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Innovative Reward Ideas for Customer Loyalty Programs

Written by 
Michaela Ward
July 12, 2019

There’s no denying that customer loyalty programs have changed dramatically over the years.

Traditional loyalty programs used to merely offer discounts off the businesses own products and services in exchange for continued loyalty from customers, however, the concept has evolved into something much larger.

After all, the wider selection of rewards you can offer, the more unique each individual customer’s experience is.

The new era of customer loyalty programs sees businesses offering loyal customers unique experiences based on their own wants, needs, hobbies and lifestyle choices, instead of traditional rewards.

Perhaps there are other rewards that will do more to keep customers coming back than the products or services that your business offers. Your loyalty program’s rewards don’t necessarily need to be your own products and services; they just need to appeal to your customers and align with their wants and needs.

On that note, here are a few  innovative reward ideas for your customer loyalty program.

Think Outside the Box When Considering Your Rewards

In regards to your business’s loyalty program, it’s important to think outside the box when developing your rewards.

For example, let’s assume your customers are primarily females under the age of 40. A gift voucher for Sephora might be a great incentive for customers to return to your store and spend a bit more money in order to redeem that voucher.

While the classic “25 percent off your next purchase” kind of deals are good incremental offers, the “$20 Sephora voucher with every fifth purchase over $10” lures them back that fourth and fifth time when they’ve already made three transactions with your business and realise they’re halfway there.

If your business has a wider, more general customer base with no specific demographic, then broader gift vouchers might work better. They cast a wider net over the products and services that can be redeemed with that voucher.

Stamp Me offers a Scratch & Win campaign as part of the digital loyalty app, which allows businesses to offer additional rewards and create a bit of fun around their marketing.

As the merchant, you have control over how many of these Scratch & Win deals are winners, and what the prizes are.

Perhaps broader gift vouchers that cover entire shopping malls are the perfect giveaway to include in your Scratch & Win campaign. You'll no doubt generate a bit of buzz around your loyalty program and encourage customers to sign up.

Who Are Your Customers and What Do They Like?

queue of customers
Understand your customers

Let’s try another example. A large portion of an electrical wholesaler’s customers are generally male tradesmen purchasing products and services on behalf of a company or a third party.

So with that in mind, a loyalty program that offers “10 percent off your next order”-type deals isn’t going to have any effect on those customers, because the money isn’t coming from their pocket.

However, incentives like tickets to football games, cinema vouchers and liquor store vouchers are likely to grab their attention. The idea is to put yourself in your customers’ shoes when considering your loyalty program’s incentives and rewards.

Pretend you’re a first-time customer visiting a shop that primarily sells stationery, backpacks, books, journals, and other school supplies. The shop is currently in the middle of a “Back to School” sale.

You choose a few items, and decide to sign up to the store’s loyalty program as you make your purchases because on the way up to the counter you saw a Scratch & Win campaign offering the chance for loyalty program members to win a free family pass to a local amusement park.

After your transaction, you’re offered 25 percent off your next purchase, which brings those schoolbags down from a price you weren’t prepared to pay to a price you are. Regardless of whether you won the family pass or not, you go back later and buy the schoolbag.

If it weren’t for the opportunity to win the free family pass, you wouldn’t have bothered signing up to the loyalty program because you don’t think you’ll be a regular visitor to this store.

The point is, this shop’s loyalty program is working because they’re offering innovative rewards as well as the conventional incentives.

Partner Up and Create a Win-Win Situation for Everyone

Loyalty Card App Customer Retention
Partnership among loyalty programs

By partnering up with another brand which mutually benefits from your partnership, both businesses open up their loyalty program members to each other while the members enjoy a wider selection of rewards to choose from. It’s a win-win for everyone.

The travel industry was among the first to embrace this, and the industry as a whole has recently undergone a massive shift in the way brands run their loyalty programs. Hotel chains which embraced partnerships early in order to offer their members a wider variety of rewards to redeem were ahead of the curve.

J.D. Power System’s 2017 Hotel Loyalty Program Satisfaction Study found that third-party partnerships were one of the average hotel guest’s highest valued factors in a hotel chain’s loyalty program.

J.D. Power System Global Practice Lead Rick Garlick said that points which can only be redeemed for hotel stays aren’t going to provide as much customer satisfaction as experiences like spa treatments, adventure sports, and other products and services travellers generally enjoy while on holiday.

“The more engagement you have in a program, the greater share of travellers’ wallets you will get,” he said. “Redeeming for nights versus retail or travel packages, options with variety will be the programs that represent a better value to customers, and they do drive better engagement.”

There’s another reason this approach has proven to be successful – not only are hotels offering a much wider selection of rewards for its members to choose from, but they are offering experiences, rather than products.

Give Your Customers an Experience, Not Just a Discount

Salon Loyalty Programs
An experimental reward

On that note, brands must find new, innovative ways to connect with customers on a human level and appeal to their personal needs.

A recent Epsilon study found that 80 percent of consumers are more likely to do business with a brand that can offer them a personalised experience.

While your classic “Buy 6 of these and we’ll give you the 7th one free”-type deals serve their purpose and do entice customers to return, they are aware that they’re being lured into ongoing transactional behaviour.

However, a loyalty program that offers its customers unique experiences that appeal to them – such as the spa treatments, adventure sports and other travel packages mentioned above – is developing a much more intimate relationship with each of its loyal members.

Companies like BananaLab offer packages that allow the giftee to choose from a wide range of fun, unique experiences inside. By partnering with someone like BananaLab, you’re giving your customers control over which experience they choose, rather than losing their loyalty because your reward failed to entice them.

The Growing Importance of Corporate Social Responsibility

Corporate Social Responsibility

Another angle to consider in regards to your innovative rewards is Corporate Social Responsibility. Consumers, especially the younger generations, prefer to support brands that are donating to charities and contributing to good causes.

A customer is more likely to continue shopping with you over your competitors if they feel that their purchases are helping to make a difference.

Related article: How Brand Loyalty Differs Between Each Generation.

The Sky's The Limit

There are no limits to what a business can do with its loyalty program’s rewards and incentives.

As long as you know who your main customers are, what they want, what they like, and what they value, the sky is the limit with how creative you can get with your rewards and offers.

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