14. Calculating Cost of Rewards Loyalty Marketing Loyalty Program ROI ROI Loyalty Program ROI Calculation Review Text Text
  15. 15. Lifetime Value of a Customer figure" Loyalty Increases Lifetime Value of Customers Profit from referrals Lifetime Value Index Profit from promotions Profit from increased spend per visit Profit from increased visits Base profit Source: Harvard Business School Publishing Corporation - 2007
  16. 16. Lifetime Value of a Customer Lifetime Value: the key to running a successful, long-term business The development and retention of profitable customer relationships is vital to the health of every business...Companies need to be concerned with the future revenue & profit streams associated with the ongoing satisfaction & retention of their core, profitable customer bases. The companies that fail to recognize this truth overspend in marketing to acquire & retain less profitable, or even unprofitable customers and do not spend enough on keeping profitable ones. - Harvard Business Review!
  17. 17. Goals for the Week Keep enrolling members to your loyalty program Run a text message promotion and measure your return Contact us so we can help you think about improving your loyalty returns
  18. 18. Q&A university@fivestars.com

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