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Do You Really Need a Loyalty Program?

Presenters

Chris Miller, Director of Marketing & Strategic Planning - Golfsmith
Mu Hu, Director of CRM - Golfsmith

Session Overview

The objectives of loyalty marketing (i.e. retain best, most profitable customers, make good customers better, reconnect lapsed users, acquired customers with potential to become best customers, etc.) are similar to and also can be achieved by other marketing means such as database marketing and CRM.

Then Why Do You Need a Loyalty Program?

One of the reasons is that Loyalty marketing has its advantages when compared with other marketing forms. However, when determining whether you need a loyalty program or not, the ultimate criteria are not the advantages of the loyalty marketing, but rather it is that whether or not the loyalty program can generate incremental margin (note: it is not just incremental revenue) and favorable ROI, which oftentimes is the key to get the go-ahead to the loyalty program from top management.

This presentation will discuss how Golfsmith, the largest specialty golf retailer in USA used advanced analytics and followed these key steps below to determine whether a loyalty program is appropriate for the company.

1.      Create meaningful Segments.

2.      Establish metrics for each segment.

3.      Set up loyalty marketing goals for each segment.

4.      Project incremental revenue and margin for each segment

5.      Design and Test (Average Order Value, Frequency, Cross-Selling, Response Rate, etc.)

6.      Measure Lift vs. Control Groups