It’s been a minute. While loyalty news has not slowed down, we have been busy! We held a virtual event with Velvet Taco and Kneader’s Bakery and Cafe this week and we have been all over the press. I’ve added a Thanx RoundUp section so you can read up on interesting Thanx news. This week, I’ll cover the best metric for measuring loyalty performance and what convenience and habit-building can do for your business.
Thanx for reading!
How do you measure the ROI of your loyalty program?
One of our competitors (who shall remain nameless) regularly talks about loyalty spend or the measure of how much more loyalty members spend vs. non-loyalty members. And they tout this metric as proof of loyalty’s return on investment (ROI).
But the use of this metric raises an important question: do loyalty members spend more because the program is working? Or, do loyalty members spend more because the people who spend the most and visit most frequently are the same ones who sign-up for loyalty? This is what I like to call a “feel good” metric. It may make you feel good about your program, but it doesn’t actually measure causality (real impact).
I’d like to suggest a different loyalty ROI metric to measure: “3rd purchaser” lift. I probably need to come up with a catchier name but, essentially, it’s the number of customers who have made at least three purchases in the last X period and how that’s changing.
Here’s a data point that is probably a bit hard to believe – members who make at least three purchases are 10x more likely to come back than those who have only made one purchase. Do you know how many of your loyalty members come back for a 3rd visit? You might be surprised to learn that it’s likely not the majority of them.
By focusing on improving this metric (essentially driving 1st purchasers to make a 2nd purchase and 2nd purchasers to make a 3rd purchase), even a small incremental increase in conversion has a massive impact on revenue. On the Thanx platform, a 1% increase in conversion results in a $25 increase in average revenue per customer. Take a moment to let that sink in.
Starbuck’s mobile app stopped working and all hell broke loose
Building a new customer habit is hard work but once that habit is ingrained, it’s amazing how that single change drives a sustained lift in customer lifetime value. Never has this been more clear than in the reaction to Starbucks’ mobile app going down recently.
“Had to physically walk in to order a Starbucks and actually speak to someone like a neanderthal bc the Starbucks app isn’t working this morning.”
As an avid Starbucks customer myself, I can attest that the incident added at least seven minutes to my busy day. Despite that, the reality is I’m not going to stop going to Starbucks, in part because I love the product (it is highly addictive after all) but also because, most days, the experience is extremely convenient and it’s part of my daily routine.
For millions of Starbucks app users, ordering, paying ahead, and accruing or redeeming loyalty points for their favorite items is so ritualistic that a single disruption to that process causes borderline pandemonium. Without an already ingrained habit and emotionally invested customer base, this outage could have sent countless customers into the hands of competitors. It’s safe to say the brand affinity cultivated by Starbucks’ serious investment (both time and $$$) in their loyalty program and digital interfaces has paid off when millennials would rather talk to a human and pay in person than skip their daily Frappuccino (or in my case a Mango Dragonfruit Refresher).
Note: If you don’t have Starbucks’ Trenta-sized budget, Thanx makes offering habit-forming digital experiences and engaging loyalty programs attainable for any sized brand.
How food delivery was born
Our VP of Insights, Collin Wallace, recently joined the Food Tech Podcast to talk about how he came up with the idea for food delivery, what to look for when building out your restaurant technology stack, and how to focus your differentiation to one or two channels.
Non-Discount Reward of the Week
Wingstop and Nike collaboration wins on fun and engagement
Fashionistas and wing-aficionados, rejoice! Wingstop has created a super exclusive merchandise collaboration with Nike for their “Lemon Pepper 1’s” – a limited-edition Air Jordan sneaker with each design facet tailored to Wingstop’s signature flavor and branding. The latest Nike sneaker drops have always been notoriously coveted and this pair is no exception. For a chance to win, fans must first register for the restaurant’s loyalty program, “The Club,” and then comment or reply to posts on the brand’s social media channels with the hashtag #LemonPepper1s. Now that is a fashionable way to drive engagement!
Thanx News Round Up
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