Loyalty between brands and consumers can be unpredictable and fragile. The many ingredients poured into the customer value equation for reward programs – points issuance, rewards choice, market value and the customer experience – carry different weights throughout the customer journey and make up the “deal” between brands and consumers. The vulnerability of this value equation is further complicated as consumers’ loyalty to brands is frequently challenged by competing offers, online reviews, social proofing and the next shiny object.
There is a way to tilt the odds in a brand’s favor by focusing on the “moment of truth,’ or the point when consumers burn their rewards currency and receive their reward. This well-established credo in loyalty marketing drives long-term emotional engagement. The following guidelines can tilt the loyalty equation in your brand’s favor:
- Give your customers bragging rights. The moments where consumers feel the greatest delight with a brand is when they are redeeming their rewards currency. According to an Elsevier research study on reward redemptions, during the post-reward period, the redeemer has enhanced feelings of gratitude, importance, satisfaction or obliged reciprocity. Merchandise, travel and gift cards will trigger enduring loyalty because they serve as a trophy of recognition, unlike statement credits or cash-back (which are easily forgettable). The more tangible rewards categories come with bragging rights, are memorable and shareable, and drive emotional connections with brands.
- Power of the First Redemption. The 2017 US Colloquy census reports that more than half of reward memberships are inactive while 28% of consumers have abandoned a program without ever having redeemed a point or mile. These members are not paying attention to the accumulated value in their rewards program. Data shows redeeming early in the customer lifecycle triggers a greater likelihood of repeat purchases and is a strong indicator of engagement, backed by a 2016 report by Mastercard Advisors claiming that redeemers spend almost 3X as much annually compared to non-redeemers. So, instead of chasing new sales and new customers followed by issuing rewards, focus on encouraging new and repeat reward currency redemptions amongst existing customers, and watch new sales and higher profitability follow.
- Make it Easy. Consumers need fast and easy access to their rewards currencies and their point balances. Coupling a fast and intuitive redemption experience with easy ways to earn more points will let your best customers perceive your program’s rewards points or miles as a valued form of currency and budget extender.
- More, Better and Relevant Choices to Burn Points. The short-term goal is to make sure your program’s rewards offering provides the best of everything – the best travel experiences, limitless merchandise options, the most comprehensive and popular gift card brands and unique experiences with iconic brands. According to Colloquy, 53% of loyalty program members abandon a rewards program because the program does not provide rewards/offers which they are interested in. If your program doesn’t offer redemption options that are relevant to your members, your rewards program cannot compete today, let alone tomorrow.
- Outsource what is Not Core. If you want to deliver a best-in-class rewards redemption experience, outsource it to a third-party who can help your rewards program evolve with new technologies. To meet consumer demand and effectively compete, your rewards program needs to mirror best practices in the payments and loyalty industries.
- Reinvent and Reimagine. The last time the rewards redemption landscape was dramatically changed was ten years ago, when Bridge2 Solutions replaced the outdated warehouse model with an ecommerce platform with real time pricing and access to millions and millions of products. Today, consumers’ expectations include the ability to use their rewards currencies at the point of purchase – similar to how they pay with payment cards. In response to this demand, new redemption models which allow reward members to redeem outside a closed loop online catalogue, are moments away. This will trigger a huge change in loyalty redemptions, unlocking billions of unused rewards currency into the market.
So next time you hear, ‘feel the burn’, don’t only think about how your body might ache and burn after exercising; instead, make sure your customers are feeling rewarded with the optimal redemption experience when they burn the rewards currency from your loyalty program. After all, the burn “moment of truth” may be the ultimate way to drive emotional engagement, brand preference and top-of-wallet status.