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Customer Loyalty Shouldn’t Be About Rewarding High Spenders – Insight from PunchTab

Angela Sanfilippo, CMO (aka Superwoman) for omni-channel loyalty and engagement platform PunchTab, told attendees at an event in New York City Thursday night that traditional loyalty programs reward high spenders – a mindset that needs to change.

Encouraging discovery and incentives is very important for brands, Sanfilippo said during a presentation titled, “The Future of Customer Loyalty.” She said retailers and consumer packaged goods (CPG) companies have immense opportunities to test customer behavior.

Sanfilippo refers to PunchTab as a next generation loyalty platform that aims to reward customer behavior before the purchase by leveraging social sharing, user-generated content, and awareness campaigns.

“There are a lot of relationship marketing levers can we pull,” she said. “A lot of it is through discovery. Customers want to feel exclusive.”

Sanfilippo referenced some revealing research PunchTab conducted about moms and their loyalty behaviors. The survey of more than 600 moms reveals that 81% of moms respond positively to brands when offered a reward. What’s more, more than one third is motivated by non-financial rewards such as elite status or early access to products. 

Also, 73% of moms would engage more with companies that have loyalty programs. Sanfilippo said the study offers definitive evidence that providing moms with the right incentives can enhance word-of-mouth and drive sales across an entire brand portfolio.

“This is a strategic advantage for companies to drive preference,” Sanfilippo said.

The Digitally Engaged Moms survey was conducted online between April 18, 2013, and April 22, 2013, and was sent to a random sample of moms between the ages of 18-44. A total of 647 moms in the U.S. responded.

Some other key findings in the Moms survey include:

Rewards can also help with building a customer database: 59% of respondents said they would sign up for regular email updates when a reward is offered, and 41% indicated they would share personal details and purchase behavior. What’s more, 50% of moms on Facebook said they’d be willing to share brand content on Facebook.

Rewarding moms for following your brand on social channels can boost sales: More than half (57%) of moms on Facebook said they will "Like" a brand's page on Facebook when offered a reward; 50% of moms will follow a brand on Pinterest and 52% of moms will follow a brand on Twitter when offered a reward. A whopping 92% of moms who said they would be willing to "Like" a brand on Facebook when offered a reward, also said they would be more likely to share brand content, post reviews, or purchase additional brand products if incentivized. This huge number jumps to 98% for Twitter and 93% for Pinterest.

Moms are motivated by more than just financial rewards: 67% of respondents said they would be interested in receiving perks associated with elite status, such as free shipping or branded merchandise. When it comes to financial rewards, some are more highly valued than others. Free products and services from the brand are the most popular incentives, with 83% of respondents saying these would be effective motivators, followed closely by receiving gift cards from popular retailers (82%). Discounts and coupons are also valued by moms, as 60% said they would take an action in return for a discount or coupon to use on the future purchase of a brand product.

Charity Work Condoned by Moms: 58% of moms said that they would want a brand to make a donation to charity on their behalf as a reward. While gamification strategies such as leaderboards and badges have historically been popular, the data shows these types of social recognition programs are the least effective at motivating behavior. Only 6% of moms said they would be interested in being rewarded with badges, and less than one quarter (23%) said they would appreciate recognition for their contributions. 

Umbrella loyalty programs can be effective at increasing trial and purchase: While many companies focus their loyalty programs on single brands, the data shows parent companies of brands should consider developing umbrella loyalty programs that take advantage of moms' loyalty to specific brands to increase purchases of other products in the company's portfolio – 73% of respondents say that they would be interested in a loyalty program for a parent company, and 59% of all moms in the study said they would buy other products from the parent company if doing so resulted in more loyalty points. 

More than half (52%) of moms would also be willing to take a social action in return for a discount or coupon to use on a future purchase from a brand's broader family of products. Nearly half (46%) said they would switch from a competitor's product to a brand or parent company product to earn loyalty points, assuming equivalent product quality.

Sanfilippo said PunchTab has a data scientist because analytics is an “absolute focus. The story is in the proof and the proof is in the data. If you have a competitive product, loyalty is mobilizing people to talk about it.”

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