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Loyalty trends and best practices

Successfully Driving Loyalty at U.S. Auto Parts (IR 100 Retailer)

by Zach Woith
February 03, 2014
Successfully Driving Loyalty at U.S. Auto Parts (IR 100 Retailer)

Leaders in Loyalty shares the insights and experiences of executives who run loyalty programs. In this edition,U.S. Auto Parts VP of Marketing Houman Akhavan discusses selling loyalty to colleagues and structuring rewards. 

How did you rally support at U.S. Auto Parts for your loyalty program?

Akhavan: Acquiring new customers is expensive. I positioned loyalty as a way to increase repeat purchase, and that made a lot of sense to our team. In an industry as competitive as ours, where only around 20% of customers make a repeat purchase within 12 months, loyalty incentives give people a reason to bring us their next purchase. Another benefit is channel diversification. With Google becoming such a dominant source of shoppers, investing in our customers as a new way to grow the business was appealing.

How has your loyalty program paid off for the business?

Akhavan: One way is that it lets us engage customers without sending coupons that simply train them to expect discounts. For example, we've run double-points offers for strategic, high-margin items like our house brand, which supports higher perceived value. We've also used the loyalty program to effectively drive social referrals.

What's your advice on how much to invest in loyalty rewards?

Akhavan: Think about it relative to acquisition costs. Those vary by category and product, of course, but let's say they're 20%-25% of your sales. Start out conservatively and offer rewards worth, say, 5% of purchase, and measure what kind of sales bump you get. For high-margin or strategic items, consider boosting the reward value to 10% of the purchase. I mean, wouldn’t it be worth that to nurture a repeat customer?

How has 500friends helped?

Akhavan: 500friends made it super easy to integrate with their LoyaltyPlus platform, and because it's software-as-a-service (SaaS), we get all the features that their large, omnichannel clients enjoy. That's important because, even for retail brands that are much larger than ours, it takes a lot of resources to build out reward rules, redemption systems, and detailed segmentation reporting — not to mention stuff like Sarbanes-Oxley (SOX) compliance. Plus, the 500friends strategy and client services teams helped us customize our program, and they put in place best practices around program structure, forecasting and analytics. The 500friends team really went above and beyond in positioning us for success.


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