The appeal of loyalty rewards isn’t hard to understand. If I’m a consumer who regularly purchases doodads, I will likely find that I have many different brands from which I can purchase the doodads. One doodad brand, Brand X, offers a free doodad after I have purchased ten. That’s seems like a good incentive for me to purchase doodads from Brand X exclusively. But what if I only buy two a year? There’s a good chance that I’ll forget about Brand X’s perks, or the reward seems too distant, so inaccessible that I feel less incentive to remain loyal.
Doodads are made up, of course, but this dilemma for consumers and brands is very real. Branded payments provider Blackhawk Network has published a new e-book, A Heart-to-Heart About Increasing Loyalty, that presents issues around loyalty engagement (and, sometimes, the lack of engagement). The e-book is based on survey data gathered from 1,500 US consumers.
One finding was that while the average consumer is a member of six loyalty programs, he or she is only active in four of them. Blackhawk Network’s Vice President of Marketing, Theresa McEndree, told Loyalty360: “The highly successful loyalty programs, the ones that are driving engagement in their program, they have a high frequency of engagement and redemption. Not shockingly, if you can create earning-moments or reward-moments, and then let people see the fruit of that or experience the redemption side of it frequently, that drives overall higher loyalty and higher engagement in the successful program.”
If the rewards don’t come, customers don’t give their loyalty. Effective loyalty programs grant rewards early—and often. “It’s not just the ability to earn frequently; it’s the ability to redeem frequently,” McEndree said. On that note, loyalty marketers can’t expect numerous opportunities to earn points to keep customers coming back if the program doesn’t provide sufficient opportunities to redeem those points.
Successful programs ensure that those opportunities abound. “What some of the programs do that we’ve looked at is create earning-moments across the customer journey. It’s not just about buying the big widget; it’s about giving meaningful engagement over multiple touchpoints or moments within the customer lifecycle and then reinforcing that with what we call ‘the acceptable reward.’ If you look at the old model of the punch card—‘just come in to lunch nine times, and you’ll get the tenth sandwich free’—that’s achievable,” said McEndree.
She noted that offering customers a reward with a value of $5 to $10 within the first three months of loyalty membership can make all the difference. Such simple offers show customers that you want their business, or as McEndree succinctly put it, “You’re communicating to them that they are also important to you.”
Another finding from the study is that, overall, loyalty program participants prefer reward cards over other reward options. More than half of surveyed consumers in most categories—especially online retailers, phone companies, and utility companies—opted for a prepaid or gift card but remain divided on physical or digital rewards.
“While there is a migration to digital especially among younger consumers,” said McEndree, “physical cards still have a big place in hearts and wallets. As reward values increase, many people opt for a physical card. That’s why successful programs offer both physical and digital gift cards.”
That’s one way brands that currently offer reward cards can keep members engaged. Other ways include offering variable denominations for redemption, offering promotions that add value, and ensuring a diverse catalog of brands from which members can choose to redeem. We expect that the brands that offer multiple opportunities to redeem and that offer small, frequent rewards will be the most successful.