Refocusing a Loyalty Program to Better Align with Business Objectives

After several years of operating its loyalty program, the leadership team of an automotive parts distributor questioned the program's ability to drive sales and retain automotive shops, given its high costs. They even considered discontinuing it.

The marketing team, convinced of the program's importance for the company’s success, acknowledged the need for a redesign to better align it with business objectives. They sought a fact-based analysis of the program's performance and recommendations for adjustments to lower direct costs while encouraging behavioral changes in shop purchasing aligned with key product lines.

We conducted a comprehensive analysis of the loyalty program's performance and recommended targeted adjustments to maximize its effectiveness while reducing costs.
The analysis focused on three key areas:

• The program’s impact on shop acquisition, retention, and purchasing behaviors.
• The effect of adding new product categories to the qualification criteria for rewards.
• The program’s cost and profitability.

Using our expertise in descriptive and exploratory modeling, we provided a detailed assessment of the current situation. Then, through prescriptive modeling (simulations and scenarios), we identified the necessary program adjustments to maximize outcomes for the company.

• Slight decrease in direct program costs (-1%) despite a 7% increase in sales linked to the program.
• Improved acquisition, retention rates, and annual value of program participants.
• Behavioral changes in targeted product categories: 57% of customers met the qualification criteria within the first year.