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Tag: customer rewards

  • Brand Loyalty Isn’t Enough to Keep Customers — But Reviews and Rewards Are. Here’s How. | Entrepreneur

    Brand Loyalty Isn’t Enough to Keep Customers — But Reviews and Rewards Are. Here’s How. | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    We’ve come a long way from the negative and misleading image of rewards programs only being for low-income consumers. I know millionaire investors who make sure they use their air miles and take advantage of the punch cards and point systems at local mom-and-pop cafes. The traditional approach of building a brand and a loyal customer base is being replaced by rewards programs, which disproportionately benefit bigger spenders. The more these consumers spend, the more they get back — setting up a virtuous cycle for both buyer and seller.

    In our survey of over 50,000 consumers, only 3% said they would stay loyal to their top brand if a competitor offered cashback or points incentives. The explosion of the number of products at marginal price differentials on retail platforms helps explain this dramatic shift. With so many transactions taking place online, consumers are being swayed by the best deals, the best reviews and the best rewards.

    Rewards build up over time, so the purpose of these programs is to create an ongoing relationship with customers, especially those who spend the most. It’s a simple equation: Offering them the most value ensures they remain the most loyal. Brand equity may not be dead, but it is being redefined by the need to reward repeat customers in this more complex operating environment.

    Related: How Brands Can Turn Short-Term Rewards Into Long-Term Loyalty

    Reward programs are everywhere

    From your local juice shop offering a free beverage after collecting 10 stamps to the major players such as Amazon Prime and Target Circle, rewards programs are ubiquitous and public awareness is high. Almost 80% of people in our survey said they were familiar with apps and websites that offered purchase rewards. According to software company Oracle, 72% of consumers belong to at least one loyalty program.

    While reviews undeniably wield considerable influence over consumer choices, it’s evident that spending habits are increasingly pivoting around the strategic redemption of reward points. For instance, when Discover Card designates certain vendors offering additional points for a limited period, consumers are spurred to intensify their spending at these locations. Such strategic initiatives benefit consumers with bonus points and stimulate the entire ecosystem, creating a win-win scenario for all parties involved.

    Brand loyalty is also being informed by the preferred rewards of consumers, with two studies divided over the No. 1 category: Capgemini says 69% of consumers prefer cashback above all other rewards, while Merkle found that 79% of respondents preferred discounts. The constant is that everyone wants to be recognized and appreciated for their loyalty.

    What works best for you?

    There are two types of loyalty programs: Your own hosted program and an externally hosted program that offers a rewards ecosystem. No matter which you choose, you don’t need to have an enterprise business.

    A hosted program can vary from business to business, but it’s likely the type you are most familiar with. You spend enough money or make enough purchases at a business and are rewarded with a free item or something similar from the same business. Almost every small business now has punch cards or a point system that rewards us when we return regularly — whether it be your local coffee shop or the restaurant down the street.

    Alternatively, I am seeing growth in external loyalty programs that allow brands to reach new customers and reward them for sticking around. These programs can be broken down into two more categories: One that partners with individual industries or market segments, such as Ibotta’s hosted rewards program that offers rebates in grocery and retail, and the other that operates across the entire consumer landscape.

    I call the second type of program a “unified provider.” This type of rewards program is evolving in unique ways as mobile apps allow people to be rewarded based on where and when they are spending across varying stores and brands and accumulate rewards.

    Related: 3 Types of Reward Programs Every Retail Brand Should Know About

    Going further than games

    The surge in mobile usage over the last decade has unlocked vast potential for these unified reward platforms. My company aims to become the primary channel for consumers to amass rewards from diverse spending avenues. Initially focusing on mobile gaming, we plan to extend into other sectors like fuel, groceries and other areas consumers wish to be rewarded in.

    One of the key benefits of a unified provider lies in its cumulative nature. This allows consumers to garner more points than they ever could through multiple independent programs. The more consumers spend across diverse categories, the more rewards they accrue, creating higher value for the unified provider. In turn, the provider can afford to share more rewards with the customer, ensuring they stay engaged with various vendors. In essence, this creates a virtuous circle where all parties involved come out winners.

    Do your homework

    The arena of gaming for rewards and mobile rewards programs is relatively uncharted. Understandably, people harbor skepticism about earning gift cards simply for playing a game — it seems too good to be true! This newness and a dynamic marketplace indicate a clear need for brands to do their homework thoroughly before venturing into these emerging rewards ecosystems.

    If you want your business to use an externally hosted reward program, know that the market can be volatile. New providers often spring up only to vanish just as swiftly if they fail to strike a balance that benefits all stakeholders. Reliable resources are crucial for gathering insights and making informed decisions. Major contributors to the app install ecosystem regularly publish performance indexes of leading publishers. These indexes often include information about players in the rewarded engagement field, making them valuable starting points for verifying potential partners.

    Related: Dunkin’ Donuts Customers Express Fury Online at Pricier Rewards Program

    Reward retention

    The narrative of consumerism has pivoted; it’s no longer just about brand loyalty. The innovative rewards program landscape, from local businesses to global corporations, is expanding, evolving and firmly establishing its presence. And it’s not just about choice or variety.

    Repeat customers generate around 65% of a company’s revenue, underlining the vital role of rewards programs in customer retention, sustainable business growth, and market differentiation. They’ve become much more than just a trend; rewards programs are an essential strategic instrument in today’s consumer market. Brands that recognize this shift and harness the power of rewards will thrive in this dynamic environment, enhancing their consumer relationships and, ultimately, their bottom line.

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    Daniel Todd

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  • 5 Types of Customer Loyalty Programs that Pay Off

    5 Types of Customer Loyalty Programs that Pay Off

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    Opinions expressed by Entrepreneur contributors are their own.

    According to ProfitWell, 80% of future profits come from just 20% of existing customers. So clearly, any effort to keep yours engaged is a worthy investment, and loyalty programs are one of the oldest and most popular ways to do that.

    Put simply, such programs retain existing customers by rewarding them for interacting with your brand — typically via points, discounts, perks or free products. Research from Yotpo in 2019 found that 67.8% of buyers equate brand loyalty with repeat purchasing. It’s not surprising, then, that brands have created associated programs to encourage repeat purchases.

    Here are some proven program categories:

    1. Points

    If you have a credit card, you’re likely familiar with points programs, in which you spend a certain amount to get a number of points. These are usually convertible to cash, or store credit in the case of retail brands. Starbucks has one of the most popular in the world: You use an app or card to pay for orders and earn points. In the U.S., customers can start redeeming rewards once they hit 25 points (or “Stars,” as the company terms them). The brand also runs yearly sticker-based points programs during the holidays in select countries, which encourage customers to collect a number of stickers to get a limited-edition Starbucks planner.

    Related: How Brands Can Turn Short-Term Rewards Into Long-Term Loyalty

    2. Premium

    Paid or premium programs encourage customers to pay a membership or subscription fee in exchange for benefits. Perhaps the most recognizable example in this category is the Amazon Prime subscription, which rewards members with a free membership in its streaming app, free shipping within the U.S. and other added value.

    Some retail brands like Barnes & Noble have membership programs that grant members discounts on items and early access during sales. To get customers to sign up for a paid loyalty program, the key is to offer something that’s perceived as valuable and useful, and among the highest-performing examples of associated apps were recently listed by AVADA.

    3. Tiered

    Tiered loyalty programs follow the same concept as points-based examples — the difference being members are given different rewards as they reach each tier, rather than everyone getting the same. Such programs present members with a specific status name each time they climb up a level.

    For example, most airlines have tiered loyalty programs measured by miles. Qatar Airways, the flag carrier of Qatar, has a Privilege Club for its frequent fliers. New members start on the lowest tier, called “Burgundy,” followed by “Silver,” “Gold” and “Platinum.” As members progress, they earn more privileges and perks. For example, once members hit the Silver level, they get lounge access, while one benefit of the Platinum tier is a no-charge allowance of 55 pounds of baggage every time they fly.

    Member programs in other industries might offer good student, safe driver or good credit discounts, along with referral rewards, VIP status and other perks.

    Related: 7 Ways Leading Companies Boost Repeat Sales

    4. Action-driven

    Action-driven loyalty programs encourage customers to interact with your brand beyond purchasing. For example, they might receive specific points on a first purchase, but to progress as a member they need to like and share your social media pages. To drive members to action, it’s best to also include tiers in these examples.

    A winning example in this category is Adidas’s action-based loyalty program called the adiClub, wherein members are encouraged to shop and post reviews, complete a profile on the website and sign up for a run. Members climb tiers and unlock more privileges and rewards as they earn points. In time, they become brand ambassadors — supporting the company on a more holistic scale.

    5. Cash-back

    Cash-back programs are similar to points programs but with more instant gratification. Many credit card companies offer them and typically reward members between .25% and 5% per eligible transaction. Most companies have partner merchants and a minimum-spend amount before cash-back is granted.

    Related: 3 Ways to Build the Rewards Program Customers Want

    The key takeaway is that instead of competing for attention in a crowded marketplace, it might be better to focus efforts on the audience you already have. For hundreds of brands spanning dozens of industries, customer loyalty programs have proven to be an effective strategy for retaining customers, boosting relations with them and increasing brand affinity.

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    Nick Brogden

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  • As Inflation Soars, Consumer Habits Are Changing. Here’s How to Adapt

    As Inflation Soars, Consumer Habits Are Changing. Here’s How to Adapt

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    Opinions expressed by Entrepreneur contributors are their own.

    The current uncertain economy, coupled with rising inflation, is driving consumers to seek money-saving tactics, including cashback rewards, discounts, and online coupons.

    Economic pressures are driving the broad adoption of shopping rewards programs, which are “crossing the chasm” from coupon clippers and early adopters to mainstream consumers seeking to cut costs any way they can.

    In a survey commissioned by Wildfire and conducted by the research firm Big Village, we examined mainstream consumers’ attitudes and expectations toward rewards and other shopping incentives. The findings revealed that 90% of respondents are more interested than ever in getting discounts, using coupons and earning cashback rewards when shopping online, precisely due to rising prices.

    Related: 3 Secret Reasons Why Your Brand Needs a Rewards Program

    Rewards and discounts affect online purchase behavior

    Regardless of the economic environment, consumers will continue to shop. But in challenging financial times, they will modify their buying habits, for example, by purchasing store brands instead of more expensive options. Recent reporting on these types of behavioral shifts includes from Personetics, finding that almost 2 of 3 consumers are curbing spending on non-essentials due to the higher cost of living, and from Gartner, revealing that nearly 1 in 4 consumers will spend less on holiday shopping this year due to higher prices.

    In such a setting, rewards and other incentives are a substantial factor influencing consumers’ online shopping behavior. The availability of rewards and incentives directly and positively affects consumer behavior at the top of the purchase funnel (awareness and consideration) and the bottom (completing a purchase).

    A key finding in the Wildfire survey reveals that rewards impact consumers’ behavior even before they decide where to shop: 81% state that the availability of rewards is a factor when deciding which ecommerce retailer gets their business.

    In addition to influencing where consumers shop, rewards and incentives further impact the decision to purchase, driving higher sales conversion rates. Findings show that most respondents are more likely to complete a purchase when they can earn cashback rewards or use a coupon or discount code.

    Many consumers seek bargains when they shop online, and we expect consumers’ propensity for ferreting out discounts will further increase as the economy tightens. The majority of respondents (61%) state they “always” or “often” look for coupons, discounts, cashback rewards or other ways to save on their purchases.

    Based on these findings, the takeaways for any brand selling online are clear:

    • Retailers can win the battle for consumer preference by offering rewards for shopping, either through native loyalty programs or online cashback rewards programs.
    • Offering coupons through loyalty and rewards programs drive merchant benefits, including increased sales conversion.
    • Businesses choosing not to offer such incentives are disadvantaged in consumers’ selection of online shopping destinations.

    Related: Why Trust and Incentives Help Consumers With Better Brand Selection

    Responding to customer preferences for simplicity

    Furthermore, consumers seek ease of use and want to access rewards and discounts conveniently within the natural flow of their online shopping behavior without detours or hurdles. Most consumers surveyed for Wildfire’s report prefer rewards automatically applied at checkout or activating them while shopping without having to search elsewhere. Conversely, fewer consumers want to receive an email with a special offer, and even fewer still prefer to search through a directory of offers.

    Consumers have spoken: the simpler and more convenient a rewards program or discount offer, the better. Consumers prefer easy-to-understand, simple-to-access rewards such as cashback over rewards like points, miles, or future discounts. The survey also revealed that 80% of respondents prefer cashback as their reward instead of points or credits towards future purchases.

    The need for simplicity and convenience in rewards programs is borne out by other research. In the 2022 Loyalty Marketing & Rewards Program report from Comarch and Forrester, retail marketers were asked what they find to be the most critical elements of a loyalty program. The results showed that most are leaning toward offering cash rewards.

    What’s the implication for businesses considering a loyalty program? Online shoppers have become extremely savvy. They are now much more accustomed to seamless digital experiences, so their expectations regarding earning and redeeming rewards through retail loyalty programs or other shopping rewards programs have changed. Consumers are no longer willing to settle for jumping through hoops, and retailers will see low adoption for their program unless it is simple and convenient for customers to earn and redeem rewards.

    Related: The Marketing Power of Rewards Programs

    Conclusion

    By offering easy-to-access shopping incentives — such as cashback and coupons — businesses selling online can meet the demands of today’s value-seeking consumers. Through such programs, they cannot only positively influence consumers’ purchase behavior but also provide some much-needed relief for their wallets.

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    Jordan Glazier

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