Download pdf - Watt International Report - Loyalty Program Marketing

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Loyalty Program Marketing

74% of consumers somewhat or strongly agree that, “retailers need new and better ways of rewarding loyal customers”

Ideally, loyalty programs need to affect, impact and influence the shopper’s experience in positive, meaningful ways.

Loyalty programs at many retailers are focusing more on rewarding the shopper for coming into the store on a regular basis (Starbucks, Target), rather than trying to incentivize the customer to return to the store to buy more via a coupon.

Using a blend of traditional tactics and new media, loyalty programs will continue to become further customized to suit the individual shoppers’ needs.

The significance of shopper loyalty programs to the retailer

What shoppers want •  70% of program members want to see more discounts and savings from loyalty programs •  58% want better personal benefits and services

More than 64% of consumers want to receive information and notifications via email. However, they are tired of irrelevant and excessive communications.

Among a list of negatives associated with loyalty and rewards program membership, these are the top three: •  Too much spam and junk email: 44% •  Too many conditions and restrictions: 38% •  Rewards that lack real value: 37%

Most customers (60%) say they learn about programs through retail or point-of-sale engagements.

Loyalty program effectiveness

Most marketers do not fully explore and leverage their customer data sets

•  Only 13% of marketers say that they have been effective in leveraging loyalty and brand preference among club members

•  Basic demographics: 73% •  Location of members: 68% •  Brand loyalty and attachment: 27% •  Satisfaction levels 33% •  Product preferences: 38%

Loyalty program marketing

These are our 15 picks for innovative and effective marketing in loyalty programs.


Brand: Target

Place: US

Offering: replacing the previous awards program is the new discount program.

Shoppers using their card for online or in-store purchases receive 5% off. Other incentives include receiving 10% once 10 prescriptions have been filled using the card at the Target Pharmacy.

1.

Brand: Sobeys Club Card

Place: Canada

Offering: The Sobeys club card works in affiliation with Aeroplan, with members collecting 1 point per dollar spent at Sobeys stores.

Club Sobeys points can be converted at any point to Aeroplan Miles at a rate of 2 Sobeys point to 1 Aeroplan Mile.

2.

Brand: Loblaws

Place: Canada

Offering: Use of the PC Financial debit card will earn 5 points to the dollar, 10 points for PC MasterCard. Every time a customer checks out at a Loblaw store, a cashier circles the area on the receipt that highlights the amount of PC Points you could have earned (in this case 250), and invites you to join. PC Financial acts almost as a full service bank, offering mortgages and various types of insurance.

3.

Brand: Cineplex/Scotiabank Scene Card

Place: Canada

Offering: A Scene card from Cineplex will earn holders 100 points with every movie they attend. In conjunction with Scotiabank, there is a Scene debit card and Visa card. The debit card earns users 1 point for every $5 spent at any merchant. Opening an account earns 2,000 points, or 2 free movies. The Scene Visa card earns 1 point for every dollar spent. Points can also be used toward purchases of videos from the Cineplex store, and card gives members 10% off of concessions.

4.

Brand: Payback

Place: Europe

Offering: A retail loyalty program for several retailers that carefully uses personal information and purchase history to enhance customer experience. Trending data is also utilized to develop new products.

5.

Brand: Wal-Mart Credit Card

Place: US

Offering: Starting a WM Visa account will earn you $20 back initially. Shoppers earn up to 1% cash back on all purchases. Using the card at participating Wal-Mart gas stations will save shoppers 3¢ to the gallon.

6.

Brand: Kmart/Sears

Place: US

Offering: •  Earn Rewards on qualifying purchases at

Sears, Kmart, Lands' End, sears.com, kmart.com and mygofer.com

•  Spend Rewards at participating stores or save them up for something special

•  Earn bonus Rewards during exclusive promotions throughout the year

•  No-receipt-required returns on purchases at Kmart and Sears stores

•  Win great prizes with Kmart K'Ching Surprises at Kmart Stores

7.

Brand: Kmart/Sears Christmas Club

Place: US

Offering: Instead of functioning like a credit card the Christmas card allows users to add value beforehand.

Providing they did this before mid November 2009, members were entitled to a reward of 3% extra to spend in Sears, Kmart and associated stores.

8.

Brand: Best Buy

Place: US

Offering: Best Buy offers shoppers the ability to browse and purchase items via the website on their phone, browse and save or receive text alerts for time-sensitive deals.

In conjunction with Loopt, the location-based incentives app, Best Buy is offering smartphone users loyalty perks and coupons as they enter the vicinity of a Best Buy location.

9.

Brand: Tesco Club Card

Place: UK

Offering: Receive a £1 voucher for every 100 points collected.

Tesco is preparing to invest further in its loyalty program, using shopping behaviour data collected through the program to create more personalised offers to shoppers.

Tesco’s club card is considered a major differentiator from the other big UK grocery chains.

10.

Brand: 4Food

Place: New York City

Offering: Customers have the option to create and advertise, via social networking sites, their own version of a burger.

If that customized burger is selected by any other customers, the originator will receive 25 cents off of any subsequent purchases.

Orders taken in the restaurant are processed on iPads.

11.

Brand: Starbucks (among other retailers) and foursquare

Place: Global

Offering: Using the mobile gaming app, Foursquare, users can achieve loyalty points at the stores they frequent. By “checking in” online as they enter store locations, gamers acquire badges and points. When Starbucks customers acquire a “mayor” badge, they receive a dollar off their favorite drink, every time they enter the store.

12.

Brand: RecycleBank

Place: Los Angeles; Houston

Offering: Subscribers use a special ID tag for their home-recycling bins. When collected, the bins are weighed, with the heavier bins gaining more rewards.

RecycleBank points are redeemed within your account for rewards.

Rewards are used with partners such as: Coca-Cola, Clorox's Greenworks, CVS/pharmacy, Hearst Magazines, McDonald’s, Kimberly-Clark, Purina Pet Care, Bed Bath & Beyond, and Dick's Sporting Goods.

13.

Brand: O2

Place: UK

Offering: In 2009, UK based telecom company O2 created an added value service for people that use their website to book concert tickets for the O2 Arena in London. The company developed an online area called blueroom which allows clients to get Perk Packs which, in turn, give access to specific amenities at a particular show. Offers for blueroom consumers include priority ticketing, advanced release notice of ticket sales, discounts and VIP treatment at events.

14.

Brand: Whole Foods

Place: US

Offering: Whole Foods offers smartphone apps that organize shopper needs needs by creating shopping lists according to recipe desires, and filtering choices by kids meals, dietary restrictions, or budget.

15.

These are 3 loyalty programs offered by pharmacy chains in North America.


Brand: Shoppers Drug Mart

Place: Canada

Offering: Optimum Card and others

Shoppers Drug Mart offers the Optimum card, which collects points when the shopper swipes the card at check out. Recently introduced is the “VIB” program, which is targeted toward new mothers.

The Optimum points can now also be collected on a MasterCard.

Brand: CVS

Place: US

Offering: Extra Care card

Shoppers using their card for online or in-store purchases earn 2% back with every purchase, which eventually adds up to “Extra Bucks” that are revealed on store receipts every 3 months and can be used toward purchases at CVS.

Offers and savings are available to those who sign up for email offers and members benefit from periodic “double bucks” promotions (earn 4% instead of 2%) .

Brand: Duane Reade

Place: US

Offering: FlexRewards

Members have the option to redeem points at the $5 level, or redeem at a higher level and earn extra points.

Double Flex points are offered on a weekly basis.

Shoppers who become members of any of the DR clubs earn FlexRewards bonus points.

To Summarize

Transforming consumers into loyal customers and, better yet, brand ambassadors, requires a deep understanding of the aspirations and motivations behind the data sets; involving attitudinal as well as behavioural studies.

As with PL programs, loyalty programs can be tailored to support and enhance the brand’s core proposition, whether for premium quality and personal service or for low prices and value-based, or a carefully balanced combination of both.

We would welcome the opportunity to discuss how your company can forge stronger connections and affiliations with target customers and drive frequency, higher conversion rates and increased transaction values by enhancing their experiences with a Loyalty program that includes relevant, meaningful and channel-appropriate, value-add rewards and incentives.


Watt International Patrick Rodmell President + CEO [email protected]

300 Bayview Avenue Toronto, ON Canada M5A 3R7 www.wattintl.com

T 416 364 9384 F 416 364 1098

An envoy group company

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