For brick-and-mortar businesses, building true customer loyalty is both an art and a science. At Thanx, we're bringing you the stats, tools, and takeaways to help you capture data that grows business through customer loyalty.
Loyalty in 2017
Your ﬁeld guide to making more money by
increasing customer happiness
Table of Contents
Why Customer Retention
• Retention vs. acquisition
• What is loyalty really worth?
Why most “loyalty programs” fail
• Customer experience shortcomings
• Lack of data
Big Data for Brick and Mortar
• Stop customer churn
• Identify VIP customers
Feedback rules all
• Getting responses that matter
• Why Net Promoter Score is the industry standard
Your customer loyalty adventure
If you’re looking to drive more revenue this year, you’re in luck. We’ve
crunched the numbers and there’s a sureﬁre way to do it — and it all starts
with the customers you already have.
We analyzed over 50 million transactions, and we compiled the most
interesting information about customer loyalty and guest behavior. Dollar for
dollar, it’s always worth investing in incentivizing loyal behavior — but how do
restaurants, retailers, car washes, and other brick-and-mortar businesses go
about doing it?
Consider this your ﬁeld guide.
For every 10 customers who walk into your
business, only 3 of those customers are likely
to return. Restaurants, retailers, car washes,
and other brick-and-mortar businesses invest
money into advertising to new customers, but
when those new customers only come in
once, it’s hard to justify the cost of acquiring a
That’s why it costs 5-7x more money to
acquire a new customer than to drive an
additional visit from an existing customer.
Dollar for dollar, it’s more lucrative to invest in
your existing customer base — especially
when, according to research from Harvard
Business School, increasing customer
retention rates by just 5 percent increases
proﬁts by 25 percent to 95 percent. A customer
who already knows and loves your brand
might be willing to come by again just from a
personalized message. This is why targeting
people who've already visited your
business is easier and more cost effective.
Why Customer Retention?
Bottom line: New
customers are expensive.
It costs 5x more to attract a new
customer than it does to retain an
Why does retention have such a dramatic impact? Because, in addition to being a better value, loyal
customers behave very differently than ﬁrst-time customers in three main ways:
1. Higher spend: According to Small Business Trends, customers spend less on their ﬁrst purchase
because they see new brands as "risky." After building a relationship, customer spend grows
alongside trust. Eventually, loyal customers spend 67% more than new ones
2. Increased Frequency: Customers involved in a loyalty program increase their visitation
frequency to a particular restaurant by an average of 35%.
3. Better word-of-mouth: Retained customers are more powerful sources of referral business. A
Bain & Company strategy brief reported that, on average, a ﬁrst-time apparel shopper refers three
people. After 10 purchases, that same shopper refers seven customers. Referred shoppers
spend more money and are more loyal themselves.
Customers enrolled in a loyalty program visit 35%
Part 1: Why Customer Retention?
What is customer loyalty worth?
2017 Goal #1: Start building a customer
retention engine to keep your customers
Why “Loyalty Programs” Fail
Despite knowing how valuable loyal customers are, most loyalty programs
don’t actually do much to inspire loyalty. They make customers jump through
hoops, they aren’t fun, and they don’t always deliver measurable results for
merchants. We once heard of a restaurant who had purchased 10,000 plastic
loyalty cards for their POS-based loyalty program… and after they’d handed
them out, only 300 were registered, and only 76 of them ever ended up being
The idea behind loyalty programs remains sound; give customers a reason to come back and
recognize loyal customers with a reward. However, there are the main failures with traditional loyalty
1. It demands too much of the customer: Making a customer carry around an additional piece of
paper everywhere isn’t just inconvenient — it ﬂat-out doesn’t work. While the typical consumer is
a member of more than 27 different loyalty programs, they actively participate in less than half of
those. Why? Because nobody is carrying around 27 loyalty punch cards!
2. It requires the customer to take an action every single time they transact: That’s a poor
customer experience — when trying to build brand loyalty, you should aim to make the customer
experience BETTER to increase repeat visits, not worse. Yet, brands continue to come up with
complicated schemes like QR codes, additional hardware at the POS, or even making customers
write their phone numbers on the back of their receipts.
3. It fails to differentiate between customers: If I go to my favorite coffee shop every single day, I
should be treated differently than someone who comes in twice a month. This is why some of the
most successful loyalty programs in the world are status-based, like airline and hotel programs:
They recognize that their “big spenders” drive a disproportionately high amount of revenue, and
treat them like rockstars.
Loyalty Pitfalls to Avoid
Part 2: Why “Loyalty Programs” Fail
2017 Goal #2: Get rid of friction when it comes
to your loyalty program. Make it effortless for
customers to use.
Data is power… but most ofﬂine
businesses are seriously lacking in
actionable customer data.
When it comes to getting to know your
customers better, data unlocks all of the
secrets: who your customers are, where
they like to go, how much they spend,
and what types of marketing will convert.
Online retailers have been using big data
to help them build brand loyalty through
extremely targeted messaging and
advertising. It’s time that restaurants,
ofﬂine retailers, and car washes start
using big data to their advantage.
Big Data for Brick and Mortar
“In the online world, businesses
have the opportunity to develop
very deep relationships with
customers [by] observing their
purchase behavior over time so
that you can get individualized
knowledge of the customer…
Then the customers are going to
feel a deep loyalty to us, because
we know them so well.”
So, how do ofﬂine businesses gather customer data? One great way is
through a digital customer rewards program that ties to customer
transactions. Without one, your customers are open season for competitors.
With a good one, you’ll have your single biggest competitive advantage. Here
are some of the most proﬁtable ways to utilize customer data…
Use your data intelligently (and proﬁtably)
Part 3: Big Data for Brick and Mortar
In a world where customers receive
countless promotions every day—the
only way to cut through the noise is
personalization. And the only way to
improve personalization? Better data.
Email blasting your entire mailing list
with an offer for 20% off of their next
purchase isn’t a smart marketing
technique — in fact, broadly
discounting product can diminish the
perceived value of your product.
Send your customers timely,
personalized communication when it
matters. Send them offers when it
counts, not just whenever your
company is planning a generic email
Stop Customer Churn
Customer data can help you prevent
once-loyal customers from slipping
through the cracks.
Identify “at risk” customers by using
your data to understand which
customers were once loyal, but are
now less frequent. You could do this
by tracking customer behavior over
time, and then setting up systems that
alert you to any signiﬁcant change in
CALCULATE CUSTOMER CHURN
AT YOUR BUSINESS →
“winback” to convert at-
risk customers into
Communicating with customers who
were once loyal is much cheaper than
acquiring brand new business. Sixty
nine percent of your customers
haven’t returned to your business in
the past four months — driving these
previously loyal customers back in
store represents the perfect
opportunity to increase proﬁt and
Target AT-RISK customers by using
your customer data to automatically
identify these customers at risk of
Identify and retain your
One of the primary functions of a
loyalty program should be to identify
and retain your very best customers.
ALL businesses have their superstar
customers, but few can identify
exactly who these big spenders are.
With 66% of sales coming from just
25% of customers, take action to
identify and segmenting out VIPs —
the top 10-25% — and then develop
targeted VIP marketing that ensures
these loyalists never churn out of your
LEARN HOW TO LAUNCH
EXPERIENCES → thanx.com/vip
2017 Goal #3: Start collecting customer
transaction data and running automated
marketing programs with it.
Customer Feedback is a compass
for your business
Happy customers drive most of your
revenue, so it’s important to be able to
keep your ﬁnger on the pulse of customer
sentiment. As your company grows, it
becomes harder and harder to gauge the
happiness of each and every customer.
Aside from polling every single person
that comes into your store, how do you
get a sense of your performance in the
mind of the customer? That’s where it
becomes essential to have a feedback
program that customers actually engage
with (is anybody actually ﬁlling out those
paper feedback forms?).
The simple act of asking for feedback has
a pronounced effect on customer
frequency. Across 100’s of thousands of
feedback responses, customers who
completed a non-intrusive mobile survey
returned 7% faster than those who didn’t.
The customers who received merchant
responses to their feedback returned 14%
faster. The reason, of course, is that
customers love to feel heard. So, ask
them! That’s how to build deeper
How to get customers to respond to your
Part 4: Customer Feedback is a compass for your business
Paper feedback forms don’t garner signiﬁcant amounts of responses, and it’s impossible to know
exactly who you’re speaking to or what feedback merits a response.
Collecting responses via mobile survey is a great solution to both of those problems — not only is
feedback tied to individual customers (with their entire customer history available for perusal), but
also it’s easy for customers to respond. That means that you’re getting to hear from people who
wouldn’t typically leave feedback, and you’re actually getting enough valuable feedback to make
data-driven decisions with it — from location-level tune-ups to company-wide initiative.s
Why all businesses should know their
Net Promoter Score®
Part 4: Customer Feedback is a compass for your business
It’s called “the ultimate question” for a reason: NPS, or Net Promoter Score, is arguably the most
accurate way to measure customer happiness. NPS boils customer satisfaction down to one
question: From 0–10, how likely are you to recommend this business to a friend ?
The reason people call NPS “The Ultimate Question” is that Bain and Company, the innovators
behind Net Promoter Score and Net Promoter System found that businesses with a higher score
grow 200% faster than their competitors — just by knowing the answer to one question!
2017 Goal #4: Make feedback easy to collect
and easy to interpret
Bonus: Customer Usership Survey
How do customers actually use loyalty
Only 7% of people
who have loyalty
participate in all
48% of customers
would prefer to
applied to their
credit or debit
bring your card
If there’s one
love, it’s feeling
Thanx helps ofﬂine businesses drive deeper, data-driven relationships with their best customers.
Thanx's turnkey solution collects critical customer data and uses it to deliver automated marketing campaigns that
deliver real ROI. While the vast majority of loyalty programs today are languishing, Thanx has the highest retention
rate in the industry thanks to its frictionless customer and merchant experience. Founded in 2011 and based in San
Francisco, Thanx is ﬁnanced by Sequoia Capital and other elite Silicon Valley investors. Thanx has thousands of
customers across more than twenty retail verticals.