Reach out to members at risk of churning with offer of bonus points

The churn rate tracks the number of members that leave your loyalty program over a year. Churn and retention are like different sides of the same coin: the churn side represents members lost while the retention side represents members retained. Maintaining a healthy base of loyal members is your key to growth. After all, research indicates that it costs five times more to acquire new customers than keeping your existing ones. Reducing your churn rate by a small percentage can significantly boost your brand's profitability.

Strategy

Reach out to members at risk of churning with an award of bonus points when they complete their next purchase.

Here's the scenario: You want to target members likely to churn and lure them back into the fold. In this strategy, you identify members who 1) have a 50% or greater chance of churning and 2) have not completed a purchase in the past 3 months. You gift them 100 bonus points if they complete a purchase in the next 30 days. Let’s look at how this is done in the SessionM platform.

SessionM solution

The SessionM loyalty platform enables you to forge stronger, more loyal and more profitable relationships with your members. The platform provides an integrated set of capabilities - including data management, loyalty management, offer management, campaign orchestration, and analytics & optimization - that enable you to build compelling member loyalty programs.

Key modules

The strategy described in this article uses the following modules:

Audience
Segmentation

  • Member base segmented and grouped by demographic and behavioral data in real time
  • Built with standard demographic attributes (age gender, state) and custom behavioral attributes (customer lifetime value, risk of churn, and recency, frequency, monetary spend (RFM) metrics
  • Member profiles stored in SessionM Customer module

Offer
Management

  • Single use, multi-channel closed loop offers
  • Define offer type, value and restrictions
  • Select eligible menu items
  • Real-time validation at POS
  • Comprehensive offer reporting and tracking

Campaign
Orchestration

  • Manage scheduled and behaviorally triggered campaigns across email, push, SMS, digital channels
  • Real-time interaction management
  • Rules-based promotions
  • Centralized and actionable campaign analytics

See SessionM Features for a full discussion of SessionM platform features and functions.

Implementation workflow

The following procedure describes the workflow for implementing the loyalty program described in this article. The procedure captures the workflow at a high-level, providing you with a sense of the scope involved in implementing this program in the SessionM platform.

Take note

This strategy features the churn rate, which is the percentage of “at-risk” members that you can save from leaving the program and potentially your brand. The churn rate is an example of a calculated metric. The SessionM platform determines calculated values by observing member’s behavior over time. Calculated metrics include recency, frequency, and monetary spend as well as forward-looking projections such as customer lifetime value and propensity for churn (used here). See What is a SessionM audience? for more information on calculated metrics in the SessionM loyalty program.

For step-by-step procedures for implementing the functionality in a SessionM module, see the Procedures section in the SessionM Help Center.

Step 1. Economy Rules module: Tiered loyalty program in place

For the following implementation workflow, assume that the Koalla Retail tiered loyalty program is already in place. (See How do tiers work in a loyalty program? for a description of the Koalla Retail loyalty program.) The point economy has been set up, the tier structure is in place, and the available incentives have been defined for each tier.

Step 2. Audience module: Identify members at risk of churning

  • Create an audience and name it "Likely to Churn".

  • Select the Risk to Churn attribute and set it to 50% or greater. This targets members who have a 50% or higher chance of churning in the next 12 months.

  • Select the Last Purchase attribute and set the period to more than 90 days. This targets members who have not completed a purchase in the last 90 days.

  • Save and activate the audience. It is now available for use in a promotion.

Step 3. Campaigns module: Define promotional campaign that defines spending rule.

  • Create a promotional campaign that defines the purchase rule for the points award. Set the runtime to cover the next 30 days.

  • Target the campaign by audience. Select the "Likely to Churn" audience that you defined in the Audience module in Step 1.

  • Define the purchase rule that states that completing any purchase in the next 30 days earns the award. Add the outcome, which is an award of 100 points.

  • Configure a triggered message sent when a member earns the reward. As in the step above, define the behavior that triggers the message (completing a purchase during the campaign's runtime).

  • Launch the campaign. Targeted members who complete a purchase during the next 30 days receive an email notifying them that they've been awarded 100 points.

Step 4. Campaigns module: Define messaging campaign that informs targeted members of the promotion

  • Create a messaging campaign. Set the runtime to today. You want the message sent at a time matching the start of the promotional campaign.

  • Target the campaign by audience. Select the "Likely to Churn" audience that you defined in the Audience module in Step 1.

  • Define the messaging for the campaign. Set up an external message with a scheduled delivery method. Set the delivery date/time to fall with the campaign's runtime. Select a message provider and template for the email message.

  • Launch the campaign. On your scheduled delivery date, qualifying members receive an email notifying them of the spending challenge.

Analysis

It’s crucial to evaluate the success of your campaigns and assess what messaging and offers are performing well, and what needs improving. Built on a series of intuitive dashboards, the SessionM Insights reporting and analysis tool enables you to understand program performance by measuring key performance indicators such as customer spend and customer frequency.

This strategy targets at risk members with a low purchase recency. Insights provides several dashboards that you can use to analyze purchase recency.

For detailed information on SessionM Insight features and functionality, see About Insights on the SessionM Help Center.

Key takeaways

Leverage calculated metrics

Calculated metrics measure your loyalty program's ability to attract, engage and retain members. Use the insights they provide to fine tune your loyalty program over time, keeping it fresh and relevant. This strategy uses the churn rate to identify members at risk of leaving and provides a bonus to encourage them to re-engage.

Be proactive. Reach out to members at risk of churning

Few consumers suddenly decide to turn their backs on a brand. Rather, they drift away gradually. Reduce churn by becoming more proactive in your loyalty efforts. Identify and engage members at risk of churning. Let them know you value their business.