If you are an established retailer planning to launch a new or improved loyalty program, you can bank on the fact that your most engaged and most valuable customers will join first and in the largest numbers.
Enrolments peak early and then taper off as high value customers sign up. If your business has seasonal peaks, you will also see enrolments increase in line with these sales ‘spikes’ as good customers visit to shop for Christmas or Mother’s Day.
Routinely we see early enrolment members; spending more, buying more frequently, redeeming more rewards, staying active longer, than later enrolees.
Marketing investment in the early life of your program is much more likely to be to an engaged group of heavy buyers. These members are more likely to respond to your calls to action and buy even more / take up your offers. Response and conversion rates should be good, return on your loyalty spending great!
Even by the end of the first year of operation, most programs are seeing a decrease in the number of new enrolees and a decrease in the average value of these latecomers.
Smaller numbers of customers enrol each month, but they keep coming and over time they dilute the high value customers who joined early. Later, investments that were very likely to reach a highly engaged customer are more likely to touch a customer that is only marginally interested and far less likely to respond to your offers.
You can invest in customers who enrol early with minimal risk that the money will be wasted on un-responsive customers. The opposite is true as your program matures and enrollment rates fall. Expect program ROL to fall after the initial enrolment ‘rush’, then level off unless you start targeting investment early.
We recommend all program operators prepare for member engagement scoring during the set-up and planning for program launch. Observing and noting how early cohorts of customers behave and interact differently with your program than later (lower value) cohorts will help identify what scoring elements are best at identifying members worthy of your investments early in their relationship with you.
This article was first published by Customer Network Strategy. Permission to use has been granted by the publisher.