Updating Loyalty Programs for the 21st Century Customer

CHICAGO — Despite convenience store companies spending up to 10 percent of their budget to run a loyalty program, roughly 69 percent of their customers will go inactive in the program, with 42 percent of those customers leaving it entirely.

These revelations came via Tom Byrnes, senior vice president of marketing at PayiQ, during the "New Research: What Executives & Users Really Think of Loyalty" webinar hosted by Convenience Store News and sponsored by Quisitive's global payments business unit, PayiQ. The presentation examined the different ways consumers interact with loyalty programs, what they expect to get out of them and how stores can better utilize technology solutions to engage with their customers.

Meeting the Customer Where They Are

According to Byrnes, while most loyalty programs make it easy to join — consumers will, on average, join up to five other programs if they've already joined one — keeping members engaged and using the program can be trickier.

"It can be up to 11 times more expensive to attract a new customer than it is to retain a current one," Byrnes said. "So, while it makes a lot of physical sense to lean into your previous successes and generate as much value as you can, it's also important to remember that your most active customers are already likely to be your best customers."

He also acknowledged that even small changes in customer engagement can make a big difference on the back end. For instance, increasing the engagement of program members by only 7 percent could boost the lifetime profits per visitor by up to 85 percent. However, if stores don't regularly update their design plan, they might be missing out on these opportunities.

"Bottom line, the customer has moved and is now moving all the time," Byrnes said. "That's going to require operators to find a new way to leverage loyalty solutions that deliver the kind of customer data that they're going to need to align offers, rewards and messaging."

Byrnes did offer ideas on how stores could implement new loyalty plans or update old ones. The days of receipt coupons, mailers and even social media rewards are falling behind, he said, so it's up to stores to adapt to new methods of outreach to meet customers where they are. He suggested companies start using point-of-sale credit card data to analyze shopping habits and pinpoint areas of engagement or outreach for individuals.

"You either face a big strategy shift and a significant investment hoping to increase ROI, or you accept a traditional one-size-fits-all loyalty experience that's not aligned with what the customer's expectations have become," he said. "The good news is you don't have to accept second-rate results."