By Terry O’Halloran | Director – New South Wales Division
Loyalty programs take many forms, from the smallest corner store café to the largest global hotel chain and airline. The common driver in all of these programs is how to generate repeat business and reward ‘loyalty’ for that repeat business.
Most manner of programs use a tiering type format to incentivise their most profitable customers, and while these top tiers may receive disproportionately more rewards per dollar spent, the contribution is largely linear (directly related to what they spend). This allows for marketing budgeting and forecasting to be based on previous history, and leads to decisions based on business intelligence rather than guesswork, which allows for programs to be modified based on what moves the needle.
So how do clubs differ from the mainstream? Putting aside regulatory issues that the club industry is beholden with, we have historically taken a more socialist approach by integrating a traditional rewards program (based on spend) with an approach that rewards everyone for simply being a member. Birthday offer rewards that far exceed the cost of membership, free beverages on the gaming floor and badge draws that offer prizes up to European cars are but some of our promotions-based activity linked to our rewards programs. This is a unique approach for our industry, and one which promotes membership equality and membership promotion, but at the end of the day can be seen as a ‘right’, not a reward if not managed correctly.
DWS believe gaming promotions should be run at 4% of gaming revenue, and that AEMP should be 8% of total revenue. With competition taking many forms now (pubs, casinos, shopping centres, home), clubs have to get the balance right and work harder to remove the unprofitable promotions. Some suggestions on key areas;
- You do not have to reward everyone – limit those birthday rewards to those members who visit regularly and spend in your premises.
- Courtesy bus – a tricky proposition to be sure, but preference must be given to higher tiers and contributing members.
- Rewards not discounts – instead of reducing the price at the counter, place the discount on a member card as points. It creates additional visits and has a better margin than 0%.
- Focus group the top 0.5% – while numbers vary wildly, in most cases the top half percent of your membership will contribute approximately 12-15% of your profitability. They control the future of your club, engage with them.
Like many things, loyalty programs require discipline and resources. If left unattended, they become unwieldly and cumbersome and will not reflect membership needs, but when done well, it can give you an almost unassailable lead on your competition.
To find out how DWS can assist your venue with its loyalty program, contact us at firstname.lastname@example.org or on (02) 9223 7564.