There is no way to deny that rewards programs do work. A rewards program can help you build customer loyalty, deepen engagement and serve as a marketing benefit to attract new customers. That’s why reward marketing is also termed with loyalty marketing sometimes.
A study by Technology Advice showed that
“82.4 percent of customers were more likely to shop at stores that offer some kind of loyalty program,”
proving that an effective rewards marketing strategy may be just what you need to edge out the competition.
Now the question is why reward programs work? Let’s try to know the benefits of a rewards program to understand why it’s a good model for your business!
Benefits of rewards marketing
Reward programs make it easy to offer additional value that encourages customers to engage with your brand. By offering rewards like discounts, or exclusive access to new products and services customers are given a solid reason to engage with your brand beyond their first purchase. This promise of additional value makes it much more likely that they’ll forge a lifelong relationship with your brand. It makes them feel valuable and special thus the customers feel connected to the brand.
Not only do reward programs sweeten the deal for existing customers, but they also draw in new ones. It’s just like any other value proposition in business — if you offer it and your competitor doesn’t, you’re more likely to secure the sale.
Few tips regarding reward programs
You should lead with a strong offer.
Your rewards program should be appealing enough to entice customers to want to sign up and use it repeatedly. Consider how your rewards program could be structured to reward customers when they agree to join, and to encourage them to return consistently.
Make them feel special.
Customers want to feel like they’re valued as rewards program members. What better way to market your rewards program than benefits that give customers the “VIP” status they seek? Whether you give rewards participants exclusive access to deeply discounted items, or host special events for rewards members that aren’t open to the public, your rewards program can simultaneously act as a reason to stay in touch with customers consistently, while demonstrating that your business is committed to giving its loyal customers the special treatment they deserve.
You can partner with others.
Increasingly, credit card and travel rewards programs have partnered with similar brands that embody their brand and customer ideology to structure appealing cross-sell offers for customers. The City Bank, Eastern Bank LTD. for example, partnered with different food chains, healthcare etc. of Bangladesh for a symbiotic relationship that rewards members with points and discount offers. Small businesses can structure rewards program offers with partner discounts from other local businesses in much the same way. This creative approach to rewards offers can help you increase how many customers may be attracted to your rewards program while empowering you with more insights about their consumer behaviour that you can use to develop even more relevant content, promotions and offers in the future.
You can surprise the customers with offers.
Surprising rewards customers with offers, freebies and benefits they don’t expect can be a marketing advantage that boosts customer engagement. At Sephora (A renowned cosmetics brand), for example, rewards program members receive surprise notifications when they’ve earned enough points to visit the store for a free makeover, in addition to coupons and similar special offers.
Keep communicating the value of their rewards program membership. Rewards programs have become so popular that customers may not be aware of the points they’ve earned, or the value those points have in terms of redemption options. Provide customers with consistent updates of the points they’ve earned, how near they are to having enough points required for redemption and ways they can earn points with your rewards program. Whether you send the information in an email, a text message update or a postcard, providing customers with a running tally of points earned gives you a reason to stay in touch and helps you stay front of mind with customers who may simply need a gentle nudge to come back and buy.
How to build a rewards program that works
A well-working rewards program is three things simultaneously: rewarding, engaging, and motivating. Here are some quick tips on how to ensure that your loyalty program is a success.
Make it clear and straightforward
One of the hardest parts of launching a new rewards program is explaining it to your customers. If it’s too complex or time-consuming, your customers simply won’t sign up. Make sure that you can explain the program clearly in a sentence or two, and always lead with what’s in it for the customer. The more value you can show upfront, the more appealing joining will be!
Use email marketing effectively
If you want your customers to join your program, they need to know about it! Let customers know that you’ve started a program, what they can earn, and how to earn it with a simple program launch campaign to get existing customers engaged. Similarly, include a clear call-to-action and highlight the benefits of joining in your re-engagement campaigns to get dormant customers excited to revisit your store. These two campaigns will go a long way to making sure your brand community is investing in your growing program.
Make it valuable
According to the Harvard Business Review, rewards do create loyalty but only if a company knows how to share value. That means that you need to be willing to give customers rewards that actually look and feel valuable to them. The easiest way to do that is with VIP tiers. Segmenting your customers based on how often they shop with you allows you to reserve your most exclusive rewards (such as early access to sales, exclusive products, and invitations to special events) for your most loyal customers. After all, these customers are more valuable and should be rewarded to reflect that status!
Rewards programs can be an inexpensive way for small businesses to cultivate a sense of customer loyalty, obtain invaluable customer contact information and give customers a reason to want to return. With these simple tips many of which have proven highly effective for rewards programs executed by major brands. You can ensure that you structure a rewards program that results in the marketing return on investment you seek.
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