Do You Know Who Uses Your Loyalty Programs?

Recently, BP announced it was simplifying its rewards programs to allow customers to choose from three different cards based on their needs and wants. In short, BP realized that consumers wanted “more bang per buck and ease of use” when it comes to loyalty cards.

Retailers, whether purveyors of food, merchandise or sporting goods, likely do not find this news earth-shattering. However, before they can figure out which programs are most successful and desired by customers, retailers must first understand who uses the rewards programs.

Identifying Your Loyalty Users

The table above shows recent research of convenience store customers and their usage of loyalty programs. In this case, only about 25 percent of consumers use loyalty programs, but of that percentage, an average of 66 percent indicate they use their loyalty cards regularly.

To build and maintain a successful loyalty program, c-stores must increase consumer participation rates higher than 25 percent. With that said, c-store operators must also identify and cater to their heaviest users of loyalty programs.

For example, the heaviest users of loyalty programs, according to the April Carbonview data, are 35- to 44-year-olds, “older” millennials, “some” high school and purchasers of prepared foods. A caution here: this is not a universal finding and it is on the onus of the retailer to determine who falls into the “heavy user” quadrant for each chain and for some larger companies, for each location.

The same can be said for those who fall into the “average” and “light user” categories, as well as for those who don’t really care about loyalty programs. These consumers either don’t believe the programs are worth the rewards, or using the program is too taxing. (I liken this to Subway’s old punch card system. I often wound up with about 17 cards with one hole punched in each, and still could not remember to bring any with me the next visit.)

What to Do With This Information

There have been numerous articles written on how to increase usage and penetration of loyalty programs. Therefore, this will be quick and actionable:

Make the program easy to use: Allow a customer to put a sticker on their license or phone, or anything they might carry to make it easy to earn rewards. Lowe’s, for example, has a My Lowe’s sticker that works in this manner. In the ideal world, just let the customer show a license to scan at the gas pump, and membership would increase dramatically.

Make it worth it: Offering a free car wash after 10 gasoline fill-ups is OK, but offering 20 cents off a gallon of gas during the same period is more attractive. Make sure customers are clear on the program and know what it is they are getting. Ignorance is often the major barrier to using rewards.

Keep adding members: See item one above. Make the rewards easy to attain and worth the time. Ultimately, this is about increasing traffic and revenues to your store, so the more you add, the most customers you will have.

Use the information: This is critical. As a retailer, you have customized information on each customer. When I receive a coupon in the mail for something I was already going to buy from an establishment, well, I’ll go there, buy it and probably buy something else.

Ask what rewards customers really want: If retailers are at a loss for why programs are not used or they fall into the “who cares” quadrant, simply go to the customers and ask why. By probing customers, it increases intimacy with them, improves relationships and also provides the retailer with detailed information on what customers really seek. Consider “tiers” and options, as pointed out with BP’s new program. Make it flexible and personal.

Where to Go From Here

The best way to start or grow your loyalty program is to identify your customer and/or shopper (they are not the same). Either use an outside firm or perform some internal work on who falls into which quadrant.

The point is to keep the heavy users very happy and move the average users to the heavy user spot. From there, the light and “who cares” users may benefit from the changes made based on the other groups.

Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.