First Year Goals for a

Repeat Purchase-Focused
Loyalty Program
TIBCO Loyalty Lab

F i r s t Y e a r G o a l s fo r a R e p e at P u r c h a s e F oc u s e d L oya lty P r og r a m

TABLE OF CONTENTS

1 IntroductIon ......................................................................... 3

2 Goal 1: Enroll and Identify Most Customers ............. 3

3 Goal 2: Drive A Second Purchase ..................................... 3

4 Goal 3: Engage New Customers Within 30 Days .......... 4

5 Conclusion ............................................................................. 4

F i r s t Y e a r G o a l s fo r a R e p e at P u r c h a s e F oc u s e d L oya lty P r og r a m

Introduction
Do 75% or more of your customers make one purchase and then disappear? Do
you have trouble identifying and engaging these customers? If so, you probably
have either considered developing or have already developed a loyalty program.
The goals presented below, based on real-world examples, provide specifics on
what businesses whose customers exhibit one and done customer spending
patterns (e.g. specialty catalogs, luxury items, apparel, etc.) should expect from
their loyalty programs in the first year.

Goal 1: Enroll and Identify Most

Customers
You often need only achieve

Program enrollment is the most critical factor determining early success of a loyalty

a 10% lift to realize a

program. Without a critical mass of customers, lifts in retention rates, purchase

positive ROI.

frequency, and average order size do not generate sufficient revenue to pay
back overall program costs. In addition, customer identification (usually done
by capturing an email) is especially critical for retailers who rarely see the same
customer twice. Program enrollment rates of 10-40% with valid email capture rates
above 75% are good goals to strive for.
Furthermore, in an effort to enable future relevant messaging, successful programs
are increasingly requesting critical information from customers following program
registration. Common benchmarks for response rates to these surveys start at
about 10%.

Goal 2: Drive A Second Purchase

Loyalty programs for businesses with low-frequency customer spending patterns
should be intensely focused on driving consumers to make a second purchase.
A simple program design that weve seen successfully employed consists of (1) a
strong bounce back email offer triggered after initial purchase, e.g. get 25% off
your second purchase, and (2) a published reward threshold set at the dollar value
equivalent to the third purchase. For example, if your average order size is $50
then it would be spend $150 get $20 back. The combination makes for a vibrant
program that motivates new customers to make a second and third purchase
without unnecessarily eroding company margins.

F i r s t Y e a r G o a l s fo r a R e p e at P u r c h a s e F oc u s e d L oya lty P r og r a m

After launching a repeat purchase program, a high-end specialty home goods

retailer that we work with achieved 100% lift in repeat purchase rate and 156% lift
in purchase frequency of new loyalty members versus non-members over a 60-day
period. And the good news is that while these results are phenomenal, depending
on your margins and consumer spending patterns, you often need only achieve a
5-10% lift to realize a positive ROI.

Goal 3: Engage New Customers Within

30 Days
Engaging program participants early and often is another basic building block of
loyalty program design. The 30-day window following a customers initial purchase
is the most critical period in determining and shaping a customers ongoing
relationship with a brand. Good programs start triggered, relevant, event-based
communication from day one. In fact, effective ongoing CRM is the secret sauce
separating the very profitable loyalty programs from the mediocre ones. Email
and direct mail response rates over 0.5% are good; 3-5% response rates are
exceptional.
The key to building your customer engagement program is employing a test
and learn philosophy by testing four basic dimensions: (1) offer (2) creative/
subject line/messaging (3) timing/frequency, and (4) target. Based on lifts across
those dimensions versus a control group (that receives no communication), those
learnings tweak and evolve your strategy.

Conclusion
Ongoing CRM is the secret

Success in year one of a loyalty program starts with a strong and steady enrollment

sauce separating the

rate, enabling follow-up communication to drive increased purchase frequency. For

profitable loyalty programs

businesses where most customers only purchase once, it is even more critical to

from the mediocre ones.

capture and engage new customers with a loyalty program structured for them.

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