Can we get more control over how we manage the system?
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Pete
Rewards are very powerful, we have stopped offering any affinity dscounts (BMC, BCU, BC, National Trust and all the other bodies that don't promote our business but seem to give their members a sense of entitlement to a discount).
We offer a more generous level of reward points than the default setting and with some customers this really seems to work.
However, there are a couple of areas where if we could customise the settings a little more, I believe we could make this a more powerful tool.
1) Online, we get customers who buy a single heavily discounted item with free shipping, a day later they buy another, taking the reward points from their earlier purchase and applying those to another item (often the same as the one they bought the day before) and we incur two lots of postage. If we could set a custom period of delay for when the points hit their account, we may be able to get that customer to buy both in the first purchase and because they now have twice as many points, they come back to buy from us again in the future. I'm thinking that I would set our system at 14 days. I think that's just long enough to prevent them exploiting the loophole, but not long enough that they've forgotten about us. It's also better than Tesco who give you your points quarterly.
2) Active accounts, we currently have our accounts set with points deactivating after two years (again we looked at Tesco and the lifespan of their vouchers), but we get customers who want to "rack up" their points saving them for a "big purchase". If we could set it so that the points don't deactivate if the account has been active in the previous 12 months, or two years, then these customers could theoretically build their points over a prolonged period. In some respects this could be a win/win for us as retailers with the value of the points accrued effectively decreasing as prices go up with inflation, equally we wouldn't have to be checking expiries and reinstating points that have expired because the customer has let them rollover for too long. If they're a regular, then the last thing we want to do is alienate them by telling them they've lost their points.
Just a couple of thoughts I had, I'm interested in hearing other folks opinions?
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Chris
It would be great to hear Citrus Limes take on this Neil McQuillan - CEO Citrus-Lime? Reward Points and increasing Customer Loyalty is a worthwhile cause and one that CL really promotes and we've seen an uplift in AOV and Returning customers since increasing our points offered.
However, It shouldn't be concern but we're reluctant to run double or triple reward promotions as there remains the potential for a customer to buy a high value item get free postage, return it and spend their points on another item(s) that could result in the combined sales actually costing us money, leaving the customer reward balance in the negative and never hearing from them again.
There's the argument of it all irons out in the wash but that maybe only true because we're all just offering them as a token gesture rather than something more substantial.
Some of our brands are taking steps to control advertised discounting of current season stock, so points could play a more crucial part in the sales funnel moving forward. A customer with a larger points balance becoming a lot more "loyal".
But currently the issue still stands, which can be exploited accidentally or deliberately.
A solution (I dare not say easy as i've no idea how) we'd be happy with would be to add a 14 day delay to points being credited to an account.
An alternative the system to flag a returning item during a refund is that this would put the rewards into a negative balance, with a do you wish to offer a partial refund. But i imagine this would lead to kicking and screaming... that or losing money on some sales.
Neil McQuillan - CEO Citrus-Lime
Chris I think flagging if a refund might drive the account negative is technically possible, quite a lot of software to do.
The retailer could then remove the amount from any refund, but that is going to lead to frustrated customers.
Holding the points for 14 days isn't something the system architecture supports and I cannot see howto make it do that. A shame as this is a great idea.
I would not know howto assess the scale of the issue, clearly this happens from time to time, but I wonder if the extra time handling the customer service problems it creates is worth the while? e.g. Is this just an occasional frustration or a pattern which reoccurs enough to actually point the extra customer service work in with extra checks and flags for negative balances?
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Chris
Neil McQuillan - CEO Citrus-Lime Thanks for addressing this. I would say it is a regular occurance, more so for stores that do not offer exchanges, it likely happens every time someone orders the wrong size item and chooses to buy another rather than wait for an exchange to be processed. I know some accounts only offer re-ordering rather than exchanges, so why would a customer not use their gift of points.
You''re 100% correct that the former option would lead to many tantrums and this is something we wish to avoid, regardless as to what our T&C's may say. So i do not think partial refunds is the way, we'd have to change the wording reward points... you can't take a gift back without tears!
Either way this is limiting the efficacy of reward points, we're running triple points on a brand at the moment, we saw a conversion within the hour of announcing this. The customer left with £172.50 worth of points, which if/when the spend that with us it could cost us half. But if they decided they didn't like the item or their car ends up in the garage and would rather a free pair of shoes, we lose out.
Reward points on current season stock is way better than a never see you again coupons or % off, and as already mentioned I see more brands wanting retailers to stick to RRP for advertising current season products moving forward.
If you can come up with a 14 day delay solution I think a few of us will realise the true potential of reward points and the returning customers they bring.
Thanks for your time.
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Pete Baars
Neil McQuillan - CEO Citrus-Lime it's eating into margins. Hence point one of the original post.
We've just had another repeat order to take advantage of the points, that could have and probably would have all shipped in a single consignment with the first purchase. We rarely see the third or fourth purchase, so the loyalty isn't growing.
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Pete Baars
Chris, I agree with this point in particular "Some of our brands are taking steps to control advertised discounting of current season stock, so points could play a more crucial part in the sales funnel moving forward." They can be an incredibly powerful tool when well managed, we're using a fraction of their potential at present.
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Chris
Pete Baars Thanks Pete. We get a few customers get in touch that would rather stop the emails than to have £10 in points. So for points to work it needs to be more of an incentive or giving customers a genuine choice at the checkout for marketing emails. Some just get annoyed as they did not opt in and get marketing emails, like a digital slap in the face.
It could definitely feature more for us, but all of the above is keeping one foot on the brakes. Currently it's more of a token gesture rather than a driving incentive, we're running 5% on current season, 2.5% on last seasons, and 0% on old old.... so the average transaction is maybe only £5 to the customer. Loyalty probably costs a little more than that these days
I see your point about the expiration of the points could annoy the genuinely loyal customers, who may not bring this up and just stop coming back. I like your idea of activity retaining older points, I wrongly assumed this was the case already. Do you know if there's a last chance email that goes out when there's a one month to go or do the points balance emails just eventually stop? I'm not sure the process.
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Pete Baars
Chris I'm unaware of an automated email to advise customers of their balances impending demise.
In store, we're often asked if they have any points, before we've even had a chance to volunteer that they do. A quick look at there last visit date will tell me when they expired if their balance is zero. Generally, we reinstate them and explain that they only last two years so they'll need to shop more frequently but we've reinstated them as a gesture of goodwill a small cost to potentially remind them that loyalty pays.
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Chris
I'm 100% on board with the 14 day delay for points to be awarded. The sneaky customers can definitely abuse the system and the busier we get the harder it is to catch this abuse of the system.
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Pete Baars
Here's an example, customer bought a jacket on sale. Wrong size. They ordered the correct size, on the second day, but utilised the reward points from the jacket they were returning.
Had they not had access to the additional discount, they MAY have simply processed a return and saved us incurring two lots of transactional fees.
We're now in the situation of do we:
A) refund minus the points used? and risk alienating the new customer
B) refund in full and adjust the rewards balance?
C) suck it up and hope they shop with us again as there is an unused rewards balance of £7.95.
It was a sale item reduced by 25% as it was, a further 5% in reward points, two lot's of postage, two lots of transactional fees, there's next to nothing left in this transaction now anyway. Our rewards work best with instore customers, but despite offering a higher than average level, we don't seem to get return online customers using them. Maybe £7.95 isn't enough free money to tempt someone back these days?
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Peter Carol
I'm all for number 1, it should have a minimum. Currently you can make a second transaction on the same day and use points from their first transaction. We also get some customers using loyalty points from a first purchase when they buying a different size, and then return the wrong size, so it would make sense not to put points on until the refund period has expired.
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Pete
Peter Carol, I agree we have had the points applied to a second purchase and then had to refund the first (wrong size), never to see that customer again. They didn't save much as we don't offer free returns, but it all adds up to ever diminishing margin.
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Eoghan Sheehan
We have a special rule set for Sale and reduced price items so items we have on sale only get 1/3rd of the usual number of points automatically so this way we're not giving too much out on reduced items and in a way helps negate the effects of your first point Pete
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Pete
Eoghan Sheehan we also reduce the level of points offered on sale items by 50%, but it doesn't stop some people exploiting the loophole and ordering a second item, the day after the first to secure a further 5% saving on their second purchase.
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Scott
Agree with suggestion 1 for the noted reasons