Understanding Customer Loyalty and Rewards Redemption with Customer Intelligence and Analytics: Consulting Engagement for a Coffee Restaurant Chain

With rewards redemption at less than 10%, one of the biggest and most successful coffee and tea shops in the country and the world needed insights into their customers.

The coffee retailer offer over 40 kinds of tea and coffee varieties and serves these in over 50 branches across the country and needed to identify customer segments based on purchase and redemption behavior.

Kpability helped this client in four (4) key areas: customer analytics, sales analytics, Recency Frequency and Monetary Value (RFM) analysis, and redemption analytics.

Using RFM analysis, the retailer’s customers were segmented into six categories:  Gold, Silver, Bronze, Loyal “Masa”, Churning Silver Customers and Occasional customers.

Kpability’s study and analysis of the customers’ redemption behaviour revealed the following:

• 91% of the customers are not redeeming their loyalty program rewards however, as the tenure of the customer lengthens, redemption also increases
• only seventeen percent (17%) of customers are truly loyal
• those who use their cards, generate points and possibly like loyalty benefits

Kpability presented key recommendations in improving the loyal customer base, increasing active loyal customers, and managing the loyal RFM segments.