Regal Cinemas operates nearly 600 movie theaters and over 7,000 screens across North America. In 2011 they brought in $2.6 Billion in revenue. Needless to say they are doing very well. But what can vape shop owners learn from a loyalty program at national movie theater chain?
The Regal Crown Club (RCC) loyalty program is masterfully crafted, and vape shop owners should pay attention to how it’s done. Here’s a flyer I got with my receipt the last time I visited a Regal Cinema. The loyalty program is easy to understand and easy to join. Take a second to study these snapshots before we continue.
However, before we break down the Regal Crown Club loyalty program we need to understand the business model of a Regal Cinema first.
Regal sells candy, not movie tickets
Regal doesn’t make sh*t selling tickets. They make the lion’s share of their revenue selling candy, popcorn and soda. It’s why they charge zombie-apocolypse-level prices for everything. That’s also why it’s impossible to get to your seat without walking past the concession counter. Margin on concessions is about 85-90%, and it’s actually what keeps the lights on and the ticket prices low.
Regal’s main goal is to get you into the theater and in front of the concession salespeople. Once there they hound you for drink and popcorn upgrades. You’ll also notice this model reflected in how they setup their loyalty program.
If you think of this in terms of a sales funnel, the movie ticket is the lead-gen, the concessions are the core product and the concession upgrades are the profit maximizers. Every business has a sales funnel like this (do you know yours?).
Now that we are clear on Regal’s business model we can more completely understand their rewards program.
Regal rewards behaviors, not activity
This is an important distinction to recognize.
The Regal rewards program only gives away small popcorns, small drinks, 2-D movie tickets and concession upgrades. These are some of the least attractive offers to reward, so why did they pick these?
Because they aren’t just trying to give away free stuff. They are trying to encourage a behavior: to walk up to the concession counter, or to upgrade your current purchase.
It goes back to Regal’s sales funnel. They want to get a large popcorn, large drink and box of candy in everyone’s hand. By offering the entry level products they can still get you into their funnel and convert to revenue by asking for an upgrade at the counter.
If you want the larger soda, larger popcorn, or you want a 3-D movie ticket, you have to PAY the difference.
Do you see how they just converted a low-value free-loader to a paying customer?
Regal is encouraging a BEHAVIOR, not simply rewarding spending activity.
Regal assigns point values based on real financial analysis
Regal offers 100 points for every $1.00 spent. Rewards start at 1,500 points, or $15 of customer spend. With margins of around 90% on concessions you can guess that they brought in about $13.50 in profit from this activity. When you look at the margin impact of the reward bonuses you realize the rewards are actually very modest. Except for the movie ticket reward, Regal only loses about 1% margin in revenue for reward benefits.
Here is a breakdown of how Regal calculated these values, and what impact they have on margin:
|Regular Price||Points To Redeem||Customer Spend||Real Value Of 100 Points||Cost to Theater
(90% margin on concessions,
50% margin on tickets)
|Soft Drink Upsize||$0.50||1,500||$15||$0.0333||$0.05||1%|
|Small Soft Drink||$5.50||8,000||$80||$0.0688||$0.55||0.75%|
|2D Movie Ticket||$18.25||15,000||$150||$0.1217||$9.12||43%|
When you setup your rewards program, pay attention to how much margin you are giving up. Don’t just settle for a nice round number. Really understand the reasoning behind the reward levels.
Regal rewards frequency with point bonuses
Regal has a “Crown Jewel” bonus program that rewards frequency with extra points. It breaks down like this:
- 6+ visits per year = 250 extra credits per visit
- 10+ visits per year = 500 extra credits per visit
- 20+ visits per year = 1,000 extra credits per visit
In this case Regal is encouraging the behavior of repeat business.
How this applies to your shop
It’s tempting to offer rewards on a 30ml bottle of your best juice to your most loyal customers. It’s also tempting to give people a flat 10% cash back rewards like $25 after spending $250. As business owners we want our customers to know how much we appreciate them.
Don’t rush to this decision. Rewards are not simply a “thank you for your business” program. They are behavior-encouraging lead-generation tools. Treat them as such, and know what the financial impact is on your shop.
Think of what BEHAVIORS you want to encourage in your shop and plan your loyalty program around them. Here are some behaviors to think about rewarding:
- Upgrading to a premium bottle when they purchase a generic brand
- Upgrading to a larger ml bottle with any purchase
- Upgrading their old battery
- Bringing in a friend
- Coming back frequently
- Reviewing your shop on Facebook, Google or Yelp
- Anything that does not encourage free-loading…
Know your shop’s business model before you begin
Before you design your loyalty program you need to understand your shop’s business model and sales funnel. Put simply – you need to be able to answer the question: What do you want your customer to do when they walk in the door? “Buy stuff” is not an answer here…
Why we recommend AppCard
AppCard is a trusted partner of VapeMentors and of vape shops across the country. It’s truly one of the best loyalty apps available. Everything we covered in this post can be configured in AppCard.
Here’s a quick overview of why we like AppCard:
Automated “hands-off” rewards. AppCard learns the individual preferences and buying patterns of your customers while you sleep using machine-learning. Tt then uses the buying patterns to automatically send rewards and incentives to your customers.
Vapers have 2 very consistent and predictable buying cycles: juice and coils. AppCard will track each individual customer as they make purchases and identify patterns in those behaviors. Once the system has identified that a customer normally buys a 30ml bottle every 10 days, the system will automatically send reminders and incentives to get a refill on day 11.
Beat slow times with rewards. AppCard’s “slow time setting” will track the ebbs and flows of you shop’s sales volumes and identify the slow periods. Once identified, the system will automatically send each AppCard customer an offer for their favorite product or service redeemable during slow times.
Your customers become your salespeople. AppCard’s referral setting helps you acquire new customers. The system will identify your top customers by how frequently they visit and how much they spend. AppCard will assume these customers are fans of the business and will incentivize them to refer a friend.