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Targeting Your Rewards Program Based on Shopper Path-to-Purchase

November 15, 2021 | Amanda Chomicz

When analyzing the performance of rewards programs, it’s important to ask: are you targeting the right shoppers? A recent study conducted by Harvard Business Review identified a new strategy for marketing your rewards program that more deeply focuses on who you’re targeting.

Determine High-Value Shoppers Based on Where They Live

You want to enroll shoppers in your rewards program who will truly be loyal and contribute to an increase in profitability. So, which shoppers are you targeting, and what data are you basing your communications on? 

Typically, stores will focus on historical spending patterns and target shoppers who have spent the most in the past. This is still the most powerful strategy for your communications. Instead of only honing in on these big spenders, though, take a look at your shoppers’ literal path to purchase and also target those who are vulnerable to competitors. In this case, a physical address plays a major role in identifying these key prospects, and it’s not rocket science when you break it down.

If a shopper lives closer to the retailer with few competitors around, they’re likely to only marginally increase the impact of the rewards program. What will substantially increase the impact of the program, however, is a shopper’s close proximity to competitors. If the shopper passes several competitor stores on the way to your store, they can be pretty easily swayed to make a stop– and a purchase– at one of them. This makes them a “vulnerable” shopper, and an incredibly high-value candidate to target for a rewards program.  

Shoppers who live in an area where competitor stores are scattered far and wide are less vulnerable than those who live in urban areas where the competition is clustered around your store. This latter group of vulnerable shoppers is one you should include in your targeting. They have the highest conversation rates, translating to a higher ROI than shoppers who are targeted based only on spending.

According to Harvard Business Review, an email targeted to shoppers with high spending levels increased their chances of committing to a rewards program by 6.1%, but they kept their spending pretty steady after joining. Conversely, shoppers who enrolled after being targeted based on location vulnerability ended up increasing their spending at the store by a whopping 45%. 

Never Ignore Your Top Shoppers

This does not mean you should ignore top shoppers that don’t make the list based on where they live. Enrolling these members is absolutely critical to your store’s performance. In many cases, top shoppers make up 12-15% of all transactions and a whopping 50-60% of sales. Using a shopper’s home addresses as an indicator of their likelihood to enroll in your program is an important strategy to deploy, but it should just be one layer among many.

Many independent grocers issue mailers, giving them a leg up as they already have their hands on crucial data: where their shoppers live. Now, it’s about regaining control of the conversation with your shoppers by turning that data into actionable insights. Who is most likely to churn, based on where they live in relation to the store?

Regain Control of the Conversation With Your Shoppers

Once you have that figured out, start digitizing communications to these shoppers. This will not only decrease your marketing spend, but increase conversion as well.

Consider SMS for your communications. 95% of texts are opened within three minutes. More than half of consumers say they are very likely to opt-in to SMS promotions from local businesses. Even more compelling? These consumers are 21% more likely to opt-in to local businesses’ text promotions over major chain or big-box retailers. Nearly half of them are more likely to opt-in over online or e-commerce businesses. 

This is just one of many easy and strategic ways to communicate with and convert these shoppers in today’s digital world. By unlocking and acting on this information, you have the potential to tap into a gold mine of soon-to-be loyal shoppers.

Looking to enhance your rewards program? Contact AppCard today! 

 

 

 

AppCard is a Member of the Intel IoT Solutions Alliance. A global ecosystem of more than 800 industry leaders, the Alliance offers its Members unique access to intel Technology, expertise, and go-to-market support, accelerating deployment of best-in-class solutions.

About Amanda Chomicz