Can push messaging boost loyalty programs?
Push messaging is highly popular among retailers, and it can be effective in increasing spending and redemption in loyalty programmes. It is especially helpful in driving engagement and reward redemption in temporary loyalty programmes. However, to get the most out of push messaging, retailers need to target high-spending customers, avoid sending too many messages, and schedule push messages during the middle weeks of the programme.
Loyalty programmes are highly popular in many sectors, especially retail. Customers
accumulate points when they shop and later redeem them. However, such customer engagement typically loses steam over time as customers no longer feel the initial excitement. Traditional communication (email or regular mail) has proven ineffective in maintaining engagement in loyalty programmes. So, retailers are beginning to use push messages via apps to encourage spending and redemption within loyalty programmes. A study looks into this new practice to answer the question: Do push messages increase engagement and reward collection in store-loyalty programmes?
The study found that push messages boost both spending and redemption. Customers who
get push messages redeem twice as many points, and spend 14% more on average than customers who don’t get push messages. This gives retailers a significant margin gain of 11% on average. Push messages work by providing customers with a simple reminder of the program and/or the rewards and deadline for redemption. They encourage customers by highlighting how much effort they have already put in to gain rewards, which will be wasted if they do not complete the process. This uses the well-known loss aversion principle.
The study focused on temporary loyalty programmes, that is, programmes that run for a short, specific period within which customers collect points/stamps and redeem them. Some examples of such programmes are McDonald’s “I’m lovin’ it” Card and Natural Ice Cream’s Berry Festival.
Interestingly, the timing of the push messages can have a significant impact on the volume of spending, points collection, and points redemption, especially for temporary loyalty
programmes. Spending and point collection increase when messages are sent during the programme weeks. When messages are sent later, points redemption goes up. Because high redemption comes with a high cost, but low redemption can lead to customer disengagement from the programme, retailers need to find the right balance between their customer engagement and redemption goals.
Moreover, the study found that those buyers who generally spend more also tend to spend
higher during the programme. Their regular heavy spending allows them to expand the spending ceiling to get more stamps/points to redeem for more rewards. For example, a buyer whose average ticket size is ₹ 1000 will be more likely to spend ₹ 1500 to get 20 reward points than a buyer whose average ticket size is ₹ 500. They will also feel encouraged to reach the reward threshold because of the ease with which they can earn points, whereas low spenders might get frustrated because it is harder for them to reach the threshold.
The study has important implications for retailers who are planning or using temporary loyalty programmes. Firstly, they should definitely opt for push messaging as its impact on both spending and redemption is high. Push messages are most effective when retailers send between one and three messages per week. Too many messages can lead to diminishing returns or even irritate customers.
Secondly, retailers should also target the high-spending customers who account for a significant proportion of the total sales during the programme. Finally, the best time to send the push messages is the middle of the programme since early messages lead to higher spending by low redemption and later messages do the reverse. Maintaining a proper balance in number and scheduling of messages will allow retailers to get the maximum benefits out of push messaging.