Learn a basic framework for measuring returns from loyalty marketing, see real data from small businesses that are using rewards programs, and understand how to optimize returns from loyalty.

1. Loyalty 202
Measuring and Optimizing Loyalty Returns

2. Loyalty Marketing
Experts agree that loyalty is the most
effective and highest return marketing
Customer loyalty is the single most important driver
of growth and profitability.
HARVARD BUSINESS REVIEW
Retailers with loyalty programs, on average,
are 88% more profitable than competitors
who do not.
DELOITTE RESEARCH SURVEY
It is 6 to 7 times more to acquire a new
customer than to retain an existing one.
BAIN & COMPANY

3. Loyalty Automation Platform
Loyalty marketing is more relevant
today than it has ever been
• Your biggest asset is your existing customer base and foot
traffic
• Data shows that loyalty programs can increase customer
visits by 20 percent or more
• With social media, each of your customers can now share
your brand with hundreds of others
• Technology can now automate most of your loyalty
marketing needs
• It’s marketing that’s fun and makes sense!

4. Loyalty Automation Platform
You have all the tools you need to
become a loyalty marketing expert!
FiveStars Card
POS Relationship
Manager
Merchant Toolkit

7. Increasing Visit Frequency
Once a customer becomes truly engaged with your loyalty
program, you will begin to see them come back more frequently

8. Increasing Visit Frequency
Frequency Compression for Coffee & Tea
Days
Between
Visits"
Visit Number"

9. Increasing Visit Frequency
Case Study: Tpumps
After FiveStars: Customer Visits
Before FiveStars: Customer Visits
Additional Visits from FiveStars
Gross Profit
Additional Profit per Member
Number of VIPs
Additional Profit with FiveStars
2.5 visits/month
- 1.85 visits/month
0.65 visit/month
x $4 per visit
$2.60
x 4000
$10,400

10. Increasing Spend Per Visit
Revenue per Customer Visit (Illustrative)
$12.00
$10.00
Before FiveStars
After FiveStars
Only possible if you have rewards based on spend

11. Increasing Spend Per Visit
Ideas to encourage customers to spend
more per visit
Loyalty Program Mechanics: Instead of doing one point per visit,
do one point for every $5 in spend to encourage more spend per
visit.
Cross-Sell: Starbucks gets customers to spend more by
promoting their baked goods and other food items.
Bundling: Create compelling bundles or packages (buy entrée,
dessert, and drink for $12). Or create compelling package for
groups (buy a large pizza and get an additional medium pizza
for half price).

12. Driving Sales from Promotions
Use Text Messaging to Drive Loyalty
• Brings your best customers in the door immediately
• Customers prefer getting timely messages from places
they already go to, especially places they frequent
• Text message promotions can reach
customers throughout the day, they don t need
to be in front of a TV or computer
150X
PER
DAY!
• Good text message campaigns can
complement your other marketing efforts
91% of people keep their phones within 3 feet
of themselves 24/7
# of times
people
look at
their cell
phones

13. Driving Sales from Promotions
Scan Card

14. Driving Sales from Promotions
Soulman’s BBQ Campaign Profit
Cost of Text Campaign: 400 x $0.015 = $6.00
15 Customers Responded: 15/400 = 3.75%
Total Revenue Generated
Cost of Goods Sold
Cost of Text Campaign
Profit from Text Campaign "
$107.40
- $32.22
$6.00
$69.18"
Revenue/Marketing Cost Multiple of 18x! "

16. Calculating Costs of Rewards
Cost of Rewards in February
Free Beverage Costs: 585 x $0.80
Free Beverage & 1 Bag of Tea Costs: 31 x $1.30
Free Beverage & Eco Cup: 12 x $1.80
Total Reward Costs
$468.00
+ $40.30
+ $21.60
$529.90

17. Calculating Cost of Rewards
Loyalty Marketing
Loyalty Program ROI ROI
Loyalty Program ROI Calculation Review
Text
Text

18. Lifetime Value of a Customer
figure"
Loyalty Increases Lifetime Value of Customers
Profit from referrals
Lifetime
Value
Index
Profit from
promotions
Profit from
increased spend per visit
Profit from
increased visits
Base profit
Source: Harvard Business School Publishing Corporation - 2007

19. Lifetime Value of a Customer
Lifetime Value: the key to running a successful, long-term business
The development and retention of profitable customer relationships is
vital to the health of every business...Companies need to be
concerned with the future revenue & profit streams associated with the
ongoing satisfaction & retention of their core, profitable customer bases.
The companies that fail to recognize this truth overspend in marketing
to acquire & retain less profitable, or even unprofitable customers and
do not spend enough on keeping profitable ones.
- Harvard Business Review!

20. Goals for the Week
Keep enrolling members to your
loyalty program
Run a text message promotion and
measure your return
Contact us so we can help you think
about improving your loyalty returns

21. Q&A
university@fivestars.com