Before the heady days of smart phones and online advertising algorithms, rewards programs meant a 3.5″ x 2″ punch card that either found a home within your wallet or the cup holder in your car. When one was in receipt of said punch card, one remembers the promise and possibility of that fabled 10th and final punch. That “free” item – whatever it may have been. Instead, that card remained in its misbegotten home until its bearer simply gave up on that promise.
These days, rewards programs are far more sophisticated than the punch cards of days past. Thanks to technology, loyalty and rewards systems are more relevant and engaging than ever before. Moreover, thanks to smart phones, rewards programs can inspire real-time action.
Now, many of our loyalty cards live on our smart phones, and we’re inundated with offers and e-mails to entice us to earn more points.
But as a result of widespread adoption of loyalty programs by brands, customers have come to expect benefits for return business. And thanks in part to an influx of similar programs that have leveled the playing field, the effectiveness of rewards programs is highly variable and dependent upon the type of program and its implementation.
So, as a retailer, how can your program break through the white noise?
It’s About More Than Points
Despite the apparent saturation, a report released by Forrester Research last year indicates consumers still view loyalty programs favorably and are on the lookout for new and innovative programs from which they can benefit.
According to the report, 72 percent of adults online belong to at least one loyalty program and those enrolled in loyalty programs report that they belong to nine, on average. Only 24 percent of respondents said they belong to too many loyalty programs. Seventy-eight percent of respondents said loyalty programs save them money, and nearly half of respondents said loyalty programs influence what they buy.
So while consumer engagement in customer loyalty programs doesn’t seem to be waning, companies are reaping the rewards. According to the report, loyalty program members on average spend $42.33 more with traditional retailers than shoppers not in a loyalty program.
Today’s companies realize that loyalty programs aren’t just about earning points. For example, beauty retailer Sephora, who has seen much success with their Beauty Insider program, offers free makeup classes and access to exclusive beauty events to keep their customer base engaged. Benefits like these are putting a new spin on customer loyalty.
Influencer Marketing Programs Are Essentially Elevated Rewards Programs
Due to the rise of social media, a number of companies have implemented influencer marketing programs where social media users with large followings advertise a company’s products or services in exchange for perks and free gear. Influencers can also receive a percentage of sales in exchange for promoting products.
These kinds of programs represent a new kind of rewards program, reserved for a select group of trusted consumers. And they’re leading to results for companies. In 2016, companies that implemented an influencer marketing program received $11.69 in earned media value for every $1.00 of spend, on average. That’s a 4.4 percent year-over-year increase.
After a few years running a cash back loyalty program, luxury retailer Nordstrom eliminated its program from Ebates and has turned to influencer marketing. SimilarWeb estimates that 74 percent of Nordstrom’s August 2017 mobile traffic came from referrals. Influencer platform RewardStyle is estimated to have brought in 79 percent of that total. And SimilarWeb estimates 38 percent of Nordstrom’s desktop traffic comes from RewardStyle and its 20,000 influencers.
The takeaway? Rewarding influencers, who in turn get to reward their audiences, is an effective strategy in supplementing a traditional customer rewards system.
Mobile Is Essential To Loyalty Programs
Consumers are constantly using their phones and other smart devices, so customer loyalty programs that don’t have a mobile component are not likely to succeed. According to a 2016 report, 57 percent of consumers want to engage with their loyalty programs via mobile devices.
It’s no secret that Amazon has been leading the way in e-commerce. But the company’s Prime Day event is a great example of the importance of mobile capabilities to a company’s loyalty program. Prime Day deals were only available to those customers enrolled in Amazon Prime. Throughout the Prime Day event, users enrolled in this loyalty program received regular notifications on their mobile devices about members-only deals and they could shop these deals directly on these devices.
In general, Amazon Prime members receive perks like free two-day shipping along with free movies, music, books, and photo storage. As a result of these offers and the annual Prime Day event, 91 percent of Prime members renew for a second year and 96 percent of those subscribers pay for a third year.
Rewards Program Members Are Marketers
Similar to influencers, members in rewards programs have proven to serve as some of the best marketers. Those loyalty programs that are most attractive to members can lead to an increase in sales because members spread the word about them and inspire others to join. According to a 2016 report on brand loyalty, 73 percent of loyalty program members are more likely to recommend brands with good loyalty programs.
The home entertainment industry is innovating in the rewards game in a way that retailers can adopt. Today there are over 200 subscription video-on-demand platforms in the U.S. and in order to set themselves apart, these companies are turning to unique loyalty rewards programs. Take new video-on-demand company TaTaTu as an example, they are providing rewards to viewers and launching an e-commerce store where viewers can redeem rewards for products. Founded by Hollywood producer, Andrea Iervolino, the company is one of the first video-on-demand businesses to offer a rewards program.
Video streaming services make a lot of their money from advertisers. And instead of reaping all the rewards, the company is passing that revenue onto those viewers who watch advertisements. The company’s rewards program “connects users and content providers in a way that not only rewards people for consuming entertainment, but also for producing it,” says Iervolino.
For retailers, it means looking more holistically at the customer to translate desired behaviors, such as viewing advertisements or browsing in store, into tangible rewards.
Rewards programs are ubiquitous, and because of that, they risk becoming stale. By understanding the full scope of benefits loyalty programs can provide consumers, looking at influencers with a fresh perspective, and doubling down on mobile, brands can keep their rewards cards out of the cup holder of obsolescence.