Simplicity is the ultimate sophistication when it comes to loyalty programs
By Mats Danielsen.
All convenience retailers want loyal customers and all convenience retailers want to launch and execute a loyalty/rewards program that effectively motivates and rewards loyalty.
However, there are still many convenience retailers that do not have a loyalty/rewards program.
Also, there are still many complicated loyalty programs out there which are not effective (many of these are points-based programs). Consumers struggle to understand them and category managers struggle to secure margins and understand to what extent the loyalty program actually delivers customer loyalty, as well as long-term sustainable profits for the retailer.
Increasingly, and with digital as a driving force, the big brands want to contribute and work closely with convenience retailers to drive consumer loyalty. However, they also want to control margins and understand to what extent increased loyalty is the actual result of their activations with their retail partners. The brands want to balance volume and market share targets with healthy profits- short and long term. And brands need data-proof that it is actually improving loyalty and increasing purchase frequency as a result of their investments with their retail partners.
The more complicated the program is, the harder it is to convince brands to participate and contribute financially, in order to include brand deals and mechanics in the program that customers really appreciate.
The simpler the program is however, the more transparent it is for all involved parties – up front.
Simple for brands could mean:
1) Simple to understand and calculate investments vs. effect
2) Control of what the communication is to the consumers at all times (the ability to control the brand story that is being told)
If it is simple, you also ensure that all your customers understand it, which evidently is a good thing…
If it is simple, you also ensure that all your store employees understand it too. This is critical in order for them to be ambassadors, to be able to communicate the program to customers and to recruit new members.
Stamp cards with every xth free are simple to understand for everyone.
Simplicity is the ultimate sophistication!
Stamp cards have worked in retail for 50 years and will continue to work: digital just makes it much more interesting. Digital eliminates the internal/external fraud issues and opens up a lot of opportunities to be smart and targeted.
The two below video cases demonstrate two very effective programs from Norway. These are smart, but more importantly: they are simple. Both are powered by Coca-Cola and both are parts of Reitan Convenience´s app programs.
In both the 7-Eleven and Narvesen video cases below, Coca-Cola has a digital “level-based” stamp card in the retailer´s app. Digital stamp cards resonate well with the millennial consumers; and with Liquid Barcodes technology Coca-Cola can differentiate effectively between their customers, based on how loyal they actually are. The more loyal the customer is, the more important he or she is for Coca-Cola. And thus, the more Coca-Cola is willing to invest in further strengthening this particular customer´s emotional relationship to Coca-Cola.
Coca-Cola´s level based stamp card in the 7-Eleven app is built on 3 levels – bronze, silver and gold, but at silver level the customer needs three rounds to get to gold level. At bronze level every 6th Coca-Cola is free, at silver level every 5th free and at gold level every 4th Coca-Cola free! The 1-minute video case below shows how this is executed in the 7-Eleven Norway app.
Similarly Coca-Cola´s level based stamp card in the Narvesen app is built on 3 levels; every 6th – every 5th and every 4th Coca-Cola free. The 1-minute video below showcases how this works in the Narvesen app.
With a number of customers at each of these levels and real-time analytics it also becomes simple for the retailer and brand to target specific groups of customers with digital offers, either with the intent of rewarding the most loyal customers or to nudge the less loyal to create habits that result in higher frequency of purchase. For example, the mechanics could automatically generate follow-up deals every time the stamp card is used in-store. If the existing purchase frequency is one Coke per week the follow-up coupon (e.g. Coke ½ price) can be valid for 4 days. If the existing purchase frequency is one Coke every other day the follow-up coupon can be valid 6, 12 or 24 hours.
Product specific programs like 7-Eleven´s and Narvesen´s enable high margin control for the retailer – and for the brand. Product specific programs like the Coca-Cola level-based stamp card, also give big brands like Coca-Cola a simple, but powerful tool to reward the most loyal customers and motivate all customers to purchase a few more cokes to move to the next level!
These app mechanics are possible with Liquid Barcodes technology. Liquid Barcodes’ technology platform powers 7-Eleven and Narvesen´s apps and connects it with their point of sale system through unique codes.