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Executive Summary
Velocity Logic Group partnered with a fuel and convenience retailer to improve promotional efficiency using behaviour-based customer segmentation for non loyalty customers using their payment card transactions. In this campaign, payment was used as loyalty.
Instead of offering blanket discounts across all customers, the retailer used Ai and machine learning to provide loyalty program segmentation insights to identify which non loyalty customer groups generated true incremental revenue — and which segments reduced profitability.
The result:
- 1324% ROI from targeted promotions
- Clear visibility into profitable vs unprofitable segments
- Data-driven promotional optimization
- Strong incremental revenue from price-sensitive customer groups
Client Overview
The retailer operates within a competitive fuel and convenience market where margins are tight and customer retention is critical.
The business regularly runs promotional campaigns to drive store visits, but the key objective was not simply increasing redemptions — it was ensuring that promotions generated incremental revenue rather than margin erosion.
The Challenge
The retailer was interested in growing their proprietary food business and identity the right set of non loyalty customers to drive behavioor changes. The focus was on:
- Which segments truly responded to incentives
- Where discounts were generating incremental spend
- Which customer groups were already purchasing without promotions
- How promotional ROI varied across behavioural segments
Segmentation Framework
Using Velocity Logic Group’s AI and machine learning capabilities, non loyalty customers were categorized into behavioural segments based on:
- Deli spend
- Basket size
- Engagement frequency
- Purchase consistency
This segmentation allowed the retailer to evaluate promotional performance across distinct customer types.
Segment Breakdown
A-1: First-Time Visitors
Very Low Engagement | Unknown Propensity
Limited behavioural history meant promotions were unlikely to deliver a reliable incremental lift.
Strategy: Avoid aggressive incentives until more customer data is available.
A-2: Penny Pinchers
Very Low Deli Spend | Very Low Engagement
- Redemption Rate: 3.63%
- Incremental Spend: $5.51
- Net Revenue: $7,285
- ROI: 1324%
- Total Incremental Revenue: $33,303
Strategy: Entry-level value offers designed to encourage trial purchases.
This segment delivered the highest promotional ROI, demonstrating that price-sensitive shoppers respond strongly to targeted incentives.
A-3: Cautious Shoppers
Low Spend | Low Engagement
- Redemption Rate: 12.40%
- Incremental Spend: $2.32
- Net Revenue: $2,535
- ROI: 537%
- Total Incremental Revenue: $15,034
Strategy: Value-focused promotions designed to encourage repeat visits and habit formation.
This segment showed strong responsiveness to promotional offers.
B-1: Steady Customers
Moderate Spend | Medium Engagement
- Redemption Rate: 5.85%
- Incremental Spend: $1.52
- Net Revenue: $4
- ROI: 1%
- Total Incremental Revenue: $1,926
Strategy: Encourage basket expansion and bundled purchases rather than aggressive discounting.
Promotions delivered minimal incremental lift for this group.
B-2: Loyal Fans
High Spend | High Engagement
- Redemption Rate: 6.65%
- Incremental Spend: $1.27
- Net Revenue: -$96
- ROI: -27%
- Total Incremental Revenue: -$209
Strategy: Reduce discounting and focus on recognition-based rewards.
These customers were already purchasing at high levels, and additional discounts reduced profitability. This shows the loyalty fans were not going to change behaviour and were great customers.
C-1: VIP Champions
Very High Spend | Very High Engagement
Top-tier customers with strong natural loyalty.
Strategy: Focus on retention and experiential rewards rather than price-based incentives.
Strategic Outcome
By implementing segmentation-driven promotions, the retailer was able to:
- Reallocate promotional budgets toward high-ROI segments
- Reduce unnecessary discounting for loyal customers
- Improve incremental revenue efficiency
- Gain clear visibility into promotional profitability
This approach transformed promotions from a cost centre into a measurable growth driver.
Why It Worked
The success of this strategy came from aligning promotions with actual customer behaviour rather than assumptions.
Key success factors included:
- AI Data-driven segmentation of non loyalty customers
- Behavioural targeting of promotions
- Reduced incentives for already loyal customers
- Real-time measurement of promotional performance
The Technology Behind the Results
Velocity Logic Group provides advanced loyalty technology and promotional optimization solutions for fuel and convenience retailers. By combining payment data, customer segmentation, loyalty analytics, and real-time promotional insights, the platform helps retailers identify profitable customer segments, maximize promotional ROI, and drive incremental revenue without unnecessary discounting.
Call to Action
Want to identify which customer segments are truly driving incremental revenue in your loyalty program?
Partner with Velocity Logic Group to implement segmentation-led promotional optimization and maximize the impact of your loyalty strategy.