New research has shown the value of the loyalty customer, revealing that Australian businesses report on average a 27 per cent higher return on marketing investment by using reward-based promotions, compared with discount promotions.
The research, conducted by Aberdeen Research as part of a global research project commissioned by Blackhawk Network, also noted that 49 per cent of businesses reported a year-on-year increase in sales as a result of offering customers rewards rather than discounts. Thirty-one per cent of these businesses increased sales by between three and 10 per cent from these reward promotions.
Blackhawk Network Senior Marketing Director for APAC, Marc Cheah, said: “All businesses are keen to tap into the increased consumer spending that happens in the lead up to Christmas and this research suggests that reward-based promotions deliver better sales results.
“But more than that, the research showed that this form of promotion delivers longer term benefits by generating greater customer loyalty and the ability to use data from digital reward redemption able to be linked to membership, loyalty benefits and branded applications.”
For the liquor retail industry, loyalty programs have had added benefits during the pandemic, allowing retailers to keep their customers engaged and pivot to their changing needs. This concept is one of many that were tackled in the Retail Banner Power Panel at the Bloody Big Drinks Summit, which went online this week, and featured Chris Baddock, CEO at Australian Liquor Marketers (ALM); Chris O’Brien, General Manager at Liquor Barons; and John Carmody, Managing Director at Liquor Legends.
Carmody said the Liquor Legends loyalty and rewards database grew and escalated during the pandemic, which became invaluable to the business strategy over that period.
“Being able to talk to [these] customers directly and to understand the shifts in their shopping behaviour as it happened, allowed us to be very, very agile to react and better meet their needs and I think that’s why our results were impacted particularly positively,” he said.
“We saw growth of just under 30 per cent on our retail sales last year, which is quite extraordinary. We also had a large number of new outlets join the group to take advantage of our sophisticated digital marketing platform, e-commerce and the rewards and loyalty program. All of those factors really came to the forefront under the pressure that was imposed on us all throughout the pandemic.”
Another statistic revealed by the Aberdeen research was that rewards-based and loyalty promotions were used by 53 per cent of the those surveyed, mainly to foster customer engagement.
Customer connection and engagement is another topic explored in the Retail Banner Power Panel, with the panelists linking this not only to official loyalty programs, but also to shoppers who have realised the value of their local independent liquor store and have therefore become repeat customers.
O’Brien said: “One of the reasons we’ve been able to outperform the market is because of this local positioning.”
Liquor Barons has built awareness of its local positioning through its reimagined loyalty program, Barons Locals, and also through a marketing campaign called Legit Locals, with the campaign’s second iteration just recently launching.
“Legit Locals was a significant investment on our part, in terms of the growth and positioning of the Liquor Barons consumer brand…. [Its] been a large campaign in Western Australia, and a campaign that I think has emphasised who we are, and has been one that has been timely and well received by the liquor purchasing public,” O’Brien said.
Showcasing the benefits of local and independent retail also brought loyal customers in other parts of the country for ALM.
As Baddock described in the panel: “The pandemic has created an influx of people who have shopped local [and have realised] these stores have got a great range, they’ve got a friendly person behind the counter, and the pricing and competitiveness across the independents of the whole trade has been really really good.
“The localisation and the realisation that the local bottle shop is the destination to buy liquor has probably been the biggest change we’ve seen.”
This is just a fraction of the great insights from the Retail Banner Power Panel. To hear more, including predictions for the future and how these three banners are planning for it, head over to the Bloody Big Drinks Summit. This session is one of more than 60 you can explore with an all access pass, giving you on demand content for the next 12 months.