One of the most effective ways our Partners have increased their sales is by increasing their number of transactions and the average spent per transaction. We have helped hundreds of Partners do just that, and here’s how.
1. Increasing Transaction size
Our Partners will usually start their program design with a base offer, such as 1 AIR MILES® Reward Mile per $20 to $40 of spend. This acts as a general incentive to choose their business over a competitor, plus it encourages shoppers to buy more to get more rewards.
Recent Bond Loyalty research found that 64% of consumers modify the amount they spend to get points and here is an example of some of the results our Partners have reported.
A Honda Dealership offers 1 Mile per $20 spent in their Parts & Service department. Since implementing this AIR MILES offer:
- Transactions have increased by 39% from the previous year.
- Collectors are spending 14% more than before the Program was implemented.
In addition to base Miles, AIR MILES Partners will offer their customers BONUS Miles during limited promotional periods, when they purchase specific products or services, or when they spend a minimum amount.
Having the flexibility to create special incentives to achieve specific goals is a valuable tool, and some of our Partners have seen positive results by doing this.
Looking to increase the average spend per transaction, a mid-frequency retailer offered customers 1 Mile per $20 spent and triple Miles on selected products. They reported the following results:
- Collectors spent 87% more than non-Collectors.
- They also spent an additional 75% during promotional periods.
Better still, our Partners have reported time and time again that AIR MILES Collectors spend more than their non-AIR MILES customers.
For example, an AIR MILES Retail Partner saw year-over-year growth in average spending per transaction, number of transactions, and gross sales overall.
- Average Collector transaction was 59% higher than non-Collectors.
- Collectors made 118% more transactions than non-AIR MILES customers.
- Gross sales by Collectors were 79% higher than non-Collectors.
2. Increasing Transaction Frequency
Encouraging customers to keep coming back to you for additional products and services is another valuable tool to increase revenue.
In fact, a whopping 79% of consumers indicated that Loyalty programs made them more likely to continue doing business with a brand (Bond Loyalty).
When consumers feel that they get some additional value from making more frequent purchases, they will change their shopping behaviour. Purchases that might otherwise be put off, will be made sooner. A service that might normally be done twice per year, may increase to 3 times per year with the right incentive.
The benefits of increasing the number of transactions and average spending per transaction are multiplied further when considering the lifetime value of a customer.
While acquiring new customers is always important to keep a business growing, increasing customer retention by just 5% can increases profits by 25% to 95% (Bain & Company).
3. Customer Lifetime Value
Customer lifetime value (CLV) is what one customer is worth to the business in terms of revenue over the whole duration of their relationship.
Calculating your own CLV is quite simple when you have the data handy. Simply take your average order value and multiply this by your average customer’s purchase frequency. Then, multiply that number by your average customer lifespan. For example, an average automotive customer will buy an average of seven vehicles during their lifetime. If a car sells for $30,000, with additional upgrades, service, and maintenance, this customer could spend closer to $45,000 per vehicle. Therefore, a customer purchasing seven vehicles in their lifetime would result in a CLV of $315,000.
It is important to invest in advertising and marketing to grow your customer base and awareness. However, it is the successful conversion to a sale, the higher average spend per transaction, and the frequency of customer visits that will ultimately grow your revenue and positively impact your bottom line.