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Loyalty 360 wanted to understand the evolving world of loyalty marketing rewards. So, we asked Hinda, a leader in incentive recognition and loyalty programs, for help. Hinda gave us access to some of its most experienced specialists, leading to our three-part series on loyalty rewards trends. In part two of this series, we learn how a new twist on 300-year-old technology became a must-have for program members. We also explore generational differences.
We were fortunate to have over 125 years of awards merchandising experience in the room, including: Jim Valenti, Director Merchandising; Ana Tovar, Associate Buyer; Chelsea Piereth, Buyer; Michelle Flores, Senior Buyer; Sharon Authier, International Buyer; Tocanda Neeley, Associate Buyer; and Wendy Reed, Senior Buyer.
Redemptions have to be an indicator of people’s interests. What trends are you seeing in redemptions? Do people gravitate towards certain categories or specific brands? And what can we learn from that?
Wendy Reed: I’m seeing some enormous growth in housewares, along with some weakness in personal goods. Watches, jewelry, and other things like that have gotten a little softer in the past couple of years. These two trends combined might mean people are more strategic in how they use their points. When people have less discretionary funds, we see categories for the family and home rise in redemptions. We saw that pretty clearly with the great recession.
When we see housewares or family items on the rise, it tends to show people feel a little squeezed income-wise. If they’re using points for personal items, it tends to show they’re feeling like they have the cash to buy things for the home and family and can instead splurge on themselves.
Michelle Flores: Redemption also tends to be very brand- or item-specific. You’ve probably heard people talking about Apple AirPods, the tiny wireless Bluetooth earbuds. They were always our number one redeemer for the first six months we offered them. This shows how the combination of a strong, well-known brand—Apple—tied to a cool, new product that not only allows you listen to music, but lets you take calls with them, too, is a recipe for success. Redemptions also depend on what the participants are seeing at retail, how strong the brand is on its own, and the advertising and marketing supporting the product.
Ana Tovar: One key though is to just keep investigating the newest technologies. We have to be consistently looking at the newer technologies available and how they are trending in the marketplace. That doesn’t just apply to electronics like the AirPods, but even for housewares and other categories. But when you think about new technologies, don’t just think about a new product, but also about how a product is leveraging technology to create a buzz in the marketplace. Think about Instant Pot, for example. It was all about updating an old technology and marketing it in a new way to create a brand leader in a category.
Michelle Flores: Ana is absolutely right. I think Instant Pot is a really good example of a brand invigorating its particular product category. We offered three or four different brands of pressure cookers—and this is an item that has been around a long, long time—but in late 2016 and early 2017, people started demanding Instant Pot brand pressure cookers. It didn’t matter that another brand could cost $60 less. People said, “No, I want an Instant Pot.”
Chelsea Piereth: Instant Pot was social media phenomena. Instead of marketing in traditional ways like paid ads in print and TV, they nurtured influencers by giving away 200 Instant Pots to bloggers and cookbook authors. They posted recipes from these people on their blog page and used them in printed booklets that came with the product.
Ana Tovar: They embraced brand ambassadors and fan communities on Facebook, Instagram, Twitter, and Pinterest which made them the first cooker to come up on any Google search. Plus, they took advantage of internet sale days like Amazon Prime Day and Black Friday.
Chelsea Piereth: But they also sold in brick and mortar stores. Their marketing campaigns with Kohl’s and Target worked well to create a sense of urgency for buyers. The point is loyalty rewards specialists shouldn’t just be looking for products to add. We have to be trend hunters. We have to be out in the market watching trends closely or we’ll miss how, of all things, a pressure cooker became an internet phenomenon with a brand that has a become a must-have in a loyalty marketing program.
So, if the challenge is to be on top of the trends and find the next coolest brand offerings, how do you identify the next coolest brands?
Michelle Flores: As Chelsea said, get out in the marketplace. Attend trade shows. Follow online trends. Talk to your supplier and their distribution networks. Ask supplier reps how they are going to introduce a new product to market and the kinds of dollars they’re going to spend on it. Discuss retailer perceptions with the distribution networks to get a feel for how a brand or product is accepted.
Jim Valenti: There are also things we do organizationally to help us stay on top of trends. For example, our team members are specialists in specific categories. Wendy’s specialties include housewares and toys. Michelle’s expertise is in televisions, fitness gear, and the intricacies of the gift card market. Sharon understands global rewards like no one else. Focusing our team on specific aspects of the rewards portfolio lets them dive into the details and give them the time to see developing trends to help keep our client’s offerings second to none.
Sharon Authier: I rely on my millennial staff, too. Let’s take a brand I’m unfamiliar with, but which I think is targeting millennials. I’ll talk to my team and ask for their input. Would you buy this? Which one of these four would you add to the to the reward portfolio? They’re usually right on the spot when it comes to what is going to redeem in their age group. After all, they are the target market.
Let’s stay on that generational awards track for minute. Do you see awards cutting across generations or do you see different brands targeting certain generations?
Jim Valenti: I think all of us here would agree that it’s a combination of both. Let’s look at Bose and Beats. Both make the same types of audio products, but Bose is better known by a more mature crowd who might sit on planes listening to music. While Beats definitely appeal to a younger generation. A few years ago, Bose did try to come down to younger age groups. They felt their market share was eroding and they needed to become trendier. So, they started making products in more colors and changed some of their marketing. But eventually they got away from that, and went back to their core messaging and primary markets. So, that really demonstrates how brands can appeal to different generations.
Are there any other generation differences you’re seeing?
Ana Tovar: Speaking from the fact that I have a teenager at home, she is all about the Apple. She’s not really interested in Beats. It’s all Apple. Just plain Apple. For her, it’s all about having the ability to connect to the electronics at home or social media. Connectivity is key, at least for this particular Gen Z.
Tocanda Neely: Outside of technology though, I find millennials are not really committed to any one brand. They’re looking more so at functionality. Let’s think about wine glasses because entertaining is so big right now. Waterford is a really big and prestigious brand, but it’s a big brand for Gen X and the boomers. Millennials just want a cool wine glass, or furniture or patio furniture. The questions they’re asking are, “Is it stylish? Would it look cute on my patio?” They care less about the brand name and more about how the product serves them. “Does it function in the way I want it to? Does it fit my style?”
This seems a bit of a dichotomy. When you’re talking about technology, millennials want a brand like Apple, but with other items like or stemware or dinnerware, brands may matter less? Is price more important at that point?
Tocanda Neely: Not necessarily. I think it has more to do with how the item is going to work for them. What functionality they need and if it has the right look for them. Let’s say you have two competing brands: one sells for $30 and the other for $100. A millennial may choose the $30 model for its style or looks, even though it might not have all the same features of the higher priced unit. They aren’t necessarily price shopping, but are instead making the choice because it’s going to go better with their kitchen. They seem to choose more for style, functionality, and how it is going to work for them. I think that’s especially true in the case of a loyalty marketing selection.
Chelsea Piereth: But outside influences, like economic conditions and shifting attitudes, drive decisions as well. We’re finding millennials and Gen Z are more concerned about the environment. So, think about how that impacts a category like jewelry for example.
When I first started, big, aspirational diamond stud earrings were really big redeemers. Things started taking a turn with the whole economic crisis, so we saw rising interest in more costume jewelry like man-made diamonds. It became about attainability rather than just aspirational. While our younger generations are still cognizant of costs, they also think about their environmental impact. So, they’re looking at things like man-made diamonds to get the look without hurting the environment.
Michelle Flores: But not all millennials are the same, and people get tired of others trying to “pigeon-hole” them. We look at more than just what generation a person is in when we’re thinking about rewards to influence people in loyalty programs. Age, or generation, tells us something, but their life stage can be an even more important in determining what awards will influence them.
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