Hint: It involves implementing a digital retailing strategy with messaging woven into it. And we’ve got a guide to help you make it work. SEE HOW
Every business that has offered a loyalty rewards program has seen a variety of responses to every reward offered. Some rewards are rarely – if ever – redeemed by members, while another reward may seem to be the only reward members want. And while we may switch out unused rewards for others we see as more valuable, the success of that reward will likely remain low unless we’ve evaluated and employed the characteristics of highly successful rewards in our own reward selection.
Detailed below are eight properties that we believe are the foundation of the most successful rewards. A good reward should incorporate many – if not all - of these properties:
Flexible – Most loyalty programs are set up to last years, even decades. Your rewards should be flexible enough to adapt through any changes that may develop over the course of the program. Changes in membership numbers, the economy, product pricing and various other conditions are inevitable, and you should ensure each reward is able to cope with these changes over time.
Affordable – Select rewards that your business will be able to afford over an extended period of time and through multiple redemptions. Be sure to calculate the cost of the reward accurately so that you can adequately budget to see its affordability.
Simple – The more complicated the reward, the more frustrating it will be – for you and for your rewards members. It should be easy for your customers to estimate the value of the reward to themselves. (And remember that customer-perceived value may well be different from the value your business associates with the reward.)
Attractive – The reward is what will encourage your customers to join your loyalty program. No matter how elaborate and valuable your program is, if your rewards are not attractive, your customers won’t join.
Unique – The more unique each reward is, the better your loyalty program will stand out from the programs of your competitors. You want your program to distinguish your business, to set you apart – and above – the rest. And while it’s easy to find rewards that are expensive, you need to remember to keep the rewards affordable, as discussed above. The challenge is to find unique rewards that have a high customer-perceived value, but that don’t cost your business a fortune.
Seen to Be Attainable – It is possible for a person to win $1 million, but the average person wouldn’t necessarily see it that way. You don’t want your rewards to simply be attainable; to your customers, the rewards must be seen to be attainable.
Aspirational – Aspirational rewards are often more attractive over a longer period of time. Many customers feel a level of guilt if they see they are getting something for nothing, particularly if they are receiving luxury rewards and high-end soft rewards. Allowing your members the opportunity to earn these rewards will actually help many of them to reduce this feeling of guilt and allow them to appreciate the reward for a longer period of time. It also gives them something to look forward to, something to work towards, that they can feel good about once they’ve achieved the reward.
The Right Image – The image of the reward must match your company’s image, as well as the image of the customer. Harley Davidson can reward its members in different ways than BMW could. Be sure to involve your marketing department as you discuss what rewards to include; make your rewards part of your branding process.
How have you used these reward traits in your own loyalty programs? Are some more widely effective than others?
What other characteristics have you found to be essential in the making of good rewards?