Operators of loyalty programs need to place more emphasis on the rewards side of the experience according to Barry Kirk; Vice President, Loyalty Strategy, Maritz Motivation Solutions; and Mary Luckey, Director of Reward Strategy, Maritz Motivation Solutions.
During Loyalty 360’s Tuesday webinar -- “Now + New + Next: Rethinking “Rewards” in the New Engagement Economy – Kirk and Luckey explained to attendees that given the rise of social channels, mobile payment, geo-location, and gamification, the definition of reward is undergoing a dramatic shift along with ideas on how frequently rewards need to be delivered to drive optimal behavior.
The challenge for brands will be how to integrate these new reward models into existing programs that will maximize benefit without alienating existing members.
While just as much strategic thought goes into it, the rewards side of loyalty programs has been the neglected part, Kirk said.
“We need to create more engaging experiences around the rewards and be thinking about engagement,” he said.
According to Maritz research, 53% of loyalty program members left at least one program in the past year – but only 7% notified the company of their departures. What’s more, only 16% of consumers are redeeming through loyalty programs – a very low number.
“At some level we’re missing the mark in creating an awards strategy people want to engage in,” Kirk said. “The key is creating an experience that’s not only engaging at the level of enrollment.”
Kirk cited the 4-Drive Model of Motivation: acquire, defend, bond, and create.
The drive to acquire: People are driven to control and retain things, experiences, and status
The drive to defend: People defend their turf, status, relationships, and creations
The drive to bond: People strive to form mutually-caring relationships, and desire to fit in and cooperate
The drive to create: People are driven to learn, to comprehend one’s self and environment, along with imagining and inventing
“We’re focused too much on acquire and defend,” Kirk said.
But Luckey said there needs to be more of a focus on bond and create.
“All people are driven by a rational side of self and emotional side, and that’s critical to keep in mind when looking at rewards programs,” she said.
Luckey said traditional loyalty program rewards are tangible, very tactical, and not very strategic.
“Someone picks out a limited selection of rewards and, over time, starts adding rewards like online travel and charitable rewards,” she said. “Before long, it’s a hodgepodge of rewards. They’re throwing rewards at consumers without a strategy behind it.”
Big Data, Luckey said, Big Data is the linchpin to revamping a loyalty program rewards strategy.
“Big Data is social intelligence,” Luckey said. “People are telling us more than they ever did before. We have new generations, more digital devices, and soon we’ll have more digital devices than people. People want things personal, relevant, and convenient. Consumers are in the driver’s seat. We want to give people more of what they love. Things with emotions tied to it.”
Kirk said behavioral intelligence is also Big Data. Virtual rewards were not around a decade ago. Virtual rewards include non-physical goods such as badges, likes, shares, levels of progress, comments, and points.
“We’re not sure what to do with all of that social activity because we don’t have a monetary value associated with a tweet,” Kirk said.
The upside of virtual rewards are:
Low cost to produce virtual rewards
Low cost to store them
Supply inexhaustible
Attach it to any behavior
Consumers like virtual rewards
Kirk said companies should try linking virtual rewards to intrinsic motivators.
He offered the five best uses for virtual rewards:
Show progress toward a goal
To acknowledge mastery
To indicate social connection/status
To enable online personalization
As a proxy for a tangible reward
Luckey said now is the perfect time to start using Big Data in developing engaging rewards strategies for loyalty programs.
“Every piece of information we have makes us smarter and more engaging with the program,” she said.