Helping smaller players get in on the action
“Most programs we’ve had presented to us are simply discount programs,” says Kevin De Spiegelaere, COO of Little Short Stop Stores in southwestern Ontario. “The cost of implementing a program that involves further discounting our already slim margins is a challenge for a smaller company like us.”
“Without a solution that integrates into our POS system, the logistics and complexity of implementation are discouraging,” he says of another significant challenge.
Thankfully, more options appear to be launching in the Canadian marketplace to help stores move beyond stamp cards and into gleaning actionable customer data. Donnie Fairbanks, a senior strategist at Paytronix, which provides engagement solutions and loyalty programs for convenience stores, says, in fact, there are “a range of loyalty options that exist.”
“Truthfully, aggregate impact of a loyalty program can be difficult to measure without advanced analytics, therefore many brands consider only the cost, not the impact on customer retention and lifetime value,” he explains why so many smaller brands have been hesitant to get in the loyalty train. However, “simple, well-structured programs that are woven into all marketing efforts and diligently optimized over time can be bootstrapped and still amazingly effective at driving short and long-term incrementality.”
Of all the models out there, he recommends an automatic conversion model which rewards consumers with either fuel discounts or store value based on spend levels. “An example would be a points-based program with automatic conversion, like one that may have a customer earn 100 points to receive 10 cents off per gallon,” says Fairbanks. “The economies of this model are self-balancing, have high perceived value, are simple to understand, and require no catalogue development.”
A rewards catalogue features a list of products that can be purchased with points, but Fairbanks says that requires a lot of associate and customer training/education, which smaller chains may not be able to support.
In terms of marketing, Fairbanks advises, “convert discount pricing to loyalty exclusive benefits, by using existing shelf tags but change them to ‘member exclusive.’” He says this is the better way to go because it recognizes “loyalty is not a campaign or a promotion. It is a long-term commitment to the customer relationship that is the most direct route to true connection of any of the marketing tools available.”
POS management platforms now include loyalty-add on options. For instance, Newark, N.J.-based National Retail Solutions launched this year in Canada with a platform for independents that includes a premium feature for a store to implement a “BUY X – GET 1 FREE” club program and/or to award the customer loyalty points.
Ackroo, based in Hamilton, Ont., offers customizable points and currency-based rewards programs starting at $150 per month. Set-up of its loyalty marketing platform for a four-location chain, as an example, which includes a gift card offering and mobile app, costs just $2,000.
Rather than points-based instant discounts for loyalty, “what has become more common is currency-based rewards schemes accrued over time for redemption,” says Steve Levely, CEO of Ackroo.
“You can then use the platform to ladder on various promotions, whether it be by product or time of day, to drive purchases on higher-margin products or turn slow days into busier days,” says Levely. “Even if half your customers come 10% to 20% more often or spend 10% to 20% more per visit, your revenues will increase by 5% to 10%.”