Andrew Robbins, President and co-founder of Paytronix Systems, will be one of the featured speakers during a session at the 7th Annual Loyalty Expo, presented by Loyalty360 – The Loyalty Marketer’s Association. The event will be held March 17-19, 2014, at the Hyatt Regency Grand Cypress in Orlando, Florida.
Robbins participated in a compelling Q&A with Loyalty360. Paytronix Systems is a SaaS company that specializes in delivering solutions for building guest loyalty.
Q: What are some of the key elements in setting up a pilot rewards program?
With a pilot, time is your enemy. You need to keep the pilot as short in duration as possible because if you’re not rolling out, your competitors are. Every quarter you wait, your base of customers grows smaller and smaller.
It’s also important to keep a short set of measureable goals that you want to hit. Pick things you want to learn and design experiments for them so that, right from the start, you’re testing them.
The longer the pilot program, the less chance it has of being successful. Many things can happen that are out of your control. Plus, the rest of the organization counts on the pilot stores to make the case for rolling out brand wide. If the pilot period is too long, the project begins to compete for corporate attention and focus. If that focus is lost during the pilot, the rest of the organization gets the message that it’s not that important.
Q: How does a company set expectations?
When rolling out a rewards program, it’s important to break it down into pieces. It’s a four-step process. There’s the enrollment piece, which is getting people to sign up; an engagement piece where you focus on how much members are using the program; a segmentation piece where you can segment members based on their visit and spend behavior, and a promotion piece where you can test motivating specific behaviors beyond general visit and spend. You should have goals that you want to achieve for each.
Also, use benchmarks to gauge your results. One way to improve pilot performance is to take a look at your best and worst performing stores. There is always a lesson to be learned from top performers. We can transfer that knowledge into actions among lower performing stores. Overall, successful pilots involve setting goals, focusing on them, measuring results, and learn from them.
Q: What are brands doing well in the loyalty space?
Brands are doing well with different things depending on their segments. In the QSR (quick serve restaurant) chains, the coffee/yogurt segment is doing well combining stored value and reward programs and making it convenient for guests. They’re tying in mobile payments as a guest engagement tool. Starbucks and Pinkberry are two that have nailed that.
Panera with its Surprise and Delight program is knocking it out of the park. It has a 50% usage rate, which is just phenomenal. In our experience, brands that can get at least a 20% usage rate see material top-line impact.
In casual dining, restaurants are tying reward programs to online ordering, sports events, and charities. Tying a program to a sports event, and making it part of the fabric of the brand helped Duffy’s Sports Bar compel a 70% usage rate among its guests.
Q: Where are the missed opportunities?
The glaring one is being able to house and analyze the large amount of data that allows 1-to-1 marketing to happen. Some restaurant marketers are moving to 1-to-1 marketing, but many are still sending the same message to everyone. With brands across nearly every other business-to-consumer industry adopting a 1-to-1 marketing strategy, those who don’t change will likely lose guests to those who do. Guests expect relevant communications.
It’s also interesting that not all brands have implemented a mobile strategy. Some marketers are concerned about getting an app right before they launch it everywhere. I’ve seen some companies invest upward of $500,000 in a fully customized app, and they are still modifying it to get it right.
Getting up and running with mobile rewards apps does not have to be that expensive. For instance, the Paytronix hosted mobile app provides a check-in feature that’s connected to the POS, which eliminates the need for costly bar-code scanners in every restaurant. We make mobile-based reward programs convenient for the guests while keeping them cost-effective for restaurants.
Q: What is your definition of customer loyalty and has it changed in recent years?
To be successful, a loyalty program has to create both an emotional and behavioral bond with the customer. Emotionally, loyal customers think of a restaurant as “my place.” They refer people, and they’re big advocates. Behaviorally, it’s important to collect behavioral data and have a reward mechanism to stimulate their behavior.
Over the past couple of years, loyalty programs have evolved from paper punch cards to electronic simulation to guest engagement. Today, some of the best programs are combining mobile, electronic messaging and location services, then rolling all the data from those capabilities back into a data warehouse where they can analyze and learn from their customer behavior. These kinds of programs do not have to be expensive. Paytronix hosts guest data in the Cloud for its restaurant customers, and provides the analytics functionality too. So restaurants can quickly and cost-effectively incorporate these innovations into their programs.
Q: What is your advice for any company starting or revamping a loyalty program?
Keep it simple to start. Just get going and start learning about your guests. It’s really hard to mess up a reward program in a way that makes it not pay for itself. Learn about your best segments and most valuable groups, and then leverage what you learn to develop a strategy to retain them while increasing their long term value (LTV).
Q: Should brands focus on retaining their best customers or on acquiring new ones?
Instead of wasting a ton of money trying to acquire new customers who aren’t profitable, companies should focus on retaining their best customers. After all, reward programs all began with the airlines rewarding their best guests, the frequent travelers. Then similar programs were adopted by hotels and a wide variety of retailers. A good reward program delivers to the organization a view of the lifetime value of its customers.
The word “retaining” in this instance is a little misleading. It’s a pretty passive word. With a reward program, I’ve seen so many brands motivate more spend and visit behavior even among their most valuable segments–increasing the LTV of their best guests. Retention is far from passive. Strategies for keeping a brand’s best guests typically result in a double kicker of reduced costs and improved sales over the long term.