Caribou Coffee boosts ROI with revamped loyalty program

Brief:

Caribou Coffee boosted the return on investment (ROI) for its loyalty program after switching to a points-based program, per an announcement that software vendor Paytronix shared with Mobile Marketer.
The coffee chain saw its incremental sales ROI rise 150% this year from 2018, while its redemptions improved 215% after revamping Caribou Perks during a summer promotion.
Caribou also improved the efficiency of its loyalty program by reducing the amount of discounts offered to customers by 10%. The company relied on Paytronix's custom likelihood-to-visit scoring tool to improve incremental visits and sales.

Insight:

Caribou's revamped loyalty program benefited from a data-driven approach aimed at reaching customers on their mobile devices, and letting them track rewards points earned with repeat visits. Caribou previously operated a "surprise and delight" loyalty program that hindered segmentation and promotional execution, per Paytronix. By testing offers before a wider rollout, Caribou was able to accurately forecast the effects of promotional activities. The strategy helped to boost performance metrics while improving the efficiency of its loyalty program from a year earlier, according to Paytronix.

Tech-savvy consumers are more likely than the general population to belong to a broader range of loyalty programs, per a survey by payments consulting firm Mercator Advisory Group. More than half (54%) of "tech forward" consumers belong to a fast-food loyalty program, compared with 32% of average consumers, the survey found. Mobile devices can make loyalty programs more convenient for consumers, while letting them track program points and see their progress toward earning rewards. Chipotle Mexican Grill, Dave & Buster's, Dunkin', 7-Eleven and Starbucks are among the brands that have mobile-based rewards programs.

For a loyalty program to succeed, customers need to feel as if they are getting value for sharing their personal information with a business. More than one third (38%) of consumers say they generally avoid participating in retail loyalty programs, with 53% of that group expressing concern about identity theft and privacy, per a study published this month by CFI Group. Those issues likely will become more pronounced with next month's enactment of the California Consumer Privacy Act, which may put a damper on data collection for loyalty programs, the Association of National Advertisers warned this month.