top of page
  • Writer's pictureMichael Ridgewell

How Does Loyalty Provide A Return For Thee, Let Me Count The Ways


That’s the simple answer to a common question. And that question is “will I see a return on investment from my loyalty program?”

(I sometimes add, “If you do it properly” in my best Stephen Fry voice, but that’s the topic for another post.)

Based on my experience across industries through the years, that return comes in a number of ways, from the tangible, to the no-less important intangible.

Just how large that return will be depends on many factors, like the strength of the value proposition, scalability, the type of businesses involved, frequency of purchase & interaction, brand sentiment & more.

So, let’s keep things simple, and stick with Yes for now, and count the ways:

The Tangible

  1. Increased sales of primary products - Good loyalty programs get consumers to buy more stuff. If you recognize and reward your best customers, migrate casual segments to VIPs, deliver targeted, relevant offers with a sense of purpose, sales will follow. Consumers will buy if they feel valued, part of something special, or because they are now more aware of the full range of your goods & services through a deeper dialogue. Either way, everybody wins.

  2. Increased sales of secondary products – don’t underestimate the power of upsell, cross-sell, or recommendation. We’ve all seen the “You May Also Like” messages – they are there for a reason – increasing average transaction size. This should be a core component of any program, offer or promotion to boost return on investment.

  3. Selling direct – where applicable, your program will create a list of qualified consumers. Use this list to sell to. You may have 30-60 days from sign-up to develop a relationship, so the strategic use of a welcome series of messages, and triggers, are key. Test messages & offers to make sure campaigns are optimized.

  4. Cost reduction & efficiencies - Centralizing offers, promotions, contact strategy under one program or platform not only provides a unified experience to the consumer, but also saves duplication of effort.

The Intangible

  1. What is the value of Data? Loyalty programs can go beyond demographics and psychographics and let you know who buys what, and when. This transactional data is invaluable to fuel contact strategies, as well as provide great insights on how to refine your loyalty program.

  2. With data & insights comes the ability to use transactional data to segment your audience and deliver personal, customized experiences. These experiences deepen engagement, which can boost share-of-wallet, reduce churn, retain or win-back consumers, and more. Never under-estimate the power of true engagement.

  3. The ability to innovate – loyalty platforms can allow you to create new offers and promotions, or even develop continuity offers over time. Innovations can be tested, then rolled-out more broadly to minimize risk.

  4. Provide a prospecting pool for sister businesses & partners. Who else can benefit from your database, or new consumer insights? Their revenues, plus your own, can supercharge your P&L.

Qualifying value is of utmost importance. Keep your stakeholders happy with these last few tips

  • Measure sales lift or campaign response against a control group or holdout segment.

  • Work to ensure the integrity of the control group, to normalize against arguments such as “of course they buy more, they are your top fans.”

  • Regularly discuss how you benchmark against core metrics, create sales-driven dashboards to monitor progress.

  • Leverage research for sentiments on your performance. Ask consumers not only how they feel, but also if your program is making them buy more.

  • Find out how your data and insights can help others within your organization.

I hope you found this interesting. Thanks for the feedback from past posts – I appreciate your comments and thoughts!

33 views0 comments


bottom of page