How Profitable are Loyalty Cardholders
in comparison with Your Average Customers?

How can we measure the success of loyalty programs without having a benchmark to measure against? One effective method is comparing the profitability of customers who pay with regular forms of payment (credit cards, debit cards, checks or cash) versus customers who also present a loyalty card during payment. Profitability indicators can include variables such as average and annual customer frequency as well as consumer spending.

By keeping confidential the name of a retail client with over 60 locations, Ernex is able to share some interesting findings about this client's Visa cardholder spending (representing non-loyalty customers), versus customers who carried its loyalty program card.

The spending of customers who paid with Visa cards were benchmarked against the spending from loyalty customers in the third and fourth quarters of the program's first year in operation. This analysis included 133,500 Visa cardholders and 76,000 loyalty club members.

These were the findings:

1. The effect on average customer spending:
   1. In the third quarter, loyalty club customers spent 10% more than Visa cardholders.
   2. In the fourth quarter, loyalty club customers spent 34% more than Visa cardholders.

2. The effect on average purchase frequency:
   1. In the third quarter, loyalty club customers made 40% more purchases than Visa cardholders.
   2. In the fourth quarter, loyalty club customers made 50% more purchases than Visa cardholders.

3. The effect on average annual spending by the top 10% of the customer base:
   • Loyalty club customers spent 82% more than Visa cardholders for the top 10% of the customer base.

4. The effect on average annual purchase frequency by the top 10% of the customer base:
   • Loyalty club customers made 125% more purchases than Visa cardholders for the top 10% of the customer base.

These numbers indicate that utilizing a points-currency has in fact worked for this retailer in driving higher average purchase frequency and average spending per customer, as well as an increase in higher spending and frequency for the top tier customers.

Ernex clients have the opportunity to increase the wallet share from their top customers, especially through Ernex's point-of-sale marketing campaigns. These real-time promotions communicate with customers instantly on their receipts while they're at the point-of-sale, where 70% of purchase decisions are made, allowing a merchant to personalize a message to specific micro-segments of customers, promote new product specials, encourage additional spending, and much more.

Stay tuned for more success stories from Ernex's real-time marketing solutions.