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Hard vs. Soft Benefits in Loyalty Programs

Written by 
Brad Davis
August 18, 2020

You might have heard of hard vs. soft benefits in regards to loyalty programs before. But what does it mean? In this handy guide, we’ll walk you through the difference between hard and soft loyalty program benefits, provide a few examples, and offer some nifty tricks for incorporating both kinds of benefits into your own rewards program.

What’s the difference between soft and hard benefits in loyalty programs?

A hard benefit refers to the physical, black-and-white incentives that a brand rewards a customer with. This often includes loyalty points, discounts, freebies, and other “prizes” that incentivize repeat transactions and ongoing engagement.Soft benefits, on the other hand, refers to the “perks” and VIP treatment that long-term clients and customers often enjoy from a business that they have a long-lasting relationship with.

These “soft benefits” were first employed by travel, hospitality and tourism industries, and tend to consist of:

  • Skip-the-queue perks (i.e. priority boarding)
  • Airport lounges
  • In-app payments for table service or quicker pick-up
  • Exclusive access to industry events (such as product launches, pre-sale events and celebrity meet and greets)
  • Complimentary upgrades and add-ons
  • Birthday gifts, instant prize draws etc.
being served in VIP airport lounge

Here are a few interesting statistics that should illustrate the importance of soft loyalty program benefits:

  • According to CrowdTwist, free delivery is widely considered to be the premier loyalty perk across all generations.
  • The same CrowdTwist study revealed that 7 in 10 Millennials are willing to pay a premium for valuable perks like free shipping.
  • According to Gartner, nearly 80% of loyalty programs offer experiential rewards.

Hard benefits make the foundation of any decent loyalty program, but soft benefits make it enticing

While most of us are probably more familiar with hard benefits (Buy 6 Coffees Get 1 Free, 25% Off with Every Fifth Purchase, etc.), it’s actually the soft benefits that leave a lasting impression on customers.

Remember: the hard benefits are expected. These days, the average consumer doesn’t see a “Buy X Get Y” rewards program as a perk – it’s considered more of a requirement for any business that values its customers’ repeat business.

Moreover, hard benefits don’t provide a sense of “status” the way that soft benefits do. Perks like skip-the-queue, pay in advance and exclusive product launch invitations make people feel valued and important.

Don’t get me wrong: hard benefits are a crucial component of any loyalty program. But they don’t give you an edge over your competitors. Nor do they make your brand stand out from the crowd.

screenshot of tweets about Sephora
Image Source: Twitter

Aside from fostering an emotional connection between a brand and its customers (which inspires a 306% increase in customer lifetime value, by the way!), soft rewards offer VIP status, which makes for better social currency.

No one is going to post about the 50% discount they received on a belt when shopping for clothes today, as a result of accumulated loyalty points.

However, surprise a customer with a gift on the anniversary of their loyalty program registration, and suddenly you’ve given them something to post on social media about. The same goes for inviting them to an exclusive pre-sale event, or offering them free shipping between now and the end of the week.

In fact, if you really mean business you’ll even reward customers with loyalty points for posting these things online, and sharing brand-sponsored content on their social media pages. Learn more about how to use social media to improve customer loyalty.

Cosmetics brands are particularly adept at leveraging the “social currency” angle in loyalty programs, and at utilizing soft benefits in general. One such example is tarte Cosmetics.

How tarte Cosmetics incorporates soft benefits into tarte Rewards

tarte cosmetics rewards
Image Source: tarte Cosmetics

tarte Cosmetics has never had too much trouble converting customers into loyal brand advocates, fondly referred to as “tartelettes”. It helps that the environmentally conscious brand actively promotes its good corporate citizenship and sustainable methods.

However, the key to tarte’s success is its excellent use of soft benefits and experiential perks to create a lively community around its brand.

The perks begin as early as registration, with new members immediately being eligible for $1 samples, secret admirer sales, early access to new arrivals and an exclusive reward on their birthday.

tarte rewards how it works
Image Source: tarte Cosmetics

From there, the brand experience only gets sweeter and sweeter as loyalty program members climb through the tiers; gaining access to double or even triple points for your entire birthday month, spontaneous gifts alongside select purchases, exclusive shipping offers and more. tarte will even send you an anniversary gift each year, to commemorate your initiation into the tarte Rewards club.

Notice how the tarte Rewards program still operates on the hard benefits of a simple points-based system, yet its main selling points are all these fantastic “soft” perks?So, we’ve seen how tarte does it… how can you create a similar VIP experience using soft benefits in a way that makes sense to your business and its customers?

Here are some ideas for soft benefits that you can incorporate into your own loyalty program

1. Skip-the-queue perks and table service via in-app ordering

pay in advance mobile payment

One of the many by-products of a post-COVID retail and hospitality space has been contactless loyalty, and a surge in things like ecommerce and digital table service via in-app payments.

However, this kind of VIP treatment can easily be implemented into higher loyalty program tiers, and utilized as an incentive for increased customer loyalty. Starbucks and McDonald’s mastered this craft long ago.

2. Tailored rewards for a personalized loyalty experience

Digital loyalty apps provide valuable insights into customer behaviour, which in turn allows you to personalize each customer’s experience by offering them “perks” which directly appeal to them as an individual.

This inspires FOMO (fear of missing out) among infrequent customers, and thus encourages them to climb the chain to become frequent customers, VIP customers, brand advocates and so on.

3. Access to exclusive industry events

VIP cocktail party event
Industry events

Clothing chains, sporting goods stores and cosmetics brands were among the first to discover the power of inviting customers to exclusive product launches, workshops and tutorials, early access to seasonal sales and so on.

Find some kind of experiential reward that relates to your business and its customers, establishes social status and provides social currency, and you will see a sharp spike in loyalty program registrations.

4. Reward members for social media engagement

This point is a little different from the others listed here, because hard benefits like loyalty points and discounts are the best incentive for social media shares, reviews and other online engagement.

Offering members points and discounts for posting pictures and videos of themselves enjoying your program’s “soft benefits”, and you will create brand ambassadors.

5. Surprise & Delight

Many brands incorporate “spontaneous” incremental rewards into their standard loyalty program structure, that the customer doesn’t know about. When the customer reaches this milestone unknown to them, they are pleasantly surprised with what they perceive to be a spontaneous prize, even though it’s a scheduled reward the same as when the customer fills a stamp card.

Drop us a line for more information on finding the ideal balance between soft and hard benefits in your loyalty program.

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