Loylogic

The Journey to (Earlier) Redemption

Zurich, Switzerland
15 August, 2017

Judith Raymakers
VP Strategic Partnerships

Member engagement is an essential business priority for loyalty programs and member redemption serves as a conduit to drive engagement. Because redemption offers the opportunity to better connect with your members, encouraging earlier redemption in the member lifecycle can be extremely beneficial and lucrative to your loyalty program.

One of the critical points in a member lifecycle is getting a member to their first redemption. Research has shown that when members redeem, they enter a state of “post redemption bliss” whereby they spend (on average) 30% more with your brand for the next 3-6 months. Therefore, the earlier and more frequent you can encourage your members to redeem, the larger the opportunity holds for your program revenue.

Driving members to this “sweet spot” of post redemption bliss is one of the most direct ways of growing total Member Lifetime Value and we have been investigating ways to get your members there as early as possible. Whilst working with several global loyalty programs for over a decade, we have come across some interesting means of doing so by supporting our clients with more accrual offerings and by creating earlier redemption options. As a result of these initiatives, our data shows that the members of our clients redeem 6-months earlier than the industry average.

Encouraging Early Redemption With Raffles
Within our current Reward Experience Platform, members have the option to participate in raffles for highly sought after products, in addition to our unique “money can’t buy” experiences. The mechanics are easy and transparent: members buy the amount of raffle tickets they desire in the redemption shop, which they are driven to by a strategically designed communication strategy, and receive an online confirmation of their raffle purchase. At the end of the period, we run the raffle and the winners are personally contacted.
Since implementing this feature for several of our clients, we have seen the number of first-time actives* range from 70-85%  — an extremely successful industry result. Findings such as these inspire us to continue investigating the profiles and behavior in further detail, and we’ve discovered some additional key insights:

First Time’s a Charm.
Entering the raffle doesn’t require a high number of points, and because of this you might expect this group of 70-85% first-time actives to have low point balances, but in fact the opposite is true: these members have on average almost 2X more points in their accounts than members who have participated in raffles before, as well as up to 60% more points than members who have redeemed for rewards previously. Meaning that new members with low points balances, as well as existing members with a substantial amount of points, are both interested in raffles.

We know that the first steps to engage with members can be difficult; our raffle feature has led us to discover a way to lower the threshold for redemption and start interacting and engaging with a completely new target group earlier than ever before. When raffles drive members to the shop we see where members click, which products they like, and can use this data to optimize our view on your members and continue creating a more personalized experience (in case you missed it - the success we've had since implementing our personalized shopping experience was mentioned in an article by our COO, Piyush Khandelwal).

Our most important goal is to support programs to create and foster long-term relationships with members; we look forward to working with you in taking this first step toward earlier engagement thus more profitable relationships earlier in the customer lifecycle. Over the coming months, we’ll continue to offer you additional insight in this area as we evolve our products and features, so keep following us, after all, this is just the beginning!

Want to learn more? Contact sales@loylogic.com 

*Loylogic defines First Time Actives as members who redeem for the first time in an on-line redemption shop

Tags: Loyalty Marketing, , loyalty program, Loyalty Platform, Global Loyalty Solution, global rewards , rewards program , loyalty card, #loyaltyredemption, #memberengagement, #customerlifecycle, #firsttimeactives