In a Forbes article, Zach Goldstein looks at the importance of exclusivity in loyalty programs because the top 25% of restaurant customers generate 66% of sales. As a result of changes in Starbucks‘ loyalty program, Deutsche Bank lowered its rating on Starbucks to “hold” from “buy,” and dropped its stock price target to $64 from $70 per share. A Rand Corporation report said 26% of US consumers received a notice of data breach, yet only 11% said they would not continue to do business with the company affected. Will a new loyalty program convince Chipotle customers to come back after its E. coli crisis? That’s a tall order but possible if managed carefully and for the long-term.
Pepperidge Farm launched a new digital rewards program for its online customers promising yoga and Pilates courses, pedicures, manicures, and other lifestyle rewards. The merger of Starwood and Marriott will mean changes in both loyalty programs but research shows customers are not overly concerned. PayPal Canada‘s free returns program may turn out to be a big loyalty generator as research shows 84% of shoppers said free return shipping contributes to “the perfect returns experience.” IHG Hotels, which includes Holiday Inn, Holiday Inn Express, Crowne, Kimpton, and InterContinental, hopes its new loyalty program will encourage customers to book directly with its hotels by offering special rates.
Why Your Loyalty Program Should Be Exclusive
The crown jewel loyalty program of the restaurant industry belongs to Starbucks, which boasts tens of millions of participants. But recent changes to its program created a massive backlash from daily coffee fanatics as the switch significantly raised the spending threshold required for some people to earn their free cup o’ joe. Weeks later, Chick-fil-A announced an invitation-only program so exclusive that customers can’t even sign up on their own; they have to be invited to the club (and its VIP in-restaurant events). Even McDonald’s is rumored to be getting into the loyalty game in 2017.
Meanwhile, Chipotle historically has shunned any loyalty or rewards programs, choosing instead to focus its consumer marketing on elevating its sustainably produced ingredients (including several beautifully designed video games in recent years).
While the question of when to invest in loyalty and how to structure the program is not simple, the underlying rationale is consistent across nearly every restaurant. According to a recent report by Thanx, the top 25 percent of restaurant consumers drive a whopping 66 percent of sales. Marketing to these spenders is not only logical based on their revenue contribution, it’s more cost-effective as well. According to Bain and Company research, it’s seven times more expensive to acquire a new customer than to encourage an incremental visit from an existing customer and a 5% increase in customer retention can drive a 100% increase in long-term profit. Via forbes.com
Ouch: Deutsche Bank downgrades Starbucks over loyalty changes
Our weekly update on the Starbucks saga continues as Business Insider reports that Deutsche Bank is hitting the coffee retailer where it hurts – downgrading its stock in part because of changes to the retailer’s loyalty programme. Will Starbucks have the last laugh? Stay tuned.
Here’s the money quote from author Akin Oyedele’s article:
“[Deutsche Bank research analyst Brett] Levy noted that Starbucks’ US same-store sales — at locations open for at least one year — rose a solid 9% in the fourth quarter. But with same-store sales driving much of the stock’s rise, he said, there’s a risk that both metrics decline with as the loyalty programme changes. He said it’s possible that loyal Starbucks drinkers spend more there to earn more points, but it could take a while for this extra spending to show up in the sales numbers.”
As a result of this analysis, Deutsche Bank lowered its rating on Starbucks to “hold” from “buy,” and dropped its stock price target to $64 from $70 per share. Via thewisemarketer.com
Survey: US consumers largely unconcerned about data breaches
Every six months or so, we learn of another security breach in which a hackers compromise the IT security of a major consumer brand and steal consumer personal data. there’s good news, however, for companies who do suffer a data breach: According to a new research report from RAND Corp, American consumers are forgiving of cyber-attacks that compromise their personal information. It seems that Americans like shopping more with their favorite brands than they dislike having their credit card and personal data compromised.
The report, entitled “Consumer Attitudes Toward Data Breach Notifications and Loss of Personal Information” (ah, the poetry!) reveals that, while over 25% of American adults received notification in the past year of a personal data breach, only 11% of those surveyed say they won’t do business with the breached company again. 188.8.131.52 This article is copyright 2016 TheWiseMarketer.com. Via thewisemarketer.com
To counter mass customer exodus, Chipotle turns to loyalty
What’s a little e coli among friends? That’s the question US fast-casual dining chain Chipotle will soon be asking its best customers. After publicly eschewing the idea of launching a customer loyalty programme last year, Chipotle executives said on an earnings call last week that they aim to stem the flood of frequent diners abandoning the chain with – wait for it – a loyalty programme. Though the programme is likely to be temporary, Chipotle hopes it will reignite customer passion for bowls and burritos. The problem: Chipotle executives still seem to display a fundamental misunderstanding of the purpose of loyalty programmes.
The announcement was one of the only positives in an earnings call that can only be described as apocalyptic: same store sales fell nearly 30% in the first quarter of 2016 and the company posted a net loss of $26.4 million. The company has tried everything to pull out of the free fall: giving away millions of free burritos, BOGO offers, national advertising campaigns; nothing has worked. Money quote from reporter Virginia Chamlee over at eater.com:
“The aim is to target the most loyal Chipotle consumer — i.e. the one who visits 25 or more times per year. The company saw the largest declines among its top loyal (25+ visits a year) and its ‘light’ consumers (those that visit two to five times per year). Noting the decline in visits amongst its once most-loyal customers, [Chief Marketing and Development Officer Mark] Crumpacker said the company would love to get that ‘habit’ back up. “We do believe it’s beneficial to us to get people back in the habit of visiting Chipotle [as often as they used to].” Via thewisemarketer.com
Pepperidge Farm launches digital loyalty program
Consumer food products manufacturer Pepperidge Farm has launched its first digital rewards programme for consumers on PepperidgeFarmReward.com. The programme, which lasts for eight weeks, rewards members with a local beauty treatment or health and wellness session for purchasing Pepperidge Farm products. Who knew that carbs could be so rewarding?
The programme allows members to earn rewards when they purchase three loaves of Pepperidge Farm Farmhouse or Whole Grain sandwich bread between April 19 and June 19, 2016, and upload their receipts on the microsite. They will then receive a reward code via email that can be redeemed on the microsite. The programme is in all markets where Pepperidge Farm Farmhouse and Whole Grain breads are distributed.
Loyalty rewards include manicures/pedicures, hair styling, makeup applications, fitness classes, personal training sessions, yoga or Pilates classes, roller skating passes, nutritional consultations, and more. Money quote from Hector Briones-Sanchez, Business Director of Fresh and Frozen Bakery, Pepperidge Farm: “We’re connecting with our consumers in a new, intimate way. Life can be hectic, and this loyalty programme is our opportunity to give consumers the relaxing and personalised experience they deserve with local businesses. For Pepperidge Farm, the care we put into our products extends to caring for our consumers.” Via thewisemarketer.com
Starwood Preferred Guest rewards members aren’t as panicked about Marriott International Inc. merger as they may seem, study finds
Starwood Preferred Guest elite members who were recently surveyed were nearly split in their opinion of whether they’d want their rewards program to remain SPG or shift to Marriott Rewards, according to Phoenix Marketing International’s 2016 Hotel SCORES (syndicated consumer online research evaluation service) study.
Starwood Hotels and Resorts operates a number of hotel brands, including Westin. The merger between Starwood and Marriott has left rewards program members wondering how their benefits will be affected.
In fact, the members that PMI surveyed leaned slightly toward the Marriott (NASDAQ: MAR) program. Of the SPG elites surveyed, 45 percent said they were more open to the combined company’s loyalty program taking the form of Marriott Rewards, while 41 percent said they were more open to keeping it the current Starwood program. (The remainder selected “neither, I’d prefer something new.”)
It’s an indication that although the merger will represent a shakeup of both companies’ rewards programs, “they’re kind of giving Marriott the benefit of the doubt at this point,” said John Antonello, managing director for Phoenix’s travel and leisure division. “Overall, I get the feeling that they trust Marriott to get it right.” Via bizjournals.com
PayPal Canada to offer free returns to ease reluctant online shoppers
It’s a perk that many online retailers have resisted offering for fear it will bruise their bottom line.
But free return shipping is starting to be touted by a growing number of cybermerchants in a bid to ease reluctant consumers into online shopping. And as more big players, including Amazon.ca, offer free returns, rivals feel the pressure to follow suit.
“You’re going to see a lot more retailers that are doing it in Canada and certainly in the United States,” predicted Harley Finkelstein, chief operating officer of Shopify, the Ottawa-based tech firm that provides operating platforms for online retailers. Via theglobeandmail.com
IHG Offers Specialized Rates for Loyalty Program Members
The tug-of-war between hotels and online travel advisers (OTAs) continues to rage on, and International Hotel Group has revealed its latest move to encourage customers to book directly through its hotels. Titled, “Your Rate by IHG Rewards Club,” the program offers members an exclusive rate when booking with the hotel.
The IHG family of hotels features some of the most respected names in hospitality, including Holiday Inn, Holiday Inn Express, Crowne, Kimpton, and InterContinental. IHG Rewards Club has already reached a membership enrollment of more than 92 million, and hopes to build on that with the newest value offering. IHG consists of more than 5,000 hotels in almost 100 countries.
“IHG is a consumer driven company and we are committed to ensuring that we provide a superior and personalized experience for our millions of guests around the world,” said Keith Barr, Chief Commercial Officer of IHG. “Offering exclusive rates to our most loyal guests who know and trust IHG’s family of brands is a key part of this. The launch of Your Rate by IHG Rewards Club is another important milestone for our loyalty program, which last year launched a new top-tier membership rate, Spire Elite, alongside a series of other benefits. Via loyalty360.org
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