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Paytronix Systems, Inc. , a leading provider of reward program solutions to restaurants and retailers, recently published a report titled, “Is it Time to Change Your Rewards Program?” The report identifies the following four signs a loyalty program is ready for an upgrade: Declining loyalty, gaming the program, franchisee complaints, and a conflict with corporate objectives.
Loyalty360 caught up with Lee Barnes, head of Data Insights at Paytronix Systems, to further explore this topic. Paytronix has a history of helping brands find ways to improve loyalty programs.
Why is it that many brands don’t know how to effectively evaluate a loyalty program?
Barnes: Most of the time, brands only have their own data so they have no benchmark to compare results with to see how they are doing. Also, it is difficult to analyze the effectiveness of a loyalty program because it’s not something that can easily be tested in a carefully controlled way. Finally, some brands don’t know which metrics to use to measure performance and don’t understand how loyalty programs work. So they may measure the wrong things.
What do brands do well with data collection and leveraging key customer insights and where do the challenges remain?
Barnes: Brands are generally good at analyzing store-level transaction, inventory, etc. data, but are not used to the idea of analyzing the same guests over a period of time. Most are able to put in place some simple trigger messaging, targeting guests that lapse, or guests that earn a reward, but struggle with more complex guest segmentations. There is a tendency for brands to want to focus on guest demographic data, and specific menu item purchasing behavior, but it is hard to action these segments to drive meaningful results. The best segmentations start with guest frequency, and build from there.
How often should brands evaluate their loyalty programs based on your two primary goals of loyalty?
Barnes: Paytronix defines the two primary goals of a loyalty program as driving members to visit more often and to spend more when they visit. In order to keep their loyalty programs on track, brands should be constantly vigilant for the following signs of weakness:
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