ROL (Return on Loyalty) Strategy depends on Program age.
By Tim Tyler, Managing Partner, Ellipsis & Co.
Launching a new or revitalized loyalty program is an exciting time for loyalty marketers. Its a chance to engage customers with a new value proposition, a shiny new budget to spend and if nothing else, the sense of relief that something will actually be executed after all the meetings, planning and modeling.
But launches bring us face to face with the statistical joker of the loyalty deck; customer self-selection.
We have written before about this phenomenon. It is a fact that a brands’ most engaged and most valuable customers join new programs early and in the largest numbers. Joining early is economically rational for these customers as they stand to benefit most and they are more likely to notice the program adjacent to launch. Enrollments peak early and then taper off as high value customers sign up. If your business has seasonal peaks, you will also see enrollments increase in line with these sales “spikes” as good customers visit to shop for Christmas or Mother’s Day.
Routinely, we see early enrollment members spending more, buying more frequently, redeeming more rewards, and staying active longer than later enrollees.
This article and white paper were written, researched and developed by Ellipsis & Co.