Less Frequent Guests Key to Loyalty Program Strength

NEWTON, Mass. — Targeting low frequency guests is the key to loyalty program impact, according to a new brief from Paytronix Systems Inc., a provider of reward program solutions to restaurants and retailers.

Defining critical mass as the point where more than 15 percent of checks can be attributed to the loyalty program, Paytronix Data Insights found that as a good program matures, the majority of new members come from low frequency and infrequent guests. This guest segment presents marketers with the largest opportunity for increasing the number of times these guests visit a brand, resulting in more incremental visits won from competing brands.

Medium- to high-frequency guests will be the first to join a brand’s loyalty program, but by month four, the proportion of new members who have medium-to-high visit frequency drops to nearly one-sixth, with the majority of new members falling within the low and infrequent segments.

Paytronix found that a brand usually cannot reach 15 percent penetration by enrolling only its best guests. To achieve higher levels of penetration, it is even more important to be skilled at enrolling lower-frequency members, the reward program solutions provider advises.

According to the brief, getting low frequency guests into a loyalty program requires:

• Target the program design to the right segment. Retailers should focus the design on low-frequency guests. Customers will need to understand the value proposition quickly and be compelled to join on the spot.
• Make it easy to join the program. There should be multiple ways to join, such as through mobile apps, text-to-join, mobile-friendly registration web pages, kiosks, iPads in the store, and even paper registration forms.
• Always be enrolling. Employees are the programs' best ambassadors. They must understand how it benefits them, it must be simple for them to use, and it must be easy for them to explain the benefits to customers. Falling short in any of these areas will likely discourage employees from inviting customers to join the program.

"When setting goals for the organization, be aggressive and aim for at least a 15 percent loyalty penetration rate," said Lee Barnes, head of Paytronix Data Insights. "Getting to this level means you will need some lower-frequency members, which is also the key to producing incremental revenue. Experienced partners know how to design the program to attract this group of clientele, employing ongoing enrollment campaigns that are designed to compel the infrequent group to join the ranks of the brand's most engaged customers."

The full brief is available here.