For years retailers have responded to the so-called “80/20 rule” – that 80 percent of your sales come from 20 percent of your customers – by creating loyalty programs. They’re a valuable way for retailers to reward those top customers and reinforce their loyalty. Familiar examples of loyalty programs are the frequent flyer deals offered by airlines and the punch cards from fast-food places that give regular customers, say, their 10th sandwich free. But the challenge is to structure the program so the customer appreciates it and the retailer benefits. When SKAR advises retail clients on their programs, we draw on the latest nationwide trends, our own marketing expertise and our experience, especially in helping the Nebraska Lottery with its successful loyalty program, the MVP Club.

Let’s look at ways retailers are structuring loyalty programs to succeed.

Studies show preference for experiential

According to a 2016 Nielsen study, “Non-monetary benefits that provide lifestyle benefits or offer exclusive access are valued by consumers around the world.” That trend also was seen in an annual survey and study titled “The Loyalty Report 2017,” written by Bond Brand Loyalty in collaboration with Visa: “As consumer spending shifts toward experiences rather than physical goods, so too do loyalty programs seem to have more success with experiential rewards.”

What that means for retailers

These results suggest that retailers should offer their best customers not one-time discounts but unique experiences they’ll long remember and associate with your business. Some examples: If you’re a restaurateur you might treat valued patrons to a unique, one-time meal at the best table in the house. If you run an exercise gym you might invite loyal members to a special workout session led by, say, a representative of an equipment supplier. If you own a cigar store you might offer your big spenders the opportunity to see exactly how handmade cigars are wrapped. The idea is to offer your best customers VIP treatment or a unique experience tied to what your business offers.

Partners are key for the Nebraska Lottery

At SKAR, we work with the Nebraska Lottery’s MVP Club, a free, no-obligation loyalty program in which members get special treatment, such as first notice of every new game or promotion. The Lottery often partners with third parties to offer MVP Club members the chance to win cool experiences, like Nebraska football season skybox tickets or a trip for four to a music festival. Even when the prize is a vehicle, the advertising emphasizes the excitement of driving off in a new big red pickup truck.

“It pays to be a Nebraska Lottery MVP Club member,” said Katie Ferge, SKAR’s Nebraska Lottery account manager. “The Lottery has a variety of partners who help to create great promotion packages, and everyone at the Lottery loves seeing promotion winners have a blast!” Such offers make sense – the Lottery’s whole appeal is the thrilling experience of playing high-stakes games and winning big payoffs.

If you’re a retailer, SKAR can help you create or fine-tune experiential incentives that will reward the top 20 percent of your customers and fit your loyalty program budget and goals. For information contact SKAR.