4 Reward Program Dilemmas Solved

Roger Dow, creator of the Marriot Rewards Program, once said, “The first two years, I had peers trying to kill this idea a hundred times over.”  Fortunately, Dow knew the key to tackling the program push-back is knowing how and when to present program results.

There are four dilemmas new rewards programs face. Read about them below and learn how to tackle them.

1. Is my program working?

Regardless of the way you measure your program’s success, if you don’t have the team focused on the right things at the right time, there will be a misalignment of expectations among your colleagues. When you’re initially designing the program, be sure to set first year KPIs. These should include metrics such as loyalty member enrollment, number of transactions, and store over-store-sale improvements.

Focus on program enrollment initially when evaluating your program’s performance. It isn’t enough to just count the number of new guests that enrolled. Be sure you know how your program stacks up against other similar programs. If you find your enrollment rates are in the lower percentile, you may need to adjust your new member acquisition strategy.

For example, a client noticed its enrollment rates were lower than similar programs. They took a deeper dive into the data. It compared stores with low registration rates to stores with high registration rates and uncovered that top performing stores were using iPads in each store to push registration. It decided to implement iPads in all stores. The next month it noticed an upward trend in registration across all stores.

2. Am I attracting the right audience to sustain my brand for the long haul?

Attracting the right audience is key to brand success. Look at how guests are enrolling and engaging as age can change the way they interact. For example, a client was looking to attract a younger demographic to their program, but saw that they had a higher registration rate from an older demographic. The client added a card-less enrollment option that appealed to a younger demographic and quickly saw an increase in the number of registrations for their target demographic. More details on this card-less enrollment success story can be found here.

3. Am I running the right promotions?

Determining which promotions are best for your brand depends on the opportunities that are uncovered in the data. A restaurant sent out an email with a kid’s meal offer. The open rate was 20% less than its typical open rate of 32%. The email was not relevant to everyone on the list consequently, they received a high percentage of opt-outs from members who were clearly annoyed by the irrelevant offer.

To better target the kid’s meal audience the marketing team added a question to the enrollment questionnaire, “Do you have kids in your family?”  After they segmented based on kids, the open rate was 42%, but traffic wasn’t as high as the previous email. Why? A guest doesn’t have to have kids to purchase a kid’s meal. Instead, they used data to identify guests that are buying kids meal items. Targeting based on what guests do vs. what guests say allows you to send relevant offers.

4. How Do I Identify and Combat Fraud?

There are several types of fraud that boil down to two main categories: guest fraud and server fraud. Guest fraud is when someone signs up for your program multiple times to receive a registration perk. Server fraud is more costly and destructive to your brand.

Signatures of server fraud with a rewards program:

• The server creates an account and then swipes a card on multiple checks to earn a reward.
• Then, the server redeems rewards on cash checks to pocket the cash.

Since we know that server fraud occurs most frequently on cash checks, with Paytronix you can see reward redemptions on cash checks by server. You can check for any outliers in the data or a transaction with a high amount of rewards redeemed on cash checks. Having data that shines a light on employee theft is just one of the many benefits to having a loyalty program.

When you initially launch a rewards program, you will undoubtedly get pushback from peers. Be sure to use data to your best advantage to make informed decisions, and effectively communicate program progress at the right time.