Hinda Incentives Executives Talk Customer Loyalty Trends: Part Three

In the third and final installment of Loyalty 360’s discussion of rewards with the merchandising specialists at Hinda, we explore the growth in experiential rewards and discuss future trends. What will engage tomorrow’s participants? How could member data be used in the future? And what member needs will capture attention and more active program engagement? 
 
We were fortunate to have over 125 years of awards merchandising experience in the room, including: Jim Valenti, Director of 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.
 
So, just how do you find awards to motivate potentially millions of different loyalty program members and how does life stage help?
 
Ana Tovar: To build a reward portfolio that engages, you first have to break it down with what you know about the audience. If you look at demographics, you’re probably looking at a few high-level factors like age and gender. Age can help you understand something about what they’re into from what we know—how they communicate, what kind of technologies they use, common cultural influences or trends, and popular brands for the age groups. You’re trying to engage as many as possible by offering something for everyone. 
 
Michelle Flores: Bringing in what we call life stage adds some new dimensions. Married versus single. Rural versus urban. Do they have young children? Do they have teenagers living with them? Own their home or rent? Looking at only demographics kind of stereotypes, people who are 26 to 28 seem very, very similar, but the fact is, there’s a world of difference between a married 28-year-old woman living with a husband and two children under five in their own home in Charlotte, North Carolina, and a single 28-year-old woman living in a rental flat in the Silicon Valley working for a high-tech giant. That’s what we mean by life stage. While knowing the generation tells you something, I can tell you more about what will drive their behaviors by understanding their life stage.  
 
Jim Valenti:  Remembering three key things always helps me to make this meaningful. One: understand the changing marketplace. Keep up with what’s going on and do your homework. Two: build around your customer. Think about what the customers want first and then think about the program structure. And don’t forget, your stores and employees are the best resource for creative workarounds and solutions. Three: always ask yourself, “What would our customer think of this?” Using these basics to keep me grounded helps me as we try to determine what might motivate millions of participants.  
 
So, do loyalty marketers target specific generations and provide you lots of data about their participants when asking for your help in developing the right award mix?
 
Ana Tovar: Not always. Some provide specific demographics like age ranges, female-dominate or male-dominate, but not always.
 
Sharon Authier: Data would actually be very helpful, but many have a wide range of participants they’re trying to appeal to, or they are trying to engage a fairly broad range like 18- to 34-year-olds. And we’ve talked about how different the people in a broad range like that can be.
 
Michelle Flores: When we’re putting together a promotional assortment around a holiday like Mother’s Day or Father’s Day or around participants with a certain interest, like cooking, we can dive deeper into the types of participants whom the loyalty marketers could engage and get more data on. Seasonal events like back to school, spring cleaning, gardening, and outdoor living are more theme-related but do allow you to think more deeply about more narrow demographics and life stages of the people they would engage.
 
What about experiences? There’s lots of buzz right now about how experiential rewards engage people.
 
Wendy Reed: Experiences have been growing. But lots of things count as experiences. It’s not just travel or hot air ballooning. It can also be vendors who offer speed, convenience, and time savings to customers. That’s why our clients like to add things like in-home experiences. This includes things like self-prepared meal deliveries. Experiences are important and a growing category, but it’s more than just things like baseball camps and race car driving today.
 
Jim Valenti: Using points to book airline tickets isn’t new. Airline frequent flier programs have been doing that for the last 50 years. And travel-related experiences have been part of our portfolio for years.  But often, only elite or high point earners can afford to redeem for these, or they have to save up points for a long time just to get an experience, which may not be the kind of regular engagement our customers are looking for.
 
Wendy Reed: Some of the more creative experiences we have added are things like in-home meal delivery services—Blue Apron, Home Chef—services like that. We’ve even done things like make-up samples as experiential awards to engage participants. But you need to consider a couple of things when you get into these new experiential awards. First, they can get very popular very fast, but they can also cool down just as quickly. Be ready to change things in this category rapidly.
 
Most of these new options are subscription-based, which can be challenging for most loyalty programs with the exception of credit card programs. And, finally, you need to remember most of these companies are new and have never even considered loyalty programs as a distribution channel for their offerings, so you will need to take time and explain what you do to them.
 
So, what changes do you expect to see in the next three to five years in rewards
 
Sharon Authier: Things are changing so rapidly in the rewards arena. One thing I would certainly expect is for redemptions to continue to increase with shorter timelines between earning points and spending them. More and more of the award options even encourage earn and burn to keep the participants engaged. The immediate gratification works for the program member and the quick redemption works for the program owner as well.
 
Wendy Reed: Gift cards have grown because they’re simple to understand and becoming more and more popular at retail. I think that category will continue to grow as more regional retailers find it easier to get into gift cards. 
 
Michelle Flores: I also think digital rewards, including e-cards, will continue to grow, but that also brings up the ongoing battle against fraud. Platform providers will need to regularly update their best practices and technologies to prevent fraud as they continue moving into these awards. It’s an arms race and fraudsters continue to look for new ways to game programs, so loyalty marketers will need to stay vigilant and on the lookout for it.   
 
Wendy Reed: I can tell you suppliers are focused on providing people speed, convenience, and saving them time. The self-cook meal delivery subscription services are one example. They’re convenient and save busy people time. But the attention span of buyers is short, so an offering can rise quickly and fall just a fast.
 
But I’ll also tell you that people with points most often use them for things they’d “like to have.” It’s guilt-free spending. And they use points to redeem for a little higher value, a little higher perceived quality, and more recognizable brands than they’ll spend their own money on. That’s something we’ve always seen, and I don’t think it will change anytime soon.

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