Tag Archives: loyalty program analytics

The Power of Analytics to Drive Loyalty – Part 2: Predictive Analytics

November 13, 2012

Last week, we gave you an overview of David Rosen’s webinar focusing on The Power of Analytics to Drive Loyalty. This week, we would like to dive a little deeper into one of the most interesting and pressing topics he discussed: segmentation models that marketers have the opportunity to apply when managing and analyzing their loyalty campaigns. In the Webinar, Rosen breaks down segmentation into three approaches and highlights their benefits:

1.   Profitability Segmentation

  • Prioritizes and manages members in order to increase profits and retain customers
  • Focuses on a bottom-up value calculation model that takes into account actions and accruals
  • Drives program activity, targeting APIs

2.     Needs and Behavioral Segmentation

  • Understands members and customizes how we communicate personal, relevant offers
  • Offers multi-variable cluster analysis with manageable sense of segmentation factors and actionable segments that will form outward-facing personality of the program

3.     Predictive Analytics Segmentations

  • Provides day-to-day analytics approach for offers and continuous learning
  • Allows for multi-variable regression for using past performance and ongoing testing to best predict the outcome of ongoing offers

Rosen particularly focuses on the power of Predictive Analytics. This approach can give marketers a new kind of insight into their customers and allows them to analyze any campaign down to its ROI. By comparing a group of consumers, stores, or products subject to a campaign versus a control group that did not participate in the campaign, marketers are able to achieve the kind of in-depth analysis they desire, and make it a relatively seamless experience as well. So in addition to learning about the behavior of individual customers, marketers can get a true sense of the effectiveness and productivity of certain campaigns.

TIBCO’s predictive analytics starts with a propensity model, which looks at a number of variables that reflect a customer’s past purchases and future shopping baskets. Looking at these factors allows marketers to ask, and answer, the most pressing questions of any and all loyalty programs: how do we match the right offer, the right incentive, the right motivator, to the right consumers at the right time and place? How can we maximize the effectiveness of that incentive, and the overall productivity of the campaign?

These analytics allow you to tailor your campaigns down to the specific consumer. You now have the ability to understand why one consumer is more likely to buy one item, while another is more likely to buy something completely different, while a third may not be likely to buy anything at all, unless a 20% discount was offered.

What does this mean for you, the loyalty marketer? Unprecedented insight into your customers’ behavior, the effectiveness of your tactics, and a clear-cut path of next steps to grow your ROI.

In our next post, we will focus on ‘Offers Looking for People, and People Looking for Offers.’ 

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The Power of Analytics to Drive Loyalty – Part 1: Desires vs. Capabilities in Analytics

November 5, 2012

TIBCO’s David Rosen recently presented at the Loyalty 360 Engagement Expo on a topic that we at Loyalty Lab find to be undeniably essential in today’s loyalty marketing landscape: the importance of analytics, and the ways in which more comprehensive reporting can grow the success of your loyalty program.

Marketing Analytics

We surveyed over 100 marketers to assess what analytics tools they are currently using; the types of metrics, or dashboards they have; and the capabilities they’re investing in to take their loyalty programs to the next level.

Ultimately, we found that there is a huge gap between the desire to be able to do more complex modeling — from a day-to-day analytics approach to the ability to analyze the success of a specific campaign on a per-customer basis — and the internal capabilities of various marketing organizations.

The survey was broken into three segments. In the first segment, in which we measured the success of loyalty programs, the biggest gap was seen in measuring specific campaigns using rigorous test and control. This refers to the ability to analyze any campaign down to the individual ROI by comparing a group that was subject to the campaign versus a control group of consumers, stores or products that did not participate in the campaign.

The other major gap in measuring success was using tools to measure social buzz and sentiment. This area is obviously ripe for investment over the next few years. Currently, about 40% of marketers are using test and learn from a scientific standpoint to analyze loyalty programs, but 80% of marketers think that everyone should be doing so.

The second segment of the survey measured the gap between the importance and efficacy of dashboards and reporting. Here, the most noticeable gap was in segment migration, or the ability to move profitable customers to higher tiers, as well as retain customers already in high tiers.

The final part of the survey measured the interest in and need for specific data analysis and analytics capabilities. Rosen cites a number of advanced analytics that can be beneficial, but one approach stood out to all of the marketers surveyed as an enormous boon for a loyalty programs: the ability to match members to specific offers, and to optimize these individual offers. As Rosen put it, “Marketers dream to be able to achieve this kind of relevance for the customer.”

In our next post, we will review the three types of segmentation models Rosen suggests deploying to optimize your loyalty program. Hear more from him and see “The Power of Analytics to Drive Loyalty” webinar in its entirety here. 

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Pharmacy Loyalty Programs: A Cure Sure to Make Customers Come Back

August 30, 2012

We have seen the changing face of airline loyalty, discussed the benefits of service-minded loyalty and dove into the lack of industry-wide wireless loyalty, but we have not yet touched on an industry that continues to see rapid loyalty growth.

The pharmacy health and wellness market is a lucrative one, expected to reach $170 billion by the end of 2012. Pharmacies such as CVS, RiteAid and Pharmaca are by no means new to loyalty, but have recently been investing in programs with increased enthusiasm not seen in the past. Why have pharmacies become so loyalty-driven? Partly due to the numbers — customer spending and repeat shopping is on the rise.

Another driving factor is the ability to collect customer data through loyalty programs. When customers make purchases, pharmacies are able to track this spending. This enables them to offer personalized offers and rewards. Understanding where and how often customers are spending is crucial for growing loyalty, and for allowing pharmacies to remain competitive by better serving their customers’ needs. And, based on the positive numbers that pharmacies, Pharmaca included, are seeing, it looks like this personal touch has been the perfect remedy.

Pharmaca’s Feel Better Rewards program alone has seen a 50% increase in customers who are spending in both the pharmacy and store, with a 10% to 15% increase in spending per-member. This is not luck or the product of a growing industry; rather, it is the result of well-planned, thoughtful loyalty programs.

In today’s market, if you are not offering a loyalty program, good luck — you’re fighting a losing battle. Increased costs in healthcare and a weak economy have made pharmacy loyalty more effective than ever, bolstering membership and sales. When you have a loyalty program that delivers with increased customer spending and retention, it can be a boon for your bottom line.

It’s an easy choice from the customer perspective, too. Medical expenses can add up, but loyalty programs can help lesson this financial stress, making this approach a win-win for all parties. The customers feel valued and are saving money, while pharmacies and health and wellness stores are gaining better customer insight, increasing sales and retaining customers.

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But Does It Work? A Proof-Positive ROI For Pharmaca

August 29, 2012

We work with a number of clients who inspire us. Earlier this week, we spoke about Pharmaca’s new-and-improved approach to the pharmacy and health experience — a focus on natural products, a pleasant environment, and their Feel Better Rewards program, which allows customers to earn dollars back every time they fill a prescription or make purchases in Pharmaca stores.

But we build loyalty programs for a reason — to help grow businesses. And no matter how inspired we are by a company’s mission, we always have to ask ourselves, and them, is it working?

With the Feel Better Rewards program, the answer is a resounding yes. Since its launch about two years ago, the loyalty program includes 36% of Pharmaca’s customer base. 66% dollar-volume sales are on the program, and 56% of transactions go through it. What’s more, Feel Better Rewards has led customers to increase their spend at Pharmaca stores: more and more, pharmacy-only customers are crossing into retail, and retail customers have started filling their prescriptions through Pharmaca.

Specifically, Pharmaca has seen a 50% increase in cross-shopping customers, and the per-member spend has gone up across the board by 15%. Also notable — a 5.2% increase in prescription count, and a 9.3% increase in overall sales.

The numbers prove that this approach, both of Pharmaca and the Feel Better Rewards program, is working. But perhaps even more significantly, this loyalty program has given Pharmaca hugely informative insights into their customers’ shopping and spending behaviors. In addition to using this information to better grow their offerings and become even more profitable, Pharmaca is able to tailor their services to what their customers want, and need.

That desire, coupled with a proof-positive ROI, is what sets Pharmaca apart, and makes them a pleasure to do business with.

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