Bust open a shopper’s wallet or purse, and there’s a big chance you’ll find at least one loyalty card. Conversely, walk into a department store and ask if they have a loyalty program. You’ll be hard pressed to find one that doesn’t offer a loyalty program of some sort.
According to the 2013 Colloquy Loyalty Census, loyalty program memberships in the United States are up 27 percent from 2010 to a total 2.65 billion in 2012. That’s an average of 21.9 memberships per household.
While overall loyalty membership programs are growing, some businesses aren’t seeing as much success as others. Let’s look at some unconventional ways successful companies use loyalty cards to get the most out of their customer loyalty programs:
Dual Program Membership– In 2002, Walgreen’s introduced a Balance Rewards program that combines a traditional store loyalty card program and a wellness program called Steps. In addition to earning points for spending in-store and online, Walgreen’ s Balance Rewards program lets members earn even more points for becoming more health-conscious and physically active.
Crossover Membership Rewards– Delta Airlines and Starwood Hotel Group have gained a record number of new memberships after offering fully reciprocal memberships to their respective customers. Under the agreement, loyalty members of each company are afforded the full benefits in the other program giving members the complete travel experience. They earn points and receive preferential treatment for air travel as well as for hotel accommodations.
Secret Sales– Old Navy, the bargain-priced division of Gap Inc., occasionally holds a secret sale for loyalty members that allow them to buy merchandise at heavily discounted prices. To receive the discount, shoppers had to flash a coupon or say a secret password to a sales associate.
Exclusive Sneak Peeks and Early Access– At women's clothing chain Talbots Inc., Black Card customers—those with store-branded credit card spending about $1,000 annually—were given an exclusive sneak peek and the opportunity to order the soon to be released spring collection ahead of regular customers.
Leveraging Social Media–CVS tied its customer loyalty rewards program with its social media marketing efforts. As part of its Easter promotions, CVS asked its Facebook fans to vote on whether they liked Cadbury Creme Eggs or Marshmallow Peeps. Using customer responses on its Facebook poll, CVS then created discount coupons for the winning item.
Customer loyalty card programs are great for consumers because it rewards them for frequent purchases. Businesses, on the other hand, love them because in addition to being an effective customer retention tool, loyalty programs give them financial and strategic benefits.
The data collected by companies enable them to make targeted marketing campaigns that are very personalized to the individual shopper.
Target, for example, collects vast amounts of data on every shopper who regularly visits one of its stores. Whenever a customer makes a purchase, all information about the transaction is stored in a customer profile that is unique to the shopper. Demographic information like age, marital status, number of kids, home address, and estimated salary, among others are also linked. Because historical transactions are recorded and tagged to a specific customer profile, Target is able to create personalized offers to a customer based on that customer’s buying habits, preferences, and even health status. According to a New York Times report, Target was able to predict a 15-year old teen’s pregnancy using her transaction history.
Here’s an excerpt from the NYTimes.com report:
An angry man went into a Target outside of Minneapolis, demanding to talk to a manager:
“My daughter got this in the mail!” he said. “She’s still in high school, and you’re sending her coupons for baby clothes and cribs? Are you trying to encourage her to get pregnant?”
The manager didn’t have any idea what the man was talking about. He looked at the mailer. Sure enough, it was addressed to the man’s daughter and contained advertisements for maternity clothing, nursery furniture and pictures of smiling infants. The manager apologized and then called a few days later to apologize again.
On the phone, though, the father was somewhat abashed. “I had a talk with my daughter,” he said. “It turns out there’s been some activities in my house I haven’t been completely aware of. She’s due in August. I owe you an apology.”
Target’s revenue in 2002 was $44 billion. It rose to $67 billion in 2010. The same NYTimes.com report suggests that part of the growth is attributable to Target cornering the highly profitable mom and baby market.
The retailer’s eerily accurate prediction tool is an example of how predictive analytics can help businesses leverage all the data it has but balance has to be achieved between acceptable data mining and customer privacy.
ID Superstore specializes in custom loyalty card production. Call us or e-mail us today to learn how you can reduce your loyalty card costs.
For Further Reading: