Flows

We’ve spent a lot of time in this newsletter talking about two topics: using loyalty as a merchandising lever and activating loyalty in email. And while we’ve explored the value of the former, we haven’t as much covered the latter.

Our team is currently working on a benchmark report that will plot metrics aligning to these topics and will highlight brands who are outperforming the market, so you can both score yourself and learn from high performers. In reviewing some of the data, though, something caught our eye: Two apparel brands—identical in their price points, loyalty program setups, and per-redemption value—with vastly different loyalty program participation rates.

One—let’s call it Brand A—has a points redemption rate of 3%, which is on the lower end of program engagement. The other—let’s call it Brand B—has a points redemption rate of 30%, which, as you might imagine, is way on the opposite end of the spectrum.

So, what’s to explain the 10X difference? The difference from a marketing standpoint is merchandising.

Brand B has dedicated email flows promoting the loyalty program, reminding people of their rewards balance, and welcoming them to new tiers.

Brand A? They don’t promote their loyalty program in email, and don’t have dedicated email flows.

Now, you might wonder whether that actually matters. And the answer is actually pretty simple to get to.

If you were to price out the incremental value, you could look at the amount of returning customers who are making purchases in which they redeem loyalty points and multiply that number of customers by the AOV increase seen when loyalty points are redeemed (which, for cash back rewards, is 4%).

At $122 AOV for returning customers (which Brands A and B are at), then, you’re looking at $5 in incremental AOV from loyalty purchases. If you get, say, an extra 500 customers redeeming their points on a monthly basis, your email promotions are worth an incremental $2,500.

And that’s on top of all the existing value your loyalty program is driving.

The extra “work,” so to speak of promoting a loyalty program doesn’t even need to be that significant. While Brand B has a series of dedicated flows, none of them are long or complex. Most, in fact, are one-email flows, like this one:

In this flow, Brand B is reminding people of their rewards balance on a monthly basis. It’s one email, and—as you can see from the trigger and exclusions—very simple to set up.

If you were to get particular, you could probably find a list of things to optimize about this. But the point of showing this is that the 10X gains Brand B has generated over Brand A don’t require 10X the work. They require a minimum level of investment to just make sure the program is top of mind.

Our benchmark report will dive into these topics a lot more, but this felt too good to wait to share. In the event you agree, and you’re interested in learning more about the plays some of our brands are running to drive more engagement and more incremental revenue out of their loyalty programs, let me know. We’ll get you set up.