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Why You Need a Multitender Loyalty Program

March 27, 2018 | Nikki Dever

When we say “multitender,” we mean that your loyalty program should reward your shoppers for all of their purchases, regardless of whether they’re paying with cash, credit card, or mobile payment methods like Apple and Samsung Pay. Loyalty programs that force your customers to download an app or force them to link a credit card to the app for payment, are going to be a huge barrier to enrollment for your customers. In fact, according to this article published by FierceRetail, Target has plans to launch a new tender-neutral program called “Target Red.”

In fast-food and coffee shops, cash payments still make up over a third of all transactions. If you require app-based payments to participate in your loyalty program, you’re immediately alienating cash customers. Of the 66% of customers who will pay using a credit or debit card, it would be ambitious to expect 35% to download the app and link their card to it. That means that of your total customer base, it’s likely that less than 23% will be willing to download the app and link it to a credit card for payment.

Consider Starbucks, for example. Their hugely successful loyalty program requires customers to download and pay with the app. Starbucks, which is an internationally recognized brand with evangelical customers, states that 1 in 6 customers are members of the program (17%) and their mobile app only accounts for 22% of US sales.

What does 20% participation mean? Well, there’s good news and bad news here.

The good news
First of all, the 80/20 rule tells us that 80% of your business comes from 20% of your customers. That being said, it makes sense that the most loyal 20% of your customers are likely to download your app and participate in your rewards program. After all, they’re regularly visiting and likely spending a good amount of money with you, so they have a lot more motivation to get those rewards! Getting to know these top customers, and rewarding them for their loyal behavior, is incredibly important to your brand. For most businesses, you’d need to gain 10 new customers to replace 1 churned top customer. Surprising and delighting your top customers is a great way to keep them coming back.

The bad news
On the other hand, that means that 80% of transactions are from anonymous customers. Getting to know these customers can drive a lot of revenue for your business. We usually talk about customers in terms of profitability (how much do they spend) and stability (how regularly are they visiting, what products/product categories are they purchasing). Using those parameters, customers will fall into one of 4 segments:

  1. Top Customers: Regularly visit your store, spend more than other customers on average, purchase from several categories of products in your store
    Marketing goal: Surprise/Delight
  2. At risk/churned top customers: Customers who are at risk of or have already dropped frequency of their visits, or have stopped purchasing from a specific product category
    Marketing goal: Win back, we miss you
  3. New customers: First time customers
    Marketing goal: Identify top-shopper look alikes and nurture to a regular visit cadence
  4. Low spend customers: Customers who visit on a fairly regular basis and might purchase from several categories, but don’t spend as much as your top customers on average
    Marketing goal: brand switch to increase ticket value

At the end of the day, the goal should be to move customers into the “Top Customers” segment. In order to nurture these customers and encourage desired shopping behavior, you have to have a way to 1) identify these customers and 2) determine which bucket these customers fall into.

The key to identifying these customers is to make it as easy as possible to join your rewards program. If it only takes 3 seconds to enroll into your program, and customers only need to provide their mobile phone number, most customers won’t hesitate to join. In fact, using this simple sign up process, AppCard businesses have an average of 72% participation in their rewards programs.

Ready to start a loyalty program for your customers? Request a demo of AppCard to learn more!

About Nikki Dever

Nikki is the Director of Marketing at AppCard, a data-driven marketing platform for brick and mortar businesses.