Transactional rewards, like discounts and points, have drawbacks. Here are 12 better ideas for rewarding your customers.
$1 = 1 point. $50 spent = $5 off your next purchase.
We run into these basic types of loyalty program rewards on a day-to-day basis.
Transactional rewards like these are supposed to incentivize us to keep buying from a business by giving us some sort of value back. And sure, the value is there – whether it be immediate or eventual in its tangibility. But transactional rewards have drawbacks because they tend to be:
- Commonplace and dull - Competitors can easily replicate them.
- Non-personalized - They treat customers as a homogenous group rather than recognizing their individual preferences and needs.
- Short-term focused - They tend to prioritize immediate benefits potentially neglecting long-term customer loyalty and engagement.
- Transactional in nature - Instead of fostering genuine loyalty, discounts and points may encourage customers to engage solely for the sake of earning rewards, diminishing the relationship-building aspect.
- Conditional - Reward restrictions often apply, limiting their accessibility and potentially frustrating customers.
Customers have high expectations of the brands that they shop with. 71% of customers say that loyalty programs are a meaningful part of their brand relationships.
People expect you to have a loyalty program in 2023 – it’s the norm. But having a unique program that sets you apart will significantly impact your brand’s ability to form strong, long-lasting relationships with your customers. Well-constructed, unique rewards are both cost-effective and memorable.
If you want to learn more about the different loyalty programs, check out our last post to see the benefits of each one. For now, let’s look at different rewards that are out there that fit into your loyalty program.
Exclusive access to brand-specific rewards, events, and products allows members to deepen their connection with your brand.
Exclusivity is certainly not new to most industries. Take the fashion industry for example. Neiman Marcus’ Incircle program connects members to personalized travel experiences access to hard-to-get tickets to exclusive events.
Luxury fashion house Dolce & Gabbana launched an exclusive NFT collection called UNXD that grants token holders access to both physical and digital drops.
Exclusivity doesn’t mean free or discounted. What matters is that a customer perceives the reward as valuable.
2. Community access
A brand community is a social space where customers who share similar interests can convene and socialize. These spaces benefit both you and your customers by engaging them and providing a place to socialize.
A brand community can be hosted on a private platform like Slack, Discord, or Twitter. If sufficiently active and enticing, a brand community can lead to a significant increase in customer engagement as well as the creation of brand-orientated UGC.
For example, many YouTube and Instagram creators have Patreon accounts where a fan can become a member for a certain amount of money per month. Creators can make perks for members including access to such private social spaces. Web3 games like The Sandbox are designed to be community-driven platforms where creators can create and monetize their own games through the sandbox without the need for a publisher. The Sandbox thrives on an ecosystem of UGC and helps anyone interested get started building games for the Metaverse.
3. Freebies and unexpected rewards
Membership programs typically involve paying a recurring fee in exchange for a monetary benefit. But an unexpected reward can surprise and delight your members.
For example, a membership program with a coffee shop may give out a free once-a-month drink to its members. There are many active examples of this with popular membership programs: Amazon Prime and Prime Gaming, Starbucks Birthday Drinks, and more.
Even if the reward isn’t particularly valuable, the surprise of an unexpected gift shows that you appreciate your customers. These sorts of rewards are vital for membership programs. Keep in mind that the more personalized the reward, the more meaning it will have.
4. Personalized offers
A personalized reward is a type of incentive or benefit that is tailored specifically to an individual based on their preferences, behaviors, and/or characteristics.
Customers are actually comfortable with sharing data if it leads to products and services that make their lives easier. A strategic approach to a customer rewards program will incorporate personalized rewards with a membership program. Some content management systems let you queue progressive form fields to make the data collection process more efficient for you – and easier for your contacts to fill out. Over time, you paint a clearer picture of each customer’s demographics, interests, and preferences.
Progressive fields help minimize repetitive, overly intrusive questions. Once relevant data is collected, rewards such as discounts or access to exclusive products are distributed to the customers.
For example, McDonald’s is pursuing increased personalized rewards with their members. This will include greeting members by name and emailing them exclusive offers based on their order history. When personalization is done well, there is a 6.4x lift in membership satisfaction with a loyalty program.
5. Tiered rewards
Tiered loyalty programs give customers better rewards and more benefits based on the amount of business they do with a brand. Customers generally ascend a tier by either paying more for a higher membership or spending more money within a designated time frame. Achieving a higher tier within a program may mean, for example, access to free shipping, access to exclusive events, members-only products, and more.
Tiered rewards are meant to give customers escalating benefits over time and incentivize them to continue doing business with you. This also ensures that higher levels of customer engagement are rewarded accordingly.
6. VIP treatment
Customers that pay for premium memberships demonstrate higher brand loyalty and should be treated like the VIPs that they are.
VIP treatment means giving them easier and preferential treatment as they engage with your brand. For example, AMC’s A-List membership gives members access to a shorter line at the concession stands.
VIP treatment means being equipped to give certain members priority over others. Have separate account managers, help lines, and personalized experiences for these important members.
7. Referral rewards
The classic reward-a-friend program is about encouraging your customers to be brand advocates. A brand advocate recommends a brand to their friends and family, personally advocating for its legitimacy. This is particularly important when 81% of customers trust the advice of friends and family over advice from a business.
You can incentivize customers to recommend your business to others by giving them rewards for referring someone else to sign up for a membership.
Many gyms such as Orangetheory Fitness have referral programs where friends of members can get a free class when they sign up. If the friend eventually signs up for a membership, the original referrer may even receive some sort of reward, like a free drink or snack.
An experiential reward can take different forms depending on your brand’s industry. One example of an experiential reward is a concert ticket or backstage pass.
But experiences can have a wider reach while still being personalized to an individual customer’s interests. A unique workshop, tour, or training session may be a benefit of a membership program. Members of your program may get access to local events that you host in their area.
Experiential rewards can yield as much – if not more – value from your customers as traditional advertising. Community-building goes hand-in-hand with an effective experiential reward.
9. Charitable donations
A charity donation with every purchase, aka “cause marketing”, involves a brand donating a portion of its profits to an organization. This sort of reward structure is a mutually beneficial way for both the purchaser and seller to benefit from a sale.
As an example, Uncommon Goods donates $1 of every purchase made to a Better to Give partner of the customer’s choice. Uncommon Goods members will have $2 donated for every purchase.
Gamification in a loyalty program refers to the application of game design elements and mechanics to enhance user engagement and motivation. This involves adding achievements, badges, levels, or challenges that all have associated rewards. In general, making a membership feel more game-like will give a customer a feeling of accomplishment for making repeated purchases.
An example of effective gamification is the language learning app Duolingo. Duolingo provides interactive lessons, achievements, badges, and games that are designed for keeping people engaged while learning another language. Paying for a Duolingo membership allows customers to make an unlimited amount of mistakes and try lessons again.
11. Anniversary awards
A membership should be a long-term relationship, not a quick encounter! For this reason, many companies incentivize customers to stay the course and keep their membership by offering rewards on the anniversary of their sign-up. Customers could also be rewarded for other milestones based on their level of engagement over time.
12. Early access
Committed customers that regularly engage with your brand are often the best sounding board for a new product or service. They can articulate what they already enjoy about your brand and express their interest in potential future products. Granting dedicated members access to an early product, service, or promotion is a mutually beneficial way to test the market and gauge interest while keeping your members actively involved.
Nike’s first access shop gives exclusive offers to members based on interest and order history. Members are notified about limited trial versions of products and have to act fast in order to purchase. Clubhouse Archives is a token-gated Web3-only fashion brand that is entirely community-led. Members vote and design the garments that will eventually be distributed to the community as exclusive drops.
Exciting rewards structures will set your brand apart as a business that cares about customers on an individual basis. Creating rewards beyond points or coupons sets you apart from your competition as a brand that’s not afraid to listen to its audience.