Michael Hill's loyalty program Brilliance now has 1 million members

Michael Hill's recent investor update detailed the performance of their Brilliance customer loyalty program which has now reached 1 million members (up from 600,000 members less than a year ago).


The update noted several profitable behavours they found in their loyalty program members. Members:

  • delivered high average transaction value and margin

  • were also spending more frequently

  • had larger basket sizes

  • had average transaction values nearly double that of non-members

This is undoubtedly true but doesn't indicate that the design of Brilliance has caused this.


New Zealand membership

Michael Hill don't report how many members it has in each market where Brialliance is offered (New Zealand, Australia and Canada). We previosuly estimated the New Zealand membership to be about 140,000. With the growth to 1 million mmebrs in total the New Zealnd base may be about 170,000 now.


Self selection bias

In loyalty programs, members are almost always more valuable than non-members because of self selection bias.

 

Self selection bias from loyalty strategy experts Ellipsis and Company :


"A brand’s most engaged and most valuable customers join new programs early and in the largest numbers. Joining early is economically rational for these customers as they stand to benefit most and they are more likely to notice the program adjacent to launch.


Enrolments peak early and then taper off as high value customers sign up. If your business has seasonal peaks, you will also see enrolments increase in line with these sales ‘spikes’ as good customers visit to shop for Christmas or Mother’s Day.


Routinely we see early enrolment members; spending more, buying more frequently, redeeming more rewards, staying active longer, than later enrolees.

Later enrolments are overwhelmingly lighter buyers of your products, and as all brands have more light buyers the membership will ‘regress to the mean’ of customer value.


Note: at the end of the first program year, when we set out to measure the effectiveness of the money invested so far, we have a membership that is as full of high value customers, proportionally, as it ever will be. High value, engaged customers are over-represented in the early membership of all programs.

 

As Michael Hill's program matures we expect the distinction between members and non-mebers to wane though loyalty program members will always be the better customers.


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