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Successful loyalty initiatives are something many brands are trying to achieve. However, it’s often hard to know if an initiative is successful, especially in bringing in incremental revenue. That’s why Bumped is focusing on measuring ROI, collecting data, and knowing the best KPIs to watch. In an interactive webinar on October 10, Ashley Goode, VP Brand Solutions, and Drew Howell, AVP Brand Solutions, will discuss these topics with Loyalty360 CEO Mark Johnson. Those interested can register for the webinar here. Recently, we spoke with the webinar speakers to understand these issues more fully.
How should brands measure the ROI of their loyalty initiatives?
Measure the impact before and after. This may seem obvious, but it is actually pretty tricky to do. At Bumped, we built our platform to have visibility across a customer’s spend history, so we know when a customer has changed their spending habits (anonymized and aggregated, of course). Moreover, we can see when customers have shifted market share to a particular brand as a result of the loyalty program. That way, we know that our program is having an impact, and we can specifically identify when customers have cross-shopped less frequently and shifted their loyalties to the brand. If you don’t know what you’re measuring against, how can you know you’re successful?
What data needs to be collected in order to run a successful ROI analysis?
Loyalty has reached a fairly mature state, making it easier for brands to identify changes in behavior within their four walls. They can see if a customer is spending more or visiting more frequently, and to see the impact of promotions they run. Most organizations have the basics down, now the opportunity is understanding the whole picture, not just what’s happening for a brand, but how the overall market is impacted by changes in customer loyalty and cross shopping.
There are competitive, segment, and market differences that are exceptionally valuable for brands to understand, and marrying their behavioral data with competitive market data creates a true 360-degree picture of the customer. Imagine understanding exactly where your increase in share of market is coming from or building a lifestyle segmentation that is based on a customer’s entire spend across all brands and categories, rather than just your brand. That allows marketing campaigns to be truly personalized and relevant.
What KPIs are most important to watch?
Make sure that your program is driving the behaviors you want, with customers for whom the loyalty program is most relevant. Not everyone is equally as enthusiastic about loyalty programs, and not all rewards are created equal. For example, we’ve seen in our data that about two-thirds of customers significantly change their behavior as a result of stock rewards—and those who are excited about this new reward are really excited.
Empowering the folks who are enthusiastic about stock, investing, or being part of the companies they love, and ensuring that we’re expanding loyalty, is how we define success. Most typically this starts with spend and frequency, but sometimes it’s more specific, like paying full price for products, or going the extra mile to shop at a particular brand. Knowing what behaviors matter most to your brand is key in answering the great KPI question.
How do you factor in or identify incremental spend?
There is a huge advantage to understanding what a customer spends outside of one particular brand. When a customer signs up for Bumped, they link all their cards to create a frictionless experience. All they have to do is shop, and we automatically identify and reward their transactions with their selected brands. We generate a lot of data from linked cards, and we can distinguish if the increase in spend is organic growth (which means more discretionary spend is going to that brand) or if we’ve actually taken market share from a competitor.
What are the best practices for keeping this going in the long term?
We have data that shows that it’s not necessarily the amount of reward but the frequency of rewards and program interactions that keep customers engaged. We have tested both 1 percent and 3 percent stock incentives for identical groups. Behavioral change is positive for both groups of customers, and both shift their spending behavior more toward their loyalty-selected brand. The interesting finding, though, is that the two groups perform almost identically, showing us that the amount of the reward is not the determining factor in customer behavior.
Removing the reward percentage variable, we’ve been able to identify that program engagement—the frequency of rewards and “bumps” throughout the customer’s day and week—are stronger determining variables for shifting consumer behavior. We work with brands to design multiple unique ways to reward customers for key behaviors—shopping just being one—to ensure their business remains front and center, building loyalty and driving the outcomes you want to see.
During your webinar you’re going to talk about the use of alternative currencies to help drive a higher ROI. What does this mean?
Loyalty programs, in their current form, have utilized points, coupons, and statuses for so long that in some cases engagement from customers is waning. The average person is a member of 14.8 loyalty programs. Loyalty programs and their currencies are meant to engender true connection and engagement with the brand. However, the ubiquity of points and the heavy prevalence of coupons and discounts means that customers are not as loyal as brands would hope, often merely hunting for the best bargain or a way to save a few dollars.
This is not true loyalty but rather a concern for some brands. Customers are only as loyal as the next best offer or as loyal as their points bank is full. The time is ripe for disruption and for brands to be first movers and introduce a new loyalty currency to their customers. During the webinar, we’ll talk about the impact that stock rewards are having and why both our platform and the use of stock as a loyalty currency can provide enormous benefits to brands.
Why an alternative currency?
Imagine a world where a customer is only rewarded for completing a behavior and that reward isn’t fleeting (a one-time coupon or points that expire), but rather an ownership stake in an organization, ownership in a brand as a form of loyalty. Your customer, once an owner, is tightly tied to the success of your organization, invested. This is one reason why ownership as a reward currency through fractional shares of stock can both drive deeper loyalty and a higher ROI for brands.
Ownership, unlike points or discount codes, has staying power. For example, our customers are holding onto their stock rewards. Over 95 percent of Bumped users hold onto their fractional shares of stock and choose not to sell or convert to cash. Through our surveys and observations of customer behavior, Bumped customers are going out of their way to shop with their loyalty selections, telling their friends, and shifting their behavior away from category competitors and consolidating spend with their loyalty selections. Ownership as an alternative currency drives behavioral shifts and real results in a way that we believe points, discounts, and coupons simply cannot do alone.
How does that work within an existing program?
This is one of the most exciting elements for us. At Bumped, we are building a platform that provides your loyalty, marketing, and customer teams another arrow in your quiver, a true complement to your existing loyalty programs. How to implement and leverage ownership as a means to drive loyalty with your customers is unique to each brand and its existing relationship with its customers. Some organizations are looking to this to enable their most loyal customers—their raving brand fans—to get even closer to the brand. Others are excited for customers to be able to convert existing points into stock. Other brands want to integrate Bumped and our platform into their existing apps or loyalty platform to add an extra dimension to their loyalty efforts. Our platform is highly powerful and flexible, and our team of experts is here to be your trusted loyalty advisor as we design a program together.
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