Loyalty, Leveled Up!

Case Study: Revamping Small Business VIP Loyalty Program for Cost Efficiency and Improved Performance

I created a loyalty program at Madison & Co, that cut marketing costs by 50%, centralized CRM & e-commerce data, and increased attributed program sales by 12%.

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Goal

My objective was to revamp the VIP loyalty program to reduce costs, streamline operations, and improve sales and customer engagement. The new system needed to be more user-friendly for the brand's older customer base, who struggled with Facebook Messenger, and it needed to integrate with our e-commerce platform for better data collection. Ultimately, the goal was to drive higher sales and increase sign-ups.

Planning

I began by analyzing competitor strategies and researching various third-party loyalty program platforms. I found that alternative third-party solutions were even more expensive than our current setup, which would not be an option. I also saw that competitors and bigger retail companies were using email marketing for their loyalty programs. I identified a new email marketing platform that was not only more affordable but also offered enhanced reporting and segmentation capabilities for all of our email marketing - not just for the loyalty program. This platform could be seamlessly integrated with our e-commerce data, enabling automated emails and more effective customer relationship management (CRM). The platform would be able to replace both the current email marketing platform and the loyalty program, reducing costs and centralizing the company's marketing efforts.

To streamline the customer sign-up process, I planned to embed pop-ups on our website and create a dedicated sign-up webpage. I kept the monthly Facebook giveaway with a few adjustments that made entry and VIP signup simpler, while still using automated Facebook messenger more strategically. Additionally, I developed new promotions that aligned with the capabilities of the e-commerce platform, making it easier to track data and measure the program's success.

Challenge

At Madison & Co., the existing VIP loyalty program was managed through Facebook Messenger, with list management handled by a third-party service. While under third part management, the company still spent hours a month formulating SMS messages, creating content for coupons and giveaways, and copywriting. However, the program's cost - over $1,000 for both - was high, and its effectiveness was slightly declining. While the program worked well with in-store operations, the company had just launched an e-commerce channel, and the VIP program was not integrated with it. Additionally, the email marketing efforts were separate from the loyalty program, leading to additional email marketing costs and inefficiencies such as unsynchronized customer contact lists. This also resulted in underutilized email marketing, which was crucial for reaching our customer base. Recognizing that these issues, I explored alternatives that could achieve better results at a lower cost without adding significant work efforts.

Execution

I pitched the idea to my boss, who was initially hesitant to change the rewards system. However, after presenting a detailed cost analysis and outlining the potential benefits of the new program—particularly the need for better data collection and CRM centralization—the plan was approved.

I transitioned the VIP loyalty program from Facebook Messenger to the new email/SMS platform, which allowed for a more integrated approach. I created all the email and SMS templates, managed the program on a monthly basis, and implemented a simplified sign-up process.

The new sign-up process was straightforward: I designed a form that could be easily shared via a link, which became the primary method for in-store sign-ups. I also added a pop-up to the website, ensuring that every visitor was aware of the program. For giveaways, I simplified the entry process. Previously, customers had to comment on a Facebook post, receive a lengthy automated conversation via Messenger, and often found the process confusing. The new system required only a comment on the post, followed by a link to a simple sign-up form, drastically reducing the steps and improving the user experience.

I increased targeted email marketing campaigns and social media posts, and in-store initiatives to encourage more signups and coupon usage. This included training staff of the new program and best ways to explain the new program to customers. Although the transition took some time—about two months for customers to adapt—these efforts led to smoother interactions and increased engagement.

I ran into issues with warming a new email list which, led to a lower overall email marketing open rate. However, I quickly warmed the list in about a month by sending regular segmented emails. Additionally, during the list transfer, a small percentage of previous VIP members were unintentionally unsubscribed from SMS, a crucial part of the program. I noticed the issue when my boss received feedback from a few customers who hadn’t received their VIP coupons. I promptly resolved the situation by identifying everyone who was unsubscribed, resubscribing them.

Results

The new VIP loyalty program exceeded expectations in several key areas:

Cost Reduction: The new system reduced marketing costs by 50% by consolidating email marketing and the loyalty program onto a single platform.
Sales Impact: While the old program contributed to 25% of total sales each month on average, the new program increased this to 32%.
Sign-Up Rates: Monthly sign-ups more than doubled due to the simplified process and increased sign-up options.
Efficiency: The integration of the email marketing platform with the e-commerce system allowed for centralized CRM, better data tracking connected to the new e-commerce channel, and automated customer communications.
Time Efficiency: The new program saved time at the register. Instead of guiding customers through a long Messenger chat, they only needed to provide a coupon code to the cashier, streamlining the transaction.
Improved Reporting: Previously, data reports had to be requested and often included unnecessary data points. With the new system, I could create relevant reports tied to both e-commerce and brick-and-mortar sales and track the sources of sign-ups, enabling targeted improvements.

By taking the initiative to research, plan, and implement a more efficient loyalty program, I not only saved the company money but also increased its revenue from its loyalty program. This project demonstrated my ability to think critically, communicate effectively, and drive meaningful improvements, even when existing systems were functioning adequately. The success of the new VIP program underscores the importance of continuous improvement and adaptability in marketing strategies as the market evolves.