How to 5X Your Loyalty Redemption


When implemented poorly, customer loyalty programs can entail massive losses and wasted advertising budget. However, with the right strategy in place, a customer loyalty program has the potential to become your high-returning advertising campaign!

Many retailers do not believe in loyalty programs, seeing them as time-consuming to administrate or an erosion of gross profit.

Though this is correct, the reason most loyalty programs fail to genuinely drive sales growth is they simply are not structured correctly.

The Loyalty Program Profit Formula

To ensure your loyalty program will be hugely rewarding, consider the following:

1) How many of your clients are actively using their benefits?
2) What is the average transaction value?


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To acquire a profitable return on your customer loyalty program, equally sides of the formula have to be large (not just one!) .

By way of instance, If you have a great deal of clients with $5 worth of points available and the average transaction value when using those factors is $15, this could lead to a high volume of lesser value earnings.

On the flip side, if your customers redeem their rewards against highly-priced purchases but there is only a small part of consumers with their benefits, you still wind up with low earnings (which is not ideal!) .

Ensuring your loyalty program responds to both use volume and higher transaction values can allow you to drive program success.

If you’re trying to set up a successful customer loyalty program, you will have to encourage adoption and use amongst your clients AND higher transaction values.

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The 4 Important Changes You Want to Make

To drive program success (and profitability!) , these are four easy changes you can implement immediately to drive returns to your customer loyalty program.

1) Repair a minimal spending threshold

To push the average basket price of transactions, use a minimal points redemption threshold. Specify a minimum amount of points, and for that reason a minimum spend value that should be gathered before points can be redeemed on a new transaction.

Typically retailers see a 500% upsell on promotional coupons, by a well-planned loyalty program.

By way of example, a client with $5 of things will normally spend $25 in new sales. But if we place the minimum spend threshold to $20, they’re more inclined to spend more $100.

With that in mind, your minimal point redemption threshold ought to be set at around 20 percent of your typical retail transaction value.

2) Make sure the loyalty program is a win-win for you and your clients

Your loyalty program structure has to be a win-win on either side of the equation.

Your points earned per dollar invested ratio has to be attractive to your clients and encourage them to go back to your store.

An especially intelligent move here would be to offer a couple of occasions bonus loyalty points for things you’re carrying as excess inventory.

3) Drive app’stickiness’ with automatic SMS communications & mails

To make sure a large part of your customers really use the loyalty application, you want to do an awesome job with your customer communications!

Use automated SMS alerts and email advertising to prompt your clients to redeem their points or set reminders for birthdays and exclusive offers.

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4) Establish an expiration date on reward points

By placing an expiration date on rewards points, you can make a true sense of urgency and a call to action to your clients.

By way of instance, set the expiry to your client points to 60 days from the date they were earned, but remind them 14-15 days ahead of time through SMS or email.

5) Select a loyalty program structure that is aligned with your company

Many retailers are using the incorrect loyalty structure. Many only reach around a 10% lower redemption rate, compared to over 60% redemption rates for merchants that implement these measures, picking a loyalty program structure that’s tailored to their company and margins.



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