JERSEY CITY, N.J. — Thorntons Inc.’s Refreshing Rewards, Cumberland Farms Inc.'s SmartPay, and Kum & Go LC's &Rewards are just a few examples of rewards programs currently being offered to customers across the convenience store landscape.
Although the reasons behind a rewards program may be the same for all c-store operators — like improving profitability and enticing customers to make incremental sales — all rewards programs are not created equally, and therefore may not have the one-size-fits-all outcome retailers might expect.
During a webinar entitled "Do's and Don'ts of a Successful Reward Program," hosted by Convenience Store News in partnership with rewards program solution provider Paytronix Systems Inc., Kimberly Otocki, Paytronix's content marketing specialist, delved into the practices that c-store retailers should implement, and the practices they should shy away from in their rewards program.
The eight do’s and don’ts, according to Otocki, are:
1. DO open up enrollment methods.
“This is considered the most important part of any reward or loyalty program because if you don’t have enough customers enrolled, you’re going to have a hard time getting them to be program-active and seeing beneficial returns on your program," according to the marketing specialist. "So, gaining new enrollment from your customers should be a top priority for any brand."
The enrollment process is broken down into two segments: customers and the rewards program itself. What may block customers from joining a program is a “barrier to entry.”
Reasons customers may not want to join a program include:
- Customers may not want to keep an extra card in their wallets, but the c-store is offering a purely card-based program; or
- Older customers are not comfortable signing up online or in a mobile app, and prefer to sign up in-store to receive the card.
Otocki advises that the best way c-stores can ensure the most people are signing up for their rewards program is to lower the barrier of entry, “thus allowing customers to sign up by what makes the most sense to them."
An example of this practice is Louisville, Ky.-based Thorntons. The retailer utilizes a multichannel enrollment method, which includes a card, mobile app and responsive webpage that can be accessed by any device. By offering all three methods to enroll, Thorntons gained 1 million members within the first year the program launched, resulting in incremental sales. Thorntons operates 185 convenience stores in Kentucky, Illinois, Indiana, Ohio, Tennessee and Florida.
2. DO change the way vendor funds are used.
Otocki outlined the ways in which vendor funding be can applied to the various types of c-store rewards programs: earned points, member pricing, fuel discounts, sweepstakes, etc.
Earned Points: In this type of program, customers receive X amount of points for shopping at a particular store. Otocki suggests leveraging vendor funds for earning bonus points, as opposed to redemptions. “This way, instead of just using the money to give away free items, you can use the funds to drive incremental purchases and spends so, that way, the customer gets additional value as well as bonus points and you get the additional revenue,” she stated.
Member Pricing: Here, certain items are marked down for customers who are a part of a rewards program. Although this is a great tactic to use in the c-store industry, Otocki advises only including member pricing on high-margin items like coffee or soda so that retailers don’t cannibalize a sale and instead generate a profit. Using vendor funds to support this type of tactic can boost enrollment and tease out price-sensitive customers.
Fuel Discounts: This promotion is known as "Buy X, get X cents off per gallon." By running a promotion like this, fuel-only customers will now enter the store to make a purchase and spend more at that particular store.
Sweepstakes: If a c-store retailer is running a sweepstakes, a vendor should be paying for the prizes, according to Otocki.
Club Programs: Vendors should also be paying for these programs; however, the marketing specialist noted that there are better ways to utilize vendor funds.
Tiered Programs: For these kinds of programs, vendor funding isn’t a great fit. Instead, c-store retailers should run limited-time offers and test upselling certain products to increase foot traffic.
3. DO segment within your program.
When c-store retailers can’t tell the difference between their customers — like what they’re purchasing and how frequently they’re shopping — then their main focus is only selling products, creating a category-centric store vs. a customer-centric store.
By segmenting customers, c-store retailers can utilize the three Rs: relevance (making customers feel special), retention (creating fewer opt-outs and engaging with customers), and revenue (capturing customers and spend).
“This is something you should definitely be doing and one of the major do’s of a loyalty or reward program,” Otocki emphasized. “Segmentation is a lifeline of loyalty programs.”
4. DON’T confuse having a mobile app with a having a mobile strategy.
“They’re two very different things,” Otocki explained. Citing Pew Research Center data, she noted that 72 percent of U.S. consumers have or own a smartphone, and said a "huge opportunity” exists in engaging with customers where retailers know they are: on their phones.
This is especially true when it comes to looking at how much time consumers spend on their smartphones. Americans spend, on average, 2.8 hours per day on their mobile devices, which is 51 percent of their total time spent on digital media.
“The opportunity to be able to use this medium could be incredible and open up a lot of opportunities for your brand,” Otocki said. “These statistics are probably why everyone thinks that just having a mobile app will achieve the level of engagement that they would want and have a huge impact on their brand.”
With 80 percent of consumers' time being spent on just five apps, the marketing specialist provided this complete template for a working mobile strategy:
- Integrated store value
- Responsive webpages
- API (integrated program interface)
- Responsive emails
- Social media
- Mobile payment
- Push, pull and geofencing
- Online ordering
- SMS (native messages)
5. DO tailor rewards.
Tailoring rewards spurs off of segmentation. Once c-store retailers can segment customers, a lot of promotions open up the brand, according to Otocki.
6. DO timely promotions.
The closer a customer gets to a free item or reward redemption, the sooner he or she will come in to make another purchase. Timely messages or promotions will spark purchases among customers nearly ready for redemption. Timely promotions create awareness and excitement, she said.
7. DO use new technology.
C-stores are not taking full advantage of new technology, and it will be greatly beneficial once they do. For example, Otocki belives c-stores should make use of geofencing. Geofencing uses GPS or RFID technology to create a virtual geography boundary, enabling software to trigger a response when a mobile device enters or leaves or particular area.
The technology would allow messages to be sent to customers’ mobile devices in real-time, reminding them the c-store is close by and tell them what offers apply to them.
According to Otocki, a guest who receives a push via mobile phone is 136 percent more likely to visit a c-store vs. email or mail messages, offers or reminders.
8. DON’T overuse club programs.
Although club programs can boost customer loyalty and help c-store retailers achieve their bottom line, the convenience channel space is oversaturated with them, with any one store having anywhere from 15 to 30 club programs going at any given time.
The marketing specialist counsels c-store retailers to reduce the number by only focusing on items that are moving and generating revenue for the brand.
Retailers should also evaluate the club programs they’re running today by asking themselves: Are they generating new revenue? Do you see an uptick in additional purchases? Are customers engaging with them?
Otocki also had a few final takeaways for c-store retailers when it comes to the do’s and don’ts of a rewards program:
- Higher enrollment means higher success, and open enrollment should cater to every customer.
- Mobile strategies open the door to higher customer engagement.
- Club programs can do more for c-store retailers than they think. They just need to reevaluate what is already in place.
- Reward programs can be profitable, but segmentation is crucial.
- Think to the future.
A replay of “Do’s and Don’ts of a Successful Reward Program” is available here.