Rewarding Loyalty: Thinking Outside The Wallet

Nov 20, 2017

BY LAUREN DREXLER – CLIENT DIRECTOR

Every year, starting in early November, I begin to experience what I call the discount blur. With almost every retailer trying to take advantage of upcoming holiday spend, every day I receive dozens of emails filled with promotions, reward point multipliers, or alerts of upcoming sales. Don’t get me wrong—I love to take advantage of a good discount—but during the holiday season, these types of offers have become the expectation.

What now jumps out to me are the companies that are thinking bigger than just transactions. In addition to the expected financial discounts, I am starting to see businesses use their loyalty programs to incentivize other forms of behavior, like social media engagement and product usage.

This gives customers the opportunity to benefit from interacting with a brand in various ways, and businesses the opportunity to deepen their existing relationships, or expand their brand’s reach, with a relatively small investment. With the flurry of marketing and purchase activity that occurs during the holiday season, it’s the perfect time to experiment with rewarding customers for non-purchase behavior.

THE BENEFITS OF NON-TRANSACTIONAL REWARDS

Companies can incentivize at least three types of non-transactional customer behavior with rewards: sharing preferences, exploring rewards program features, and engaging with the brand via social media. Each of these behaviors supports the overarching business objectives of increasing customer engagement and/or expanding brand reach. The loyalty program offered by the clothing retailer Express, Express Next, does a great job taking advantage of all of three categories.

1. COLLECT CUSTOMER PREFERENCE DATA

While customer behavioral data is relatively easy to capture, it can be more challenging for companies to collect data about their customers’ needs and preferences. Many retailers’ websites include preference centers, but there is often limited benefit to customers for filling out their preferences—and in many cases, none. Rewarding customers for completing their profiles, or filling out a survey, is a great way to collect valuable, actionable data.

The Express Next program rewards customers with a $15 coupon just for completing their profiles. It’s no wonder that this rare data is so valuable: it can be used to design more effective (and cost effective) marketing campaigns, understand how customers perceive the company’s value proposition, and identify opportunities to improve customer experience.

2. DRIVE ENGAGEMENT WITH SPECIFIC FEATURES

Many companies have strategic engagement channels or product features that they are trying to test or build, and providing incentives to get customers to try them out can be effective. For example, Express appears to be leveraging the Express Next program to increase enrollment with mobile texts.

In another example, earlier this year, Sephora (an Elicit client) took advantage of their loyalty program to increase participation in their online Beauty Insider Community. While Sephora is known in the beauty world for their excellent loyalty program that includes various non-points-based benefits, they are somewhat notorious for only awarding points for spend. As part of the launch of the Beauty Insider Community in mid-2017, Sephora emailed members of their Beauty Insider loyalty program and offered them points for participating in the new virtual community. A smart move, considering the community’s success would be based on engagement from customers.

3. INCREASE EXPOSURE VIA SOCIAL MEDIA

The value of peer-to-peer marketing via social media platforms is well established—and now, many brands are rewarding customers for talking about their products online. Most companies start with the basics—like Express Next does by incentivizing customers to simply link their social media accounts to the loyalty program—and then expand to reward specific types of shares or mentions.

For customers, it’s the collection of these perks that really matters. Each action is typically rewarded by a relatively low-value award, but deep engagement can really add up. This is in the best interest of the brands offering the points, by detracting one-offs and minimizing points liability, while attracting and rewarding the most engaged customers. Smart brands are extending beyond points too, offering free products or samples, experiences, or access to short-term promotions in a similar manner.

THE REAL VALUE LIES IN THE DATA

While incentivizing specific actions like the ones listed above has clear short-term value, the long-term value comes from the data generated by these actions. Leveraging a loyalty program beyond purchases turns it into an incredible source of data, giving businesses direct access to preferences, social behavior, demographics, and offer interaction data. Good marketers and analysts know that coupling this data with behavioral data is a tremendous asset that pays dividends for years to come.

So this holiday season (and beyond!), consider rewarding your most loyal customers for behaviors other than those that involve taking out their wallets. Trust me, it’s the gift that keeps on giving.