It’s a thrilling time for your business to think of loyalty incentives for your membership programme. All the wild ideas and brainstorming! Don’t you think it really brings out the inventiveness of your team? Regrettably, reward planning meetings frequently come to nothing. In our experience, the majority of issues result from a lack of understanding of reward structures. What kind of incentives are available? What are the ideal incentives programme practises? And what errors ought to you avoid? Don’t worry; everything is under control. This manual has all the details you require.
Why Do Loyalty Rewards Matter and What Are They?
Let’s examine what loyalty rewards genuinely are in the context of customer retention before getting our teeth into award categories and investigating how they are used.
Simply described, rewards are advantages or tangible objects that members receive as gifts, assignments, or grants in response to their efforts or accomplishments within the loyalty rewards programme.
Key drivers of motivation include:
Maintain long-term investment from customers
Encourage customers to do the desired activity by providing incentives for doing so. Such behaviours may include increased brand interaction or merely the adoption of new features or services offered by your company. We have developed a Reward Planning Worksheet to guide you through the full process of choosing the greatest rewards for your members. You can learn more about each step in detail by reading the rest of this guide.
Select the Best Reward Types for Your Customers
You must first determine the kinds of loyalty benefits you want to provide. There are five standard categories for loyalty rewards. These elements are frequently present in successful loyalty programmes, but not always all of them. Therefore, it makes appropriate to begin by determining which best complement your plan.
Financial Advantages
Financial perks include fixed- or percentage-based discounts, such as coupons for free shipping or 5% or $5 off a transaction. Customers feel like they are receiving a good deal and saving money after every transaction when they obtain financial rewards. The quickest and simplest rewards to put up are monetary ones because you don’t have to deal with tangible objects.
Gifts
Customers frequently anticipate receiving a tangible object or handcrafted item when they sign up for a reward programme. Gifts may be from a third party or from your own stock. On significant occasions, such as a member’s birthday or the anniversary of their registration, you can give them gifts. Gifts are the ideal approach to thank your consumers and demonstrate your concern.
Experiences & Events
This category includes events that can be planned by your business or a partner, including parties, concerts, hotel stays, and free lunches. Events and experiences offer fantastic chances to increase client loyalty, offer exclusivity, and create long-lasting memories. To maintain the sensation of exclusivity, keep in mind that the prize should be rarer the more exclusive it is. Additionally, planning events takes a lot of work, especially if you work internationally.
Define the Reward’s Actual Value and Cost.
The cost of rewards is one of the most important factors to consider. The most expensive and exceptional gifts should be reserved for your best clients; you shouldn’t give them to everyone. Try to offer clients incentives that are of high quality and desirable while staying within budget at the same time.
High value: Since they are the most expensive awards, only give them to a small number of people. A present from your luxury collection or a private shopping session at your flagship store are a couple of examples.
A mix of things in a gift basket with a medium value. To choose products that clients adore, use gamified profiling or look at their purchasing patterns. This will make the surprise even more enjoyable.
Low value: Miniscule yet significant benefits, such as adding a lipstick to the member’s order, giving away free samples of products, or giving away free toppings to customers of a fast food restaurant. These promote WOM and don’t cost you much.
Free: Although virtual badges, customised emails, or chatbot messages are provided without charge to you, they nevertheless assist in building relationships with clients.
Identify perceived value and the rewards that customers view
Your ability to develop an emotional connection with a consumer will increase as their perception of the worth of the incentive increases. For instance, a signed photo of their favourite musician will be highly valued, but the expenditures don’t necessarily need to be exorbitant for your brand.
High: In the eyes of the customer, a distinctive, personalised reward like a pair of handcrafted shoes or a VIP event has a high perceived value.
Medium: Although members respect features like free express shipping and early access, their perceived value is only of a medium level.
Manage the Loyalty Rewards’ Accessibility
Setting restrictions on your rewards is crucial to avoiding unintentional costs. Both using restricted rewards and infinite prizes has advantages and disadvantages.
No restrictions: Consider any coupon or discount with a predetermined reduction. The prize will be redeemable by more customers if there is no time restriction.
Time restriction: This traditional FOMO strategy requires customers to use their prize within a set window of time. Time restrictions are particularly helpful for seasonal promotions that are only available for a limited period of time, such as Black Friday or Christmas bonuses.
Quantity restriction: When the supply is constrained, people automatically value the reward. Quantity restrictions also cause FOMO. Customers compete with one another as well since early birds
Plan the Logistics of the Reward
Customers’ rewards will be delivered in what ways? Logistics have a significant impact on the main portion of your marketing budget, therefore you shouldn’t ignore them.
Direct download: The customer can get it via a download link if it’s a flyer or an event ticket.
Electronic awards delivered digitally: These are the most economical because there are no shipping expenses. But keep in mind that digital rewards have a weaker emotional pull.
Delivered via your service centre: The customer will receive the reward at no expense to the business.
Delivered with the following purchase: The buyer will automatically receive their incentive with their following transaction. This saves you money, but customers could find the wait to be a little disappointing.
Prepare Your Creativity
Hopefully, we were able to address all of your concerns. Nothing will stop you from achieving your full creative potential going forward. So arrange a team brainstorming session and begin preparing your loyalty rewards.