Rewarding Interactions Has Definite Rewards

Nov 13, 2020

Many loyalty marketers have made the strategic argument for keeping customers engaged with brands in between purchase transactions and have found ways to recognize those interactions within loyalty program earning. And at Kobie, we know in order to have a more holistic view of your customer’s engagement this is imperative and will help optimize your marketing return in the short and long-term. It makes intuitive sense that emotional loyalty will be nurtured and maintained when a brand demonstrates that their commitment to their customers continues after the bill is paid… or even before a transaction occurs.

But loyalty program managers also need to answer the practical questions of how exactly to reward interactions and what the payout will be for doing so.

There are plenty of engagement tactics that involve both enabling members to earn points for their non-purchase activities and offering engagements tactics for those interactions. However, when points are involved, there are definite guidelines to follow to make the investment worthwhile.

Rewarding Engagement Pays.

Rewarding brand engagement does indeed pay. One Kobie client found that highly engaged members were more than two times as likely to stay with that brand when compared to members with average engagement. The differential increased to ten times as likely, when compared with members who were not engaged. The interactions that constituted engagement included activities such as checking account balance, answering a survey, playing a game that provided product information, and entering a sweepstakes. The client also implemented bonuses where members could earn points for activities such as choosing paperless statements and auto-pay billing; both initiatives quickly became strong profit drivers.

Designing Profitable Engagement.

The guiding principles for designing profitable recognition and rewards for interactions are:

1.Create a value exchange

2.Build fences, not walls

3.Know how your base wants to engage

4.Go beyond set it and forget it

1. Create A Value Exchange:

The kind of non-transactional behavior that a loyalty program should recognize, and reward are the behaviors that lead to purchases or that reduce expenses. Examples such as a bonus for profile completion accomplish both– the profile  facilitates a personalized and streamlined customer experience, while also saving the cost of appending data. One pet store chain had noticed that customers who celebrated their pet’s birthday were higher spenders over time so for them it made sense to award bonus points for completing a pet’s profile, which included the pet’s birthday. Simply playing a game may not warrant a points bonus unless playing the game involves engaging with brand content.

2. Building Fences, Not Walls:

There are horror stories from the days when programs first started rewarding activities of customers who visited 10 times on the same day to earn a geo check-in bonus or the customer who earned multiple bonuses by writing a review for every color of a certain item. Program managers now set reasonable limits so that a member can feel that they are making progress towards a next reward, but without receiving a hard value reward before they’ve made a purchase. One program enabled members to earn points for several activities, but they could earn only $1 back per month which amounted to 10% of the average purchase per month.

Another liability limiting tactic is to keep the bonus as a limited time campaign. This is especially useful for bonuses that reward new behaviors such as mobile ordering – once the behavior has been established, the promotion expires.

That said, if the limitations are too onerous or the process to record the activity requires too many steps, then the customer will not feel they’ve been compensated for their effort.

3. Know How Your Base Wants To Engage:

It makes no sense to reward Facebook interactions if your members have moved to TikTok or just as bad, it makes no sense to move to TikTok if your base is more comfortable with Facebook. Defining engagement requires thinking comprehensively about how your members interact with your brand beyond the program related mechanisms of points earning and redemptions. Knowing more about engagement can offer a different lens from which to approach campaigns, testing, optimization and differentiation.

4. Go Beyond Set It And Forget It:

Remembering to refresh and re-communicate the benefit is the biggest challenge of all and one that brands can fail even after significant success as evidenced by the accompanying Walgreens Balance Rewards case study. The point is to find ways to enhance and keep the benefit top of mind.

Case Examples:

For many years, members of Walgreens Balance Rewards could earn points for exercising, weighing themselves, or checking their glucose levels by linking an exercise app or health monitor app to their Balance Rewards account.

By 2017, Walgreens was publishing exciting results in health publications claiming that members participating in the health app linkage with Balance Rewards had 12% higher adherence to their medications and were almost 90% more likely to get a flu shot.

However, in the years between 2017 and 2020, the program went on autopilot. The selection of health apps for account linkage did not update as newer health apps gained popularity and market penetration. The health benefit was hard to find in the member account and hard to use if found. Worst of all, the way most customers learned they had a reward was at the register when they’d already selected all their items. The rewards became dilutionary rather than driving new visits.

In short, the program had not followed the rules for staying in touch with how customers wanted to engage and avoiding “set it and forget it” mentality

By October 2020, Walgreens was announcing the replacement of the program with different incentives.

When considering whether to enable members to earn loyalty program credit as either points or a cash back bonus for non-purchase activities, the rules to keep it profitable are straightforward and the reward for your brand in terms of increased retention can be substantive. There are also other ways to foster engagement without points earning. In either case, recognizing the customer’s investment of time and energy nurtures a relationship with your brand that goes beyond easily matched price incentives or special pricing.