Dos and Don’ts of Successful Reward Programs

Most convenience stores share similar reasons for having a reward program – such as improving profitability and enticing customers to make incremental sales – but all reward programs are not created equal, and a one-size-fits-all approach may not produce the outcomes that retailers want.

During the webinar “Dos and Don’ts of Successful Reward Programs,” I discussed reward program practices that c-store retailers should adopt, as well as ones that they should be cautious of implementing.

Here are some of the dos and don’ts of successful reward programs:

1. Do open your enrollment methods. One of the most important components of a reward program is enrollment. If you do not have a sufficient number of your customers enrolled, you will have a hard time getting them to be active enough to provide beneficial returns on your program. Gaining new enrollment from your customers should always be a top priority for any brand. The best way to ensure that your customers are enrolled in your program is to lower the barrier for entry and allow signing up in a way that makes the most sense to the customer. For instance, Thorntons Inc. utilizes a multi-channel enrollment method that includes a card, mobile app, and responsive webpages that are easily accessed from any device. By using multiple channels, the company was able to enroll one million customers within the first year, creating the desired incremental sales and contributing to the program’s profitability.
2. Don’t confuse a mobile app with a mobile strategy. There is a significant difference between the two. Per data from the Pew Research Center, 72 percent of U.S. consumers own a smartphone, and this represents a huge opportunity for engaging with them. But with 80 percent of customers’ app usage spent on a total of just 5 apps, yours is among thousands of options vying for precious little attention. Fortunately, a complete mobile strategy offers plenty of other ways to connect with customers:
   1. Responsive webpages
   2. Responsive Emails
   3. Social media
   4. Mobile payment
   5. Push, pull, and geofencing messages
   6. Surveys
   7. Online ordering
   8. SMS (native messages)
3. Do use segmentation within your program. Segmentation is the lifeblood of loyalty program. Being able to see the differences in your customers will greatly help your efforts to generate interest in visiting your store. Without the ability to segment, retailers are unable to send promotions that will compel their customers to shop with them. Customers are going to respond differently when they receive a promotion. Some will take advantage of the opportunity, while others might be put off if it’s not relevant to them. Segmentation allows retailers to employ the three R’s of marketing: relevance (making customers feel a one-to-one relationship), retention (limiting opt-outs by keeping customers engaged), and revenue (capturing incremental spend).

4. Don’t overuse club programs. A staple of the industry, club programs help motivate customers to visit and spend more. But a convenience store could become oversaturated with them by having anywhere between 15 and 30 club programs going at a time. Reducing the number being offered can help generate more revenue for your brand. Instead of running club programs for a wide range of products, try focusing on the items that are creating the most profit. Evaluate your club programs by answering a few questions: Are the clubs generating revenue? Are you seeing an uptick in incremental purchases? Are your customers engaged with them?

For more tips on how to structure your reward program, watch “Dos and Don’ts of Successful Reward Programs” on demand.