What a great loyalty program can teach you about your customers

By Margaret Link

Loyalty programs typically operate with the goal of driving increased frequency from your customers. But as technology progresses, best-in-class loyalty programs can actually become your best source of business intelligence.

Customer loyalty isn’t just about punch cards — more sophisticated programs are taking their place. Unprecedented amounts of data are now available to brick-and-mortar businesses. Restaurants, car washes, entertainment centers, and bakeries are all joining the data revolution, using digital loyalty programs to gather vital customer intel. What type of “intel” exactly, you ask? Read on to see how modern loyalty programs are driving a deeper understanding of customers and their behavior for previously underserved industries.

A great loyalty program can tell you EXACTLY who your customers are… even when they leave your business

While there are numerous glaring shortcomings with punch cards, one of the most egregious failures of the traditional “buy 10 get 1 free” stamp/punch card is the sheer data blindness.

Say you’re a coffee shop, and your best customer comes in every day, redeeming a free coffee from a stamp card every 11th day and then re-starting on a fresh stamp card. Sounds like a good deal for this VIP, right? Maybe… but not so much for this merchant, who has NO discernable intel on their top customer.

Imagine this top customer starts lapsing in their patronage for this coffee shop — they’ve started trying a new shop down the street. While your baristas working the front counter might be able to reactively recognize this customer by face when they’re ordering at the counter, there’s no good way to proactively reach out to this customer once they’re outside the four walls of this business. That means that, even if your incredible waitstaff manages to notice this customer’s absence, they’ll have no means by which to remedy it.

As loyalty programs become more digital, the data they collect serves as a customer information bank, allowing brands to know exactly who their top customers are and reach out to them when they lapse. That’s why modern loyalty programs can double as a CRM (customer relationship managment software) for brick-and-mortar businesses.

At Mixt Greens, a Thanx merchant, they make sure to use their VIP data to reach out to their best customers with holiday gifts, personalized messaging, and other VIP-specific communcation.

In a survey, respondents agreed that top spenders should earn better rewards than regular guests. With a loyalty program that can automate the process of identifying and rewarding those VIPs, it’s easy to keep your best customers close (and your profits intact).

The Value of Your Top Customers

A great loyalty program will be able to show you exactly where your revenue is coming from. Your top customers generate the VAST majority of your revenue (we’ve seen cases where the top 10% of customers account for nearly 50% of annual revenue!), so it’s far more valuable to keep them engaged and loyal than it is to invest in trying to find new customers.

For most businesses, the top 25% of customers make up anywhere from 62% to 75% of revenue (see chart below for breakdown of revenue contribution by quartile for restaurants and retail).


Interested in learning more about your top customers (and building a program that keeps them loyal)? Talk to us today. 

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