Case Study #1: Specialty Retailer Loyalty Redesign

Situation:

A specialty retailer had an existing paid loyalty program. A key issue was that the benefits of the paid program were tied to a certain day of the week. Over time, as penetration increased among the active customer base, shopping habits changed to shop only that day, leaving the stores largely empty on non-benefit days. The retailer was reluctant to make any changes because they had become dependent on the revenue stream.

Solution:

Incendio created a program with a free and a paid tier. The goal of the free program was to collect first-party data, which was previously uncollectable, as there was no capture mechanism. The paid tier was created to protect the revenue stream and identify the most engaged members. Perks include twice yearly goodie boxes packed with samples and exclusive merchandise, paid-member-only discounts, special shopping days, and free shipping, among other things.

Results:

With a premium option for customers, Incendio created a mechanism which brings in qualified and engaged customers, who are entering through the lens of a loyalty program. The program has more than 8M members across both tiers, generating a wealth of actionable first-party data and providing a mechanism for self-identification.

  • Paid tier members visit stores 2x more than non-members
  • Paid tier members purchase 2x more and spend significantly more than a regular non-paid customer.

The loyalty program has caused a shift in the company’s entire approach to pricing, which has stopped margin erosion by as much as 38% on some product lines.

Case Study #2: Mass Retailer Forensic Data Analysis

Situation:

A mass retailer handed Incendio two issues to solve.

  • Email capture: The retailer was suspicious that there was a leak somewhere in their data capture, as the number of transactions with sign-ups at POS was substantially different than the number of names that eventually ended up in their customer database.
  • CRM segmentation work: The retailer struggled to be relevant for consumers in its marketing and servicing communications with no single centralized approach to CRM. As a result, they experienced declining visits and sales from existing customers who weren’t getting relevant communications.

Solution:

  • Despite conflicting reports from the technology provider, Incendio was able to identify the root cause of the issue by conducting their own real-time audit. Each member of the geographically dispersed Incendio staff signed up for the retailer’s email list at POS, and with real people tagged and followed throughout the various hygiene processes, we were able to identify that, indeed, people were falling through the cracks and why. It boiled down to a few critical instances of poor data piping, which was fixed within weeks and resulted in an 8% increase in net new names monthly.
  • Incendio defined and aligned stakeholders on the definition of 1:1 personalization, then created a data-driven strategic plan to radically improve 1:1 personalization.

Results:

The goals were simple but hard to deliver in such a large organization. Ultimately, the email capture project found 1M+ customers who had not been appropriately taken through the data funnel, and the impact to top line sales was $30M. In the first 3 months after the 1:1 customer engagement plan was put into play, we saved the retailer $5M in gross profit, while improving top line by $20M. Both projects led to the retailer to build out their tech stack to ensure that data capture opportunities were optimized at all stages.

Case Study #3: Specialty Retailer Loyalty Redesign

Situation:

A specialty retailer had a stale, outdated, $5/year program that included extending everyday discounts. The everyday discount meant that the business had no promotional levers to pull, as more discounts only meant more margin erosion. What had worked well for decades was no longer working. The mix of customers was changing drastically, the business itself was undergoing a pivot, and competitors had created effective loyalty programs that were stealing share.

Solution:

The old program was phased out. Members of the old program were automatically enrolled in a new program with a $5 reward to offset the payment of the annual fee, plus a set number of “starter” points based on their past activity. The annual fee was eliminated, and new members receive a $5 certificate as a welcome gift. Members receive a $5 certificate on a $50 spend, along with double points during their birthday month.

Results:

  • The new program features a more personalized experience with more bonuses and exclusive perks,
    based on the first party data collected.
  • Reward certificates were changed to be used like cash, instead of forcing members to use their reward
    certificates on specific products, which drove up ATV by 15%.
  • Even with 10% reward return, the program is highly profitable because the member’s own data is being
    used to drive future purchases, upsell, and cross-sell.
  • Sales lift was up 2.3%, product margin lift was up 85bps, and reward redemption went up to 20% from
    10%.