“Is there a way to make my loyalty program profitable? Is it worth my investment?” If I made a Q&A for the most frequently asked questions about loyalty programs — something that I’ve planned to do for quite a while — those questions would definitely be at the top. And for a good reason. Having a 4-6x loyalty program ROI not only puts the minds of executives at ease but also proves that the concept is actually working.
To illustrate my point, I’d like to introduce a case study about one of our most successful clients, LuisaViaRoma. The company’s loyalty program had already brought a 293% return on investment after the first three months, and made €16m for the company after year two. So let’s not waste any time and find out how their incredible story unfolded.
Putting Luxury into Loyalty
It’s a myth that luxury fashion is incompatible with loyalty programs. Affluent buyers want to be rewarded just like anyone else… they just expect more luxurious treatment.
Low purchase frequency and high churn are extremely prevalent issues that could be easily addressed with rewards, but luxury companies are often reluctant to opt for a loyalty program in fears of cheapening the brand’s image. However, the best way to retain VIP customers is with rewards and incentives that channel the same level of quality and style that the brand represents.
The Luxury Fashion Giant That Wanted to Give Back to Its Customers
Italian luxury fashion retailer LuisaViaRoma was founded back in 1930. They first brought the business online in 1999, and today 95% of the company’s total revenue is attributed to e-commerce sales.
The online store is managed by an international crew of over 200 people and receives 4 million visits each month. To address increasing competition in the luxury retail market, LuisaViaRoma partnered with Antavo to launch a loyalty program, LVR PRIVILEGE, in early 2017.
The Reason for Launching LVR Privilege
LVR decided to introduce a loyalty program to further connect with their top customers while also addressing growing customer acquisition costs.
Initially, LVR set out to create a simple earn & burn style program that was ready for a swift global launch, yet featured exciting reward offers and had enough room for future expansion.
However, the company always had loftier goals in mind: to change customer behavior and detect the customer segments with the highest growth potential for the company.
To do so, the brand had to address the following challenges:
- Keep up with the competition without hurting their margin by lowering prices
- Prevent customer churn by improving relevancy and introducing personalized email campaigns
- Create remarkable moments and drive excitement in an effort to offer great customer experiences
Solution #1: An out-of-the-box MVP that immediately impacted purchase frequency
In early 2017 LuisaViaRoma launched an online-only loyalty program with Antavo. Two years later, the program was introduced in the offline stores as well, allowing customers to earn points while shopping in Florence. The following functionalities were available from the start:
- 4 tier levels based on points earned
- the higher the tier, the more valuable the benefits
- customers can collect points with their purchases (1 point = €1)
- interactions outside of the buying cycle are also rewarded (e.g. social shares, profile completions)
- points can be redeemed for discounts & exclusive experiences (e.g. luxury hotel getaways)
Solution #2: Testing & releasing “Surprise & Delight” incentives to increase purchase frequency
With the help of Antavo’s A/B testing feature, Campaign Management function, and segment identification capabilities, LVR ran two types of “Surprise & Delight” campaigns at the same time. The goal of these campaigns was to increase purchase frequency.
- Timed loyalty campaigns defined by a criteria: LuisaViaRoma targeted customer groups with Antavo’s Rules Editor tool. After setting up a time period, picking the right incentive and defining the rules, LVR ran bonus points campaigns, in which members were awarded points for completing a survey.
- Targeted loyalty campaigns for specific customer segments: Antavo’s Loyalty Management Platform tracks member purchase behavior, then analyzes their potential. LVR used this to run campaigns for customer segments that were identified as having growth potential.
Solution #3: Behavioral science in action – driving word-of-mouth
LVR launched a limited access club in which access to high-end sneakers is the reward – a highly sought-after reward in the luxury world. Customers who pay the 2,000-point membership fee receive early access to new drops for a whole year.
The results? Members spent 2 million points in just one month in order to gain access to the club. In most cases, the new sneakers ran out of stock before they even made it to the main shop floor.
An award-winning revelation: loyalty emails are powerful new touchpoints!
LVR has the tools to define how customers are rewarded, according to their tier level. When a member’s birthday arrives, Antavo automatically triggers a surprise email sent through Emarsys, including a number of bonus points corresponding to each tier.
The results were beyond all expectations. The emails had:
- 71% open rate
- 21% click-through rate
- 300% attributed revenue
The birthday emails in particular became LVR’s highest converting emails, receiving 25% more opens and 40% more clicks than non-loyalty emails!
Results Beyond All Expectations
Today LVR Privilege is available globally, enjoyed by over 1 million members. During the first two years running the loyalty program, LuisaViaRoma’s Privilege Program achieved the following results after the 2nd year:
- Revenue continued to increase, grossing more than €16 million
- Reward costs remained stable, capping at €1.1 million
- Retention rates drastically grew, quadrupling the first year’s results
- The number of new website visits also tripled, reaching 3.8 million
The program’s performance has gone on to win several industry awards as well.
- Together, LuisaViaRoma and Antavo won the eCommerce Awards for Excellence 2018 in the category “Best Email Marketing Campaign” in the UK.
- The next year, the two companies won the highly esteemed Drapers Digital Awards 2019, in the “Best Digital Customer Engagement & Retention Strategy” category.
- In July 2019, won the prestigious Glossy Award Europe in the category “Best Loyalty Program”.
This is a great result for Antavo, but it doesn’t surprise us: we’ve been working with them for years now and we were able to build a successful loyalty program, that today counts members from all over the world.
Finding the Way to a High Loyalty Program ROI
The biggest takeaway of LuisaViaRoma’s success should be that if a luxury fashion retailer managed to do it (an industry widely believed to be a bad fit for loyalty programs), then you can do it too. At Antavo we’ve seen that both brands and retailers in a wide range of industries can benefit from a well-planned loyalty program and concept.
For more stories on how we helped companies move their KPIs head to our case study library – you’ll be amazed by how our other clients have reached their business goals with a loyalty program. If you wish to see our product in action, then go ahead and book a demo.
Tamas is a Senior Loyalty Program Specialist at Antavo and a Certified Loyalty Marketing Professional - CLMP. Tamas is known for having a keen eye for loyalty and customer retention research and trends. Tamas is also a true gamer at heart and has an impressive collection of cyberpunk books.