Do Loyalty programs increase customer spend?

Azpiral > Azpiral Research  > Do Loyalty programs increase customer spend?
ROI

Do Loyalty programs increase customer spend?

Customer loyalty is not a new phenomenon. Traditionally, Mary shopped in the local grocery shop each week because she was welcomed by her first name when she entered the store, she would often benefit with a free product, respectable discount or even a Christmas gift because of her loyalty to the store.

 

 

These same basic principles of loyalty apply today, personalisation, consistency and relevant rewards are offered in return for customer’s loyalty. However, today these loyalty practices can be delivered digitally and connect with a multitude of customers.

 

 

 

But the real question is loyalty worth the time and investment?

 

 
To investigate the ROI on loyalty, I focused on three brands in the convenience sector. They were similar in many ways, their target audiences were much the same, product and service offerings were alike, market size varied slightly but they all used the AzpiralPRO loyalty platform https://www.azpiral.com/features/ however, they had different customer loyalty strategies.

 

Some of the strategies that can be implemented using the AzpiralPRO are loyalty points, discounts and rewards strategies, gamification, third-party rewards and tier systems strategies etc. Whatever strategy you decide to deliver, make sure it distinguishes you from competitors and excites and engages your target audience.

 

With a comprehensive analytics tool part of AzpiralPRO, I was able to run various reports which gave me clear, usable data. I focused on stats like average loyalty spend versus average non-loyalty spend and percentage uplift as a result of loyalty spend, to see was there a significant difference between on the average spend. The data was based from Jan 2016 to Dec 2016.

 

Brand 1: On average each loyalty transaction was €7.25 higher than the average non-loyalty transaction.

 

 

Brand 2: On average loyalty transaction spend was €15.10 compared to non-Loyalty transactions that averaged at €9.36.

 

 

Brand 3: The average loyalty transaction spend was €15.50 compared to non–loyalty transaction spend of €8.88. This led to a percentage uplift of 54% as a result of loyalty transactions.

 

Overall, Loyalty customers spend on average 40% more on each transaction, in order to retain loyal customers, it is essential to deliver a comprehensive loyalty program as it helps monitor and nurture these valuable relationships and ensure customer retention.

 

In other research conducted by social annex in 2016, they found the following;

 

1. Loyalty programs increase overall revenue by 5-10%.

 

2. Loyalty members spend 5-20% than non-members on average.

 

3. Loyalty program members buy 5-20% more frequently than non-members.

 

The convenience sector in Ireland is in a good position with key trends predicting a continued strong demand for convenient shopping solutions. With that, there is strong competition within the sector for customer’s attention and loyalty. Loyalty programs act as a differentiator from your direct competitors and contribute to average spend on each transaction.

Keep in touch via our Newsletter

Download our Ebook

Loyalty ebook

You have Successfully Subscribed!