One way to differentiate your loyalty program from a competitor’s is through promotions. Promotions encourage activity, and without recency of purchase and frequency of visits, the standard recency-frequency-monetary value premise of loyalty program measurement falls flat.
Marketers today often see things as an either/or scenario, struggling to determine whether promotional or loyalty-based initiatives have better yields. Often, if not always, calculating a return on investment dominates the argument, so the focus becomes what can deliver the biggest bang for the marketing buck.
Promotional programs attempt to drive sales of products or services to customers and involve short-term, high-impact motivators. The measures of their effectiveness are difficult to isolate, leaving true measures of performance somewhat arbitrary at times.
Although promotional programs may provide an incremental lift, that typically occurs only during the offer period. Shortly thereafter customers often return to their normal buying behaviors. Because of this, the ROI really doesn’t matter to the marketer interested in a sustainable change in customer behavior or significant growth in profitability. But that’s not the only challenge. Trade-offs, discounting and other factors that contribute to a promotion’s performance have to be identified and considered to credit the initiative appropriately.
Fast-food diners intending to buy the $2.59 quarter-pound burger may trade off their desired meal for a promotional offer of two cheeseburgers for $2. They have compromised their desired meal
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